* Raymond James analyst William Wallace IV downgraded Lafayette, La.-based MidSouth Bancorp Inc. to "underperform" from "outperform."
The downgrade came after the company started its capital raise and disclosed information that the company is struggling. In its disclosures, the company said it expects to be placed under "troubled condition" by the Office of the Comptroller of the Currency, Wallace wrote. MidSouth Bancorp also expects a loan loss provision of around $7 million to $12 million and a $3 million pretax restructuring charge in the second quarter. The company will also reduce its quarterly dividend, the analyst noted.
Wallace wrote that he is uncertain whether the company would be able to repay its preferred stock under the Small Business Lending Fund. He also said there is an increased risk of credit losses for the company for the second quarter.
The analyst noted that the situation presents a negative risk-reward dynamic for the company.
* Piper Jaffray analyst Matthew Breese upgraded Norwich, N.Y.-based NBT Bancorp Inc. to "neutral" from "underweight."
Breese lowered his price target to $35.50 from $36.50, which equates to 16.5x his 2018 EPS estimate, a slight premium compared to peers. He wrote that this premium was warranted because of the company's diverse revenue stream, deposit franchise, credit profile and profitability. The analyst also wrote that the company's stock is approaching fair value.
However, he added that the company will still face challenges in the long term, especially when it crosses the $10 billion asset threshold, which usually negatively impacts companies' return on assets.
* FBR & Co. analysts upgraded Dallas-based Comerica Inc. to "outperform" from "market perform" and downgraded Jacksonville, Fla.-based Atlantic Coast Financial Corp. to "market perform" from "outperform."
The analysts projected that Comerica's net interest income would increase in the range of $40 million to $85 million with the next rate hike by the Federal Reserve, translating to an annual boost to earnings per share of 15 to 30 cents. They wrote that the company has a significant portion of floating-rate commercial loans and a loan-to-deposit ratio of 80%. They also noted that the company is focused on improving its profitability.
The analysts increased their price target to $79 from $74.
In their note, the analysts listed Meta Financial Group Inc., Comerica Inc., Zions Bancorp. and TriCo Bancshares among the top companies with respect to deposit bases. On the other hand, they listed Customers Bancorp Inc., New York Community Bancorp Inc., Triumph Bancorp Inc. and Atlantic Coast Financial Corp. as among those who would probably experience outsized funding cost pressure from rate hikes.
The analysts expect the value of high-quality deposit bases to become clearer as rates rise.