Upgrades
* Both Piper Jaffray and Sandler O'Neill & Partners raised their ratings of TCF Financial Corp. after it announced a new buyback plan and the discontinuation of indirect auto loan originations.
Piper Jaffray's Nathan Race and Matthew Clark, having spoken with the Wayzata, Minn.-based company's management, are "much more constructive" on near- to immediate-term prospects. Cost savings in auto are expected to push the efficiency ratio down and the stock price up.
Sandler's R. Scott Siefers, while describing the move as "proactive" and "unquestionably" positive, raises the question of how TCF will reinvest. Siefers points out that winding down the business means the loan book's "biggest driver is set to become a multi-year headwind" and that investors may be "disappointed" should commercial and industrial loans or leasing take its place.
He also notes that discontinuing indirect auto loan originations could attract potential acquirers previously concerned by TCF's auto concentration.
Race and Clark upgraded the stock to "overweight" from "neutral" and increased the price target to $22.50 from $19.00. Siefers upgraded it to "buy" from "hold" and raised the price target to $21 from $18.
Conversely, Wedbush's David Chiaverini kept the stock rating at "underperform," arguing that the company's already below-average loan and deposit growth now has to contend with the loan runoff.
Chiaverini has a $17 price target on the stock.
* SunTrust Robinson Humphrey's Jennifer Demba upgraded IBERIABANK Corp.'s stock rating to "buy" from "hold."
The management of Lafayette, La.-based IBERIABANK seems intent on improving return on average assets, the analyst wrote, in light of a third-quarter EPS miss and recent stock underperformance. Demba expects the third quarter's storm-related provision to provide extra cushion and the company's likely break from M&A in 2018 to yield cleaner results.
Cost cuts may come from closing branches and rationalizing its mortgage operations, with every $1.0 million in cost cuts translating to about a penny of annual EPS.
Demba raised the price target by $5 to $85.
Transferred coverage
* Keefe Bruyette & Woods' Glen Manna has assumed Puerto Rican bank coverage from Brian Klock.
Manna also upgraded the stock ratings of Popular Inc. and OFG Bancorp to "outperform" from "market perform." First BanCorp. was kept at "outperform."
The damage from hurricanes Irma and Maria remains severe, and the banks' stocks continue to trade below their pre-catastrophe levels. But Manna calculates that, even if hurricane-related losses were double or triple reserve levels, all three will be profitable in 2018 and 2019.
* And Sandler now covers Eau Claire, Wis.-based Citizens Community Bancorp Inc.
Analyst Brendan Nosal rated the stock "buy" and gave it a price target of $15.50.
The analyst attributed the stock's historical underperformance to the company's "credit union roots." Now CEO Stephen Bianchi, who joined in mid-2016, has a number of strategic initiatives, as well as M&A experience. And Citizens' board would be open to a sale, should plans not meet expectations.
Nosal projects that core EPS could increase by about 29% in 2018 and comments on the attractiveness of "one of the few remaining 'self-help' stories at this point in the industry's cycle."
