Raymond James: 1st Constitution Bancorp Now A Buy, Worth $13/Share

In a report published Tuesday, analysts at Raymond James resumed coverage of

with an Outpeform rating. The price target was set to $13. The company reported 1Q15 results with robust loan growth, fee income trends and margins. The company witnessed growth in loan balances in Q1, driven by an unseasonably strong mortgage warehouse portfolio. 1st Constitution also reported strong sequential fee income growth, driven by "higher gains from the sales of residential mortgages and small business administration (SBA) loans." "While increased mortgage banking activity was primarily driven by refinance activity (74% of originations), we believe the pipeline remains strong and expect this segment to continue to exhibit strength through the seasonally strong 2Q and 3Q at least," the analysts said. Raymond James expects the company to see robust margin expansion in 2Q15, following solid loan growth through the seasonally stronger quarters. This seasonal pattern is expected to persist in 2016, with margin expansion in 3Q16 and then a contraction in 4Q16.