In a report released today, David Chiaverini from Wedbush maintained a Hold rating on Hope Bancorp (HOPE – Research Report), with a price target of $9.00.
David Chiaverini has given his Hold rating on Hope Bancorp due to a combination of factors. He took into account the mixed performance of the bank in the recent quarter, in which net interest income surpassed expectations, but noninterest income fell short due to the bank holding onto all of its SBA 7(a) production. Furthermore, he considered the increase in net charge offs, which were mainly driven by a major charge off related to a borrower in the oil and gas industry. Despite the setback, Chiaverini noted that nonperforming assets decreased and there was no indication of systemic risks in credit quality.
In addition, Chiaverini considered the strategic reorganization plan announced by Hope Bancorp aimed at enhancing shareholder value. The plan involves establishing four distinct business groups and taking immediate actions like optimizing production capacity, streamlining operations, and reducing workforce. He also factored in the absence of formal guidance for the fourth quarter due to the strategic reorganization. However, he acknowledged management’s note on potential pressure on NIM due to the maturation of $1.8 billion of CDs. Despite raising the 2023 core EPS estimate, Chiaverini maintained his Hold rating as he believes the company’s outlook is appropriately reflected in its current valuation.
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Hope Bancorp (HOPE) Company Description:
Hope Bancorp, Inc. is a bank holding company, which engages in the provision of financial services through its subsidiary, Bank of Hope. It offers core business banking products for small and medium-sized businesses and individuals. Its products and services include certificate of deposit, online banking, bill payment, mobile banking, credits card, and mortgage loans. The company was founded in February 2000 and is headquartered in Los Angeles, CA.
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