DA Davidson Raises Price Target on First Pactrust Bancorp (FPTB) Following Gateway Bancorp Acquisition

DA Davidson is reiterating its Buy rating on shares of First Pactrust Bancorp (NASDAQ: FPTB) while raising its price target on the company from $19 to $22.

The company announced on June 6 that it will be acquiring Gateway Bancorp. The firm notes that the deal is valued up $17 million in cash and comments that, "there is a $2.5 million holdback provision related to mortgage repurchase risk and a $2.9 million reserve will be added to the existing $2.0 million contingent liability for mortgage repurchases for an aggregate $7.4 million reserve."

Gateway generated loan sale gains of $6.5 million and $34.7 million in Q1 2011 and 2010.

The firm reports, "this is the first of what we expect to be multiple bank acquisitions as the company launches its M&A strategy. Also, at our recent investor conference, FPTB’s CEO Greg Mitchell reiterated his outlook for loan growth to gain traction in Q2 and ramp steadily during the second half of 2012."

DA Davidson is lowering its 2011 EPS estimate from $0.65 to $0.57 and is raising its 2012 from $1.25 to $1.45.

For more ratings news on First Pactrust Bancorp click here and for the rating history of First Pactrust Bancorp click here.

Shares of First Pactrust Bancorp closed at $15.88 yesterday.

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