On Friday, Heritage Commerce Corp's (NASDAQ:HTBK) price target was raised by Piper Sandler to $12.00 from $10.00, while the firm retained its Overweight rating on the bank holding company's stock.
This adjustment follows Heritage Commerce's second quarter earnings report for 2024, which revealed earnings per share (EPS) of $0.15. This figure fell short of Piper Sandler's estimate by $0.04 and the consensus on Wall Street by $0.03.
The shortfall in earnings was attributed to a lower-than-expected net interest income (NII), which decreased by 2% and contributed a $0.03 deficit per share. The margin also saw a decline of 8 basis points, ending the quarter at 3.26% compared to Piper Sandler's anticipated 3.34%. Additionally, the bank's earnings suffered due to a smaller earning asset base than projected.
Operational expenses exceeded expectations by $0.01 per share, driven by higher compensation costs which reflect recent hiring in loan and deposit production roles, as well as increased investment in information technology.
Despite the earnings miss, Heritage Commerce announced a new $15 million share repurchase authorization. This program is set to represent about 2.3% of the company's outstanding shares based on the current stock price.
Piper Sandler expressed a positive view on the initiation of the buyback program, stating that it had been anticipated and is a welcome development.
While the firm noted that the repurchase plan is not extensive, it is seen as a positive first step for Heritage Commerce. The authorization of the share repurchase program aligns with Piper Sandler's maintained Overweight rating on the stock.
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