Tuesday, Stephens raised the price target on Private Bancorp of America (OTC: OTC:PBAM) to $61.00 from $53.00, while maintaining an Overweight rating. The firm's analyst highlighted the company's third-quarter operating earnings per share (EPS) of $1.63, which surpassed their forecast of $1.36. The pre-provision net revenue (PPNR) was reported at $13.7 million, a 3% increase over the analyst's expectations.
Private Bancorp of America's third-quarter results were notable for a 30% linked-quarter annualized (LQA) increase in core deposit growth, which allowed the company to modestly reduce brokered deposits while still achieving a 20.9% LQA increase in total deposits. Non-interest bearing deposits also saw a 20% LQA increase. Despite a slowdown in loan growth to 6.6% LQA compared to the first half of 2024, the analyst remains optimistic about the company's future growth potential.
The slowdown in loan growth from approximately 14% in the first half of the year was attributed to the company's pricing diligence. However, with a solid liquidity and capital position, Stephens anticipates growth could accelerate into 2025, bolstered by the company's continued success in hiring new staff.
The end-of-period (EOP) total deposit costs for Private Bancorp stood at 2.43%, which is 19 basis points below the third-quarter average. The analyst believes that Private Bancorp's balance sheet is mostly rate neutral at this point, even with a conservative interest-bearing (IB) beta assumption, which is forecasted at 46%.
In summary, the upgrade of the price target to $61 from $53 reflects the analyst's confidence in Private Bancorp's deposit growth and balance sheet management, as well as the potential for accelerated growth in the coming year. The Overweight rating remains unchanged.
In other recent news, Private Bancorp of America has been the focus of market analysts following its strong second-quarter performance. The financial institution reported an Operational Earnings Per Share (Op. EPS) of $1.35, surpassing both the analyst's estimate of $1.16 and the consensus of $1.28. Additionally, their Pre-Provision Net Revenue (PPNR) reached $13.2 million, marking a 15% increase compared to the forecasted figure.
This positive performance led Stephens to raise the price target for the company to $53.00, maintaining an Overweight rating. The increase in the price target reflects the firm's confidence in the bank's ongoing growth and financial performance. Meanwhile, DA Davidson reaffirmed its Buy rating for the company and raised its price target to $57.00, highlighting the strong returns and pristine asset quality demonstrated in the recent quarter.
These recent developments underscore Private Bancorp of America's successful strategy, which emphasizes a high-touch, private banking approach. This strategy, along with successful client acquisition and retention, has positioned the bank favorably in the market, contributing to a robust balance sheet growth. Analysts project low-double digits growth for fiscal years 2024 and 2025.
InvestingPro Insights
Recent data from InvestingPro adds depth to the analysis of Private Bancorp of America (OTC: PBAM). The company's market capitalization stands at $282.05 million, with a price-to-earnings (P/E) ratio of 8.59, indicating a potentially undervalued stock relative to earnings. This aligns with the analyst's optimistic outlook and increased price target.
InvestingPro Tips highlight PBAM's strong performance, noting high returns over various timeframes including the last year, month, and three months. This is consistent with the analyst's positive view on the company's growth potential. The stock's 53.12% price total return over the past year and 43.07% over the last six months underscore its robust performance, supporting the analyst's decision to maintain an Overweight rating.
It's worth noting that while the company has shown strong returns, InvestingPro Tips also indicate that PBAM suffers from weak gross profit margins. This could be an area for investors to monitor, especially in light of the company's pricing diligence mentioned in the article.
For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for PBAM, providing a deeper understanding of the company's financial health and market position.
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