On Monday, DA Davidson maintained its Buy rating on OP Bancorp (NASDAQ:OPBK) and increased the stock's price target to $16.50 from the previous $15.00. This adjustment follows OP Bancorp's reported earnings per share (EPS) of $0.37 for the third quarter of 2024, which surpassed the projected figures by $0.04.
The firm's analyst cited the bank's continued robust loan growth in the third quarter as a primary factor for the positive outlook. The growth was mainly attributed to commercial real estate (CRE) and commercial & industrial loans (C&I), including mortgage warehouse financing. Despite a 5 basis points compression in the net interest margin (NIM), the bank managed to report a modest quarter-over-quarter increase in net interest income (NII).
The analyst expressed optimism for the bank's future, anticipating the NIM to exceed 3% in the fourth quarter, which is considered a strong position as the company heads into 2025. The higher price target reflects confidence in the bank's performance and potential.
The third quarter's earnings beat was driven by a lower provision for credit losses, which contributed $0.04 per share, and an increase in fee income, which added $0.01 per share. These positive factors were slightly offset by a $0.02 per share increase in expenses. OP Bancorp's reported core pre-provision net revenue (PPNR) per share stood at $0.54, closely aligning with the analyst's estimate of $0.55 and consistent with the previous quarter's performance.
In other recent news, OP Bancorp has announced a quarterly cash dividend of $0.12 per share, demonstrating its financial stability and commitment to returning value to shareholders. In addition to this financial update, the company has also disclosed significant leadership transitions. CEO Min Kim is set to retire in 2025, with Sang K. Oh, currently the Executive Vice President and Chief Credit Officer, slated to assume the role. Post-retirement, Ms. Kim will transition to the role of Chair of the Board, succeeding Brian Choi, who will become Chairman Emeritus.
Further changes within OP Bancorp's board have also been reported. Ernest E. Dow, a board member, has retired, and all seven director nominees listed in the 2024 Proxy Statement were elected for a one-year term. Shareholders have ratified the appointment of Crowe LLP as the company's independent registered public accounting firm for the year 2024.
InvestingPro Insights
OP Bancorp's recent performance aligns with several key metrics and insights from InvestingPro. The company's market cap stands at $209.59 million, with a P/E ratio of 10.17, indicating a potentially attractive valuation relative to earnings. This is particularly noteworthy given the bank's recent earnings beat and the positive outlook from DA Davidson.
InvestingPro Tips highlight that OP Bancorp has raised its dividend for 5 consecutive years, which may appeal to income-focused investors. The current dividend yield is 3.39%, as of the most recent data. Additionally, the stock has shown significant momentum, with a 75.33% price total return over the past year and a 54.88% return over the last six months. This strong performance is reflected in the stock trading near its 52-week high, with the current price at 98.43% of that peak.
The bank's profitability, as mentioned in the article, is reinforced by InvestingPro Data showing an operating income margin of 42.21% for the last twelve months as of Q3 2024. This robust margin supports the analyst's optimism about the bank's net interest margin potentially exceeding 3% in the fourth quarter.
Investors considering OP Bancorp may find additional value in exploring the full range of InvestingPro Tips, which includes 11 more insights not covered here. These tips could provide a more comprehensive view of the company's financial health and market position.
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