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Raymond James upgrades East West Bancorp

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Raymond James upgrades East West Bancorp

Upgrades

* Raymond James analyst David Long raised East West Bancorp Inc.'s stock rating to "market perform" from "underperform."

The Pasadena, Calif.-based company's upgrade was partly attributed to the China exposure and consent order no longer being seen as headwinds.

The analysts also raised their 2017 and 2018 EPS estimates, respectively, by 2 cents to $3.42 and by 6 cents to $3.76.

* Stephens analyst Terry McEvoy upgraded BB&T Corp. to "overweight" from "equal weight."

Calling the stock "the worst performing" among superregionals in 2017, McEvoy recommends taking advantage of the year-to-date underperformance. He further noted that, while large banks in general have taken a hit from increased commercial loan prepayments, Winston-Salem, N.C.-based BB&T's "'Main Street' focus" worked in its favor during the third quarter.

The price target is $53. Its stock has slid from $47.02 right before the start of the year to $46.37 as of Oct. 4's close.

Downgrade

* McEvoy downgraded, on the other hand, "the best performing" of the superregionals year-to-date: PNC Financial Services Group Inc.

He lowered Pittsburgh-based PNC's stock rating to "equal weight" from "overweight," on valuation. The analyst further rescinded the $135 price target. The stock closed at $134.27 on Oct. 4. It began the year at $117.97, as of the Jan. 1 close.

Coverage assumption

* Piper Jaffray's William Curtiss took over coverage of a number of bank stocks.

The analyst maintained the "overweight" rating of First Bancorp, Hancock Holding Co., IBERIABANK Corp., Investar Holding Corp., Bank of the Ozarks and Pinnacle Financial Partners Inc.

Meanwhile, Ameris Bancorp, BancorpSouth Inc., Franklin Financial Network Inc., Home BancShares Inc., Simmons First National Corp., South State Corp. and TowneBank stayed "neutral"-rated.

Industry report

* And D.A. Davidson's Kevin Reevey reported on the agricultural exposure of Midwestern banks.

On top of years of pricing pressure, the industry has seen farm real estate values drop year over year in certain states. Banks have adjusted accordingly; Reevey noted that First Mid-Illinois Bancshares Inc., for example, lowered its loan-to-value policy for farm and agricultural loans to 65%, so as to reduce portfolio risk.

A list of banks with the highest farm and agricultural loan exposures as a percentage of gross loans was led by HBancorp. Inc. of Illinois, with second-quarter exposure of 86.5%. It was followed by Nebraska-based Madison County Financial Inc., with 70.1%. Wisconsin's County Bancorp Inc. came in third with 59.9%.

The analyst pointed out, however, that many of its covered banks are well-insured to mitigate their risks.