Zacks Investment Research upgraded
) to a Zacks Rank #1 (Strong Buy) on Jun 5, 2014. Going by the
Zacks model, companies holding a Zacks Rank #1 have strong chances
of performing better than the broader market.
Why the Upgrade?
CU Bancorp has entered into an agreement with 1st Enterprise Bank
(FENB), according to which the latter will merge with California
United Bank, the wholly owned company of CU Bancorp. The deal has
been valued at $103.4 million. Each share of 1st Enterprise Bank
will be exchanged for 1.3450 shares of CU Bancorp (worth $24.47 on
Jun 2). The merger is expected to be complete in fourth-quarter
The transaction will create one of the leading commercial banking
franchises in southern California, with combined assets of $2.2
billion. Also, the new entity will operate as California United
Bank and serve small and middle-market businesses, entrepreneurs,
non-profits and professionals.
Following the completion of the transaction, shareholders of CU
Bancorp will hold a 68.5% stake in California United Bank, while
the remaining 31.5% will rest with 1st Enterprise Bank's
Prior to this transaction, CU Bancorp reported impressive results
for first-quarter 2014 on Apr 25. Earnings were 24 cents per share
versus 20 cents per share earned in the year-ago quarter and above
the Zacks Consensus Estimate of 22 cents. Total loans increased
9.8% year over year while total deposits grew 10.4%. Non-performing
assets to total assets declined 0.60%. Net interest margin inched
up 13 basis points to 3.82%.
The company's stellar performance in first-quarter 2014 triggered
positive revisions in earnings estimates. Over the last 60 days,
the Zacks Consensus Estimate for CU Bancorp has increased by 4.1%
to $1.02 for 2014 and by 3.4% to $1.22 for 2015. This, along with
the recent merger announcement and expected earnings growth rate of
13.3% for 2014 and 19.1% for 2015, has made us hopeful of another
quarter of upbeat results.
Other Stocks to Consider
CU Bancorp currently has a $208 million market capitalization.
Other banks worth considering include
BofI Holding, Inc.
Central Pacific Financial Corp.
Western Alliance Bancorporation
). All these stocks sport the same Zacks Rank as CU Bancorp.
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