Raymond James Finds The Pending BBCN Bancorp 'Merger Of Equals' With Wilshire Attractive

Raymond James maintained its Outperform rating on shares of BBCN Bancorp Inc BBCN following solid core operating results in the second quarter that were in line with its expectations.

BBCN reported EPS of $0.29 for the second quarter Excluding merger-related expenses of $1.5 million, the brokerage estimate core operating EPS at $0.30, which is in line with its estimate.

Net loans held in portfolio increased by $212.7 million, or 3.4 percent (13.5 percent annualized), on a LQ basis and by $762.1 million, or 13.3 percent, over the LTM. BBCN affirmed its guidance for low double-digit organic loan growth in 2016.

"Profitability metrics remain above average, organic loan growth has been strong, credit quality remains sound, and capital ratios are robust," analyst Donald Worthington wrote in a note.

"In our view, the pending merger of equals with Wilshire Bancorp Inc WIBC is attractive both strategically and financially for the combined company," Worthington noted.

On December 7, 2015, BBCN Bancorp and Wilshire Bancorp agreed to combine in a strategic merger of equals. The pending merger is expected to close on July 29.

That said, the analyst trimmed his 2016 EPS estimate by $0.01 to $1.23, while maintaining 2017 EPS view of $1.45, "as a lower level of net interest income is offset by a lower provision assumption in 2016 and a lower run rate for noninterest expense."

Worthington maintained his target price of $17.00, which provides total return potential of 9.0 percent, including the current healthy dividend yield of 2.8 percent.