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Sandler O'Neill downgrades Central Valley Community Bancorp on NIM pressure

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Sandler O'Neill downgrades Central Valley Community Bancorp on NIM pressure

Downgrades

Sandler O'Neill analyst Tim O'Brien downgraded Fresno, Calif.-based Central Valley Community Bancorp on valuation and net interest margin pressure.

The company's stock price has outperformed peers, rising by 14% compared to a 7% increase in peer stock prices and a 12% increase in the Nasdaq bank index, according to O'Brien. The analyst thinks there is limited upside potential where the stock is currently.

The analyst anticipates net interest margin pressure following interest rate cuts due to the company's asset-sensitive balance sheet. However, recent branch rationalization efforts could help contain or lower operating costs and offset the NIM headwind, O'Brien wrote.

The analyst lowered the company's rating to "hold" from "buy." He maintained his EPS estimate of $1.55 for 2019 but lowered his 2020 estimate to $1.46 from $1.51.

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Hovde Group analyst Joseph Fenech downgraded Tallahassee, Fla.-based Capital City Bank Group Inc. due to expectations that its performance improvement since the Great Recession will slow down.

Following steady improvement since the recession, including an 18% increase to its stock since January 2018, Fenech expects the pace of improvement to slow down due to the lowering interest rate environment.

He lowered the company's rating to "market perform." His EPS estimates are $1.73 for 2019 and $1.90 for 2020.