DA Davidson Begins Origin Bancorp With Buy And Home Bancorp With Neutral

DA Davidson initiated coverage of two Los Angeles-based banks, saying both were stable franchises but one had a more attractive stock valuation.

Origin Bancorp

DA Davidson’s Kevin Fitzsimmons initiated coverage of Origin Bancorp Inc OBNK with a Buy rating and a price target of $41.50.

The analyst noted the franchise had steadily enhanced its the growth profile and Texas had accounted for a larger share of loan growth.

The franchise was present in complementary markets where it had leading deposit market shares, Fitzsimmons said.

He added that the northern LA markets were “serving to fund loan growth in faster-growth Texas metro markets of Dallas-Fort Worth and Houston.”

The share of Texas had grown from 46% of loans in 2015 to 54% in 2019 and the analyst expects this trend to continue for both loans and deposits.

Home Bancorp

In a separate note, analyst Fitzsimmons initiated coverage of Home Bancorp, Inc. HBCP with a Neutral rating and a price target of $41.50.

The franchise has exposure mainly to southern Louisiana and southwestern Mississippi. Although Home Bancorp has an attractive, low cost deposit base, strong capital ratios and above peer profitability, it is likely to continue facing pressure on net interest margins amid the Fed’s rate cutting campaign, Fitzsimmons said.

The analyst expressed concern regarding Home Bancorp’s “legacy footprint lacking in robust tailwinds in terms of demographics and corporate relocations.” He recommended waiting for a more attractive entry point to buy the stock.

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