Morning Commentary: Preferreds gain strength as Morgan Stanley beats; Banc of California eyed

By Stephanie N. Rotondo

Seattle, Oct. 19 – Preferred stocks continued to gain momentum early Wednesday, as yet another big bank’s earnings beat expectations.

Morgan Stanley & Co. Inc.’s third-quarter earnings per share came in at 81 cents on revenue of $8.9 billion. Analysts polled by Thomson Reuters had forecast EPS of 63 cents on revenue of $8.17 billion.

The Wells Fargo Hybrid and Preferred Securities index was up 33 basis points at mid-morning.

Banc of California Inc.’s 7% series E noncumulative perpetual preferreds (NYSE: BANCPE) were meantime also firming in the wake of the Irvine, Calif.-based bank’s results.

The preferreds were up 39 cents, or 1.65%, at $24.01 in early trading. However, that was down from $24.59 at the open.

For the third quarter, the bank posted EPS of 59 cents, which compared to 29 cents the year before. Analysts had expected EPS of 42 cents.

Revenue was $161.6 million, up from $106.3 million. Analysts’ mean estimate was $143 million.

The bank also issued a statement in regards to a Seeking Alpha report that alleged the company was connected to a known conman, Jason Galanis. The bank said it launched an internal investigation to see if claims Galanis was connected to anyone in management were true, though it also cited a May 9 complaint filed by the Department of Justice that stated Galanis’ affiliation claims were “fraudulent.”

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