* Piper Jaffray analyst Peyton Green upgraded IBERIABANK Corp. to "overweight" from "neutral" following a meeting with bank management and improved impressions of its Sabadell United Bank NA integration. The analyst kept the price target at $89.
Lafayette, La.-based IBERIABANK had announced its acquisition of Miami-based Sabadell in February. The deal closed in July.
Green's takeaway from discussions was an impression of increased confidence among management and the integration teams, despite many of the latter having been initially "uncertain about the melding of the two cultures." In addition, the executives seem to have since "become more impressed" with Sabadell's commercial real estate lending expertise. CFO Anthony Restel also noted that the acquirer — unlike Sabadell with regard to its $1.4 billion of liquidity — would not have to abide by the liquidity coverage ratio. Green estimates a corresponding annual EPS boost of 4 cents.
The analyst further called the 2018 cost savings goal of $21 million "reasonable," thanks to the shuttering of five branches. He projects the expansion through Sabadell's branch network to increase consumer loan growth, excluding residential mortgage, by $20 million to $40 million a year.
* Sandler O'Neill & Partners' Peter Ruiz upgraded FB Financial Corp.'s stock rating to "buy" from "hold," in light of the price decline since its May announcement of a $33-per-share common stock private placement. The shares had then just closed at $36.91.
On Aug. 14, the shares closed at $34.02. Ruiz raised the price target by $2 to $39.
The analyst cited the Nashville, Tenn.-based company's "superior level of profitability," its recent — and immediately accretive — acquisition of Clayton Bank and Trust and American City Bank, and the likelihood of additional mergers.
* Discussions with Sterling Bancorp CEO Jack Kopnisky had Hovde Group's Joseph Fenech acknowledging the number of moving parts in the Astoria Financial Corp. acquisition and the consequent difficulty in predicting pro forma balance sheet composition.
The analyst noted Sterling's projection of a $55 million improvement to earnings from the repositioning of its investment portfolio and high-cost borrowings, while the repositioning of the loan portfolio would likely give a $30 million bump. And though commercial real estate concentration would go over 300% after the deal's close, Sterling plans to quickly push it back down to 275% to 290%.
On the M&A scene, Kopnisky commented that there are "many more sellers than buyers" and that it had been looking at three other targets before picking Astoria. On New York City real estate, the CEO opined that the high-end condo market seems to have peaked, but that segments at average price points are "just fine." He also said the next credit cycle may see more regional or niche issues, instead of the severe contraction of the most recent one.
Fenech on Aug. 14 reiterated Sterling's rating at "outperform," with a price target of $29.00.
* And Piper Jaffray's Brett Rabatin on Aug. 14 released an updated ranking of conviction names for Southwest bank stocks.
Western Alliance Bancorp. continues to lead the group, where M&A is "a solid possibility" and profitability is expected to stay above-peer. Independent Bank Group Inc. moved up following the Carlile Bancshares Inc. deal, as well as its recent hires and expansion. Popular Inc. and PacWest Bancorp rose on the possibility of better net interest margins.
On the other hand, the analyst lowered the ranking of Green Bancorp Inc. on valuation, of First BanCorp. for looking "like more of a 2018 story" and of SVB Financial Group amid possible concerns over expenses and valuation trends.