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Raymond James initiates Mercantil Bank at 'outperform 2'

Initiations

Sandler O'Neill & Partners LP analyst Casey Whitman initiated coverage of Southern National Bancorp of Virginia Inc. at "hold," with a price target of $15.50.

Whitman expects the McLean, Va.-based company to keep posting strong financial results in 2019, even though she anticipates its near-term earnings-per-share growth to face difficulties because of net interest margin pressures and lower acquisition accounting-related income.

Her EPS estimates for Southern National are $1.41 for 2018, $1.40 for 2019, and $1.47 for 2020.

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Nicholas Cucharale from Sandler O'Neill & Partners LP started covering Bayonne, N.J.-based BCB Bancorp Inc. with a "hold" rating and a $12 price target.

Cucharale's model estimates 19% growth in earnings in 2019, driven by accretion from the IA Bancorp Inc. deal. Considering BCB's profitability profile, the analyst does not currently see enough multiple expansion to merit a "buy" rating.

His EPS estimates for BCB are $1.02 for 2018, $1.21 for 2019, and $1.23 for 2020.

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Raymond James analyst Michael Rose began coverage of Coral Gables, Fla.-based Mercantil Bank Holding Corp. at "outperform 2," with a price target of $17.

Rose expects the bank to make progress at a point in the economic cycle when other banks might see their progress slow down or even reverse. The analyst mentioned a number of actions, including cost-cutting efforts, that can help the bank improve its profitability metrics.

He also believes that the bank is an attractive option for acquisition.

Rose's EPS estimates for Mercantil Bank are $1.21 for 2018, $1.18 for 2019, and $1.55 for 2020.

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Tyler Stafford from Stephens Inc. also initiated coverage of Mercantil Bank at "equal-weight," with a price target of $15.

To improve investor sentiment about the bank, Mercantil will have to address concerns regarding its credit quality and funding profile, among other things, according to the report.

He also noted the bank's several expense initiatives, such as involuntary and voluntary retirement plans, "an international de-emphasis that should improve efficiencies given the ~130 FTE in BSA/AML, and a reduction and reorganization of office space." These actions should improve efficiency and return on assets.

Stafford's EPS estimates for the bank are $1.20 for 2018, $1.29 for 2019, and $1.42 for 2020.