UPDATE: Compass Point Initiates NewBridge Bancorp with Buy, $5 PT; Credit Environment Normalizing

Compass Point initiated NewBridge Bancorp (NASDAQ: NBBC) with a Buy rating and a price target of $5 a share.

Compass Point noted, "Similar to most of its community banking peers, NBBC has incurred a significant amount of credit related expenses (over $150M in charge offs) since the beginning of the downturn. However, the bank has made significant progress in cleaning up its balance sheet, and the tailrisk should be nearly eliminated following the anticipated 3Q12 write-downs to its entire portfolio. Credit costs should normalize by early 2013 following the write-downs, though we expect the company will still need to raise common equity in order to repay its $52MM in TARP. In the near-term, sluggish loan growth, the low rate environment, and expense ramp from hiring origination personnel will act as headwinds to more substantial earnings growth."

NewBridge Bancorp closed at $4.25 on Monday.

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