Tuesday, Stephens raised the price target for Private Bancorp of America (OTC: OTC:PBAM) stock to $53.00, up from the previous target of $41.00, while retaining an Overweight rating on the stock. This adjustment follows the company's second-quarter earnings, which surpassed expectations.
On the day, the financial institution reported an Operational Earnings Per Share (Op. EPS) of $1.35, which is higher than the analyst's estimate of $1.16 and the consensus of $1.28. Pre-Provision Net Revenue (PPNR) reached $13.2 million, marking a 15% increase compared to the forecasted figure.
The positive quarterly results have led to an upward revision of the projected Operational EPS for 2025 to $5.95, a significant increase from the previous estimate of $5.02.
The bank's recent performance is attributed to successful client acquisition and retention, especially in the wake of market disruptions in California. These factors are expected to contribute to a robust balance sheet growth, with low-double digits growth projected for fiscal years 2024 and 2025.
The newly formed legal services deposit team, established in January 2024, has also shown promising progress, accumulating approximately $50 million in deposits as of June 30.
With a strong growth narrative, anticipated stability in Net Interest Margin (NIM) despite potential rate cuts, and solid profitability levels, including a forecasted 1.36% Return on Average Assets (ROAA) for fiscal 2025, the bank is positioned favorably in the market.
Private Bancorp of America's stock is currently trading at a discount valuation, at seven times the projected earnings for 2025, which reinforces the Overweight rating. The price target adjustment to $53 reflects the firm's confidence in the bank's ongoing growth and financial performance.
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