CVBF - CVB Financial raised to Buy from Neutral at Janney

2023-05-25 13:23:39 ET

Janney upgraded CVB Financial ( NASDAQ: CVBF ) to Buy from Neutral on Thursday on the premise that the stock has been unfairly penalized for running a successful commercial bank and for its proximity to failed banks.

Year to date, CVB Finanacial ( CVBF ) stock has declined 52% , compared with the S&P 500's 8.5% increase.

"We fully recognized the company does not screen well," wrote analyst Timothy Coffey in a note to clients. "CVBF has a concentration in Commercial Real Estate, relatively high balance of uninsured deposits, and low deposit costs. In our opinion, those data points reflect a highly successful commercial bank and not existential risks."

The analyst defends CVBF saying the CRE portfolio is "diversified and granular," the uninsured deposit ratio is high because the bank doesn't rely on brokered deposits, and its cost of deposits is temporarily low.

After meetings with management, Coffey also points out that deposits are stable, management is not seeing issues with credit, and CVB ( CVBF ) is conserving cash for acquisitions. "In our opinion, CVBF is likely to be a consolidator of banks when the M&A market reopens," he said.

His Buy rating contrasts with the SA Quant rating of Stong Sell; the stock shifted to sell in February for decelerating momentum. Meanwhile, the average Wall Street rating stands at Buy.

Take a look at CVBF's deposits and loan growth on its balance sheet here.

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