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D.A. Davidson initiates on Illinois banks


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D.A. Davidson initiates on Illinois banks

D.A.Davidson analyst Kevin Reevey has initiated coverage on a handful of banks withoperations in Illinois, according to a series of reports dated April 7.

Reeveysaid in an interview that he joined the firm in January and is resumingcoverage that the broker had discontinued after an analyst departure in 2015.He had previously worked on the buy side at FSI Group.

"On the buy side, we did a very deep dive on a lot ofcompanies that we covered ... which really is important here and really adds alot of value to our buy-side clients," he said. "They reallyappreciate and value that type of analysis and insight."

Heinitiated MB FinancialInc. at "neutral" with a price target of $36. He wrotethat the pendingAmerican Chartered BancorpInc. acquisition represents "a feather" in thebank's cap as a sizable bank focused on middle-market businesses.

Herated First Midwest BancorpInc. "neutral" with a 12-month price target of $19,writing that the bank is one of Illinois' "most experienced and skilled consolidators."

Hegave Wintrust FinancialCorp. a "neutral" rating with a price target of $49. Hesaid he expects the bank to be "very active" on the acquisition hunt.He added that Wintrust's market footprints have favorable demographic andwealth trends.

Heinitiated PrivateBancorpInc. at "neutral" with a $41 price target, writing thatthe bank has a diversified fee income base that makes 20.2% of total revenues.He also said the bank is well-positioned to benefit from rising rates."Given [PrivateBancorp's] growing and diversified sources of fee income,above average profitability, high probability to benefit from a rising interestrate environment, leadership in some of the nation's most attractive markets,we believe this company's shares deserve to trade at a premium to its MidwestBank peers," he wrote.

Hegave Champaign, Ill.-based FirstBusey Corp. a "buy" rating and $23 price target, sayingthe bank has an attractive core deposit franchise and was successful at growingand diversifying fee-based revenues.

Herated Joliet, Ill.-based FirstCommunity Financial Partners Inc. a "neutral" with aprice target of $9, citing limited earnings power. He wrote that the bank couldbe a takeout target for an institution looking to grow in Will and DuPagecounties, and could fetch $11.50 per share in a deal. Likely suitors could beMB Financial; First Midwest Bancorp; Wintrust; and Green Bay, Wis.-basedAssociated Banc-Corp.

Hegave Burr Ridge, Ill.-based BankFinancial Corp. a rating of "buy" with aprice target of $14. He wrote that the bank has made "significantstrides" in transitioning to a commercial lender from a "plainvanilla" savings bank, with strategic priorities in commercial leasing,multifamily lending and health care lending in markets outside of Illinois —such as Austin, Dallas, San Antonio, Tampa/St. Petersburg, Denver andMinneapolis. Its footprint could also make it a "highly sought after"acquisition target and could attract $16 per share in a takeout. Logical suitorscould be First Midwest, Wintrust, First Busey and Associated.