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Raymond James downgrades Mercantile Bank


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Raymond James downgrades Mercantile Bank


* Raymond James & Associates analyst Daniel Cardenas downgraded Grand Rapids, Mich.-based Mercantile Bank Corp. to "market perform" from "outperform" due to valuation.

After reviewing its fourth-quarter 2016 earnings results, the analyst projected steady growth for the bank. Mercantile Bank disclosed an EPS of 49 cents compared to the analyst's 46-cent estimate.

Cardenas believes that the company's reported EPS exceeded his estimate because of lower-than-expected operating and provision expenses.


* Piper Jaffray analyst Matthew Clark initiated coverage of Los Angeles-based CU Bancorp at "overweight," with the target price set at $42.

Clark noted that the bank has "one of the most attractive core deposit profiles in the industry." He also said it is one of the most asset-sensitive in its peer group.

He projected a low-double-digit loan increase for the bank, as well as stronger growth if rates rise and lower taxes are implemented under the Donald Trump administration.

* Clark initiated coverage of Novato, Calif.-based Bank of Marin Bancorp at "neutral."

He believes the bank is modestly asset-sensitive and that its valuation can grow more through stronger net loan growth, higher rates, and engagement in M&A transactions. He also thinks the bank has the opportunity to expand its market, noting the bank's reach in the East San Francisco Bay Area.

Clark set his target price at $70.

* Piper Jaffray analyst Brett Rabatin also initiated coverage of Houston-based Green Bancorp Inc. at "overweight," and set his target price at $18.

He said the bank's valuation was affected by the credit stress and uncertainty surrounding the bank's program to quickly eliminate energy exposures.

He believes the bank will be able to level its valuation with that of its peers when asset-quality trends normalize. The analyst projected that the bank will experience an improvement to around 1% on its return on assets in 2017 due to lowered provision expenses. Operating leverage will also benefit when loan growth and fee income impacts become more pronounced.

He believes that the bank can engage in small M&A transactions as a buyer.