Courtesy of Benzinga
A slowdown in loan growth could be a near-term headwind for Bridge Bancorp, Inc. (NASDAQ: BDGE) and likely downward revisions in estimates may exert pressure on the stock, according to DA Davidson.
The Analyst
DA Davidson’s David Bishop initiated coverage of Bridge Bancorp with a Neutral rating and a price target of $33.
The Thesis
Bridge Bancorp has a strong deposit base, which supports stable core margins, with low cost of funds and high contribution of fee revenues, Bishop said.
For Bridge Bancorp, the proportion of non-IB (investment bank) deposits to total deposits was at around 36% at the end of the second quarter, versus an average of merely 16% for its peers, the analyst noted.
He explained that this high proportion translated into a lower cost of deposits for Bridge Bancorp, allowing the company to maintain its Net Interest Margin above that of its peers.
Bishop added, however, that the quarter-to-date trends indicate pressure on Bridge Bancorp’s Net Interest Margin during the back half of 2019.
For Bridge Bancorp, the proportion of fee income to total revenues was at 13% in the second quarter, versus an average of merely 9% for its peers, the analyst further noted.
The company’s loan yields would likely decline, given that the current market rates are moving down, Bishop said. He also expects loan growth to slow in the near term “as growth is incrementally less profitable than prior originations and market conditions remain competitive.”
Price Action
Shares of Bridge Bancorp were down 1.09% at $28.94 at the time of publishing on Thursday.
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Latest Ratings for BDGE
Date | Firm | Action | From | To |
---|---|---|---|---|
Oct 2019 | Initiates Coverage On | Neutral | ||
Sep 2019 | Initiates Coverage On | Neutral | ||
Apr 2019 | Initiates Coverage On | Outperform |
View More Analyst Ratings for BDGE
View the Latest Analyst Ratings
Posted-In: DA Davidson David BishopAnalyst Color Price Target Initiation Analyst Ratings