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In This List

FBR upgrades Banc of California; Rafferty upgrades Capital One

Street Talk Episode 68 - As many investors zig away from bank stocks, 2 vets in the space zag toward them

Street Talk Episode 66 - Community banks tap the debt markets while the getting is good

Street Talk Episode 67 - Veteran investor tabs Mick Mulvaney to help with latest financial stock-focused fund

Street Talk Episode 65 - Deferral practices trap US bank portfolios in purgatory


FBR upgrades Banc of California; Rafferty upgrades Capital One

Upgrades

* FBR & Co analyst Bob Ramsey upgraded Banc of California Inc. to "outperform" from "market perform" and increased his price target to $22 from $18. The analyst noted that investor sentiment is low, but "change is happening." CEO and Chairman Steve Sugarman has left the company and the board is working on corporate governance improvements. Ramsey thinks that if these changes are not sufficient, the company might have a "tough time remaining independent."

* Compass Point Research & Trading LLC analyst Laurie Havener Hunsicker upgraded Brookline Bancorp Inc. to "buy" from "neutral" and increased her price target to $18 from $15. The analyst noted that the shares were affected by concerns that the board of directors may pursue another deal that might be expensive in regards to tangible book value. However, the analyst thinks the company is committed to stay independent in the near term, and might "eventually end up on the other side of an M&A transaction." She noted that President and CEO Paul Perrault sold Chittenden Bank to People's United Financial Inc. for 3.8x tangible book in January 2008.

* Hunsicker also upgraded Washington Trust Bancorp Inc. to "buy" from "neutral" and increased her price target to $61 from $50. The analyst noted that the company has one of the strongest currencies in the Northeast. She thinks it is trading at a well-deserved premium compared to its peers. Hunsicker noted that the company is a top-performing franchise, generating high return on tangible common equity.

* In addition, Hunsicker raised her investment rating for Central Pacific Financial Corp. to "buy" from "neutral" and increased her price target to $34 from $29. She thinks the company should trade at a premium compared to its peers, based on scarcity value and franchise quality. She highlighted that the company's solid capital base and strong earnings made it possible for Central Pacific Financial to pay dividends and execute buybacks.

* Rafferty Capital Markets analyst Dick Bove upgraded Capital One Financial Corp. to "buy" from "hold" and increased his price target to $109 from $75. The analyst highlighted the increase in loan losses at Capital One and noted that it might suggest that the company is following a positive strategy that might generate higher earnings growth in the future. In addition, he thinks the company will be able to reduce its loan losses and generate a large number of profitable accounts by mid-2017. He also noted that the company's current price target reflects that the company is trading at a significant discount compared to traditional regional banks.

* FIG Partners LLC analyst Brian Martin upgraded DNB Financial Corp. to "outperform" from "market perform," primarily based on valuation, and increased his price target to $35 from $28. The analyst noted that the company showed significant improvements in its earnings power and profitability following its acquisition of East River Bank. Martin expects the company to generate a return on average assets of 0.95% and and a return on tangible common equity of 12.7% in 2017.

Downgrades

* Keefe Bruyette & Woods Inc. analyst Christopher McGratty downgraded Hope Bancorp Inc. to "market perform" from "outperform" and established a price target of $22. The analyst noted that the company is trading close to its peers. However, based on his low credit outlook, he does not think the company will be able to generate EPS growth in line with its guidance. In addition, the company is trading above his previous price target, so the analyst reduced his investment rating.

* Another KBW analyst, Brian Klock, downgraded Popular Inc. to "market perform" from "outperform" but increased his price target to $46 from $44. The analyst noted that the company's $75 million common stock buyback plan, though lower than his expectations, is a "large, positive step forward." The analyst also expects the company to generate higher earnings growth based on improved credit outlook. But he reduced his rating based on valuation. He thinks the company is fairly valued, as he expects it to show slower growth in its core Puerto Rico footprint and generate a return on tangible common equity of 8.2% in 2017 and 8.1% in 2018.