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Sandler reiterates rating for Middleburg Financial, initiates coverage of Nicolet Bankshares

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Sandler reiterates rating for Middleburg Financial, initiates coverage of Nicolet Bankshares

Reiteration

Sandler O'Neill & Partners analyst Casey Orr maintained a"hold" rating for MiddleburgFinancial Corp. and set the 12-month target price at $29, followingfirst-quarter resultsand recent shareholder activism.

Orr also cut the Middleburg, Va.-based company's 2016 EPS estimateto $1.29, and maintained the 2017 EPS estimate of $1.42. The company missed earningsexpectations in the first quarter due to expense growth of 11%, compared to theanalyst's projection of 5%.

Middleburg Financial's largest shareholder, David Sokol, haspressed the bank to explore strategicalternatives. Orr believes that a number of parties mightbe interested in this transaction but also cautioned that a sale might not takeplace. "We believe the stock will likely remain supported by takeover speculation,"the analyst wrote.

Orr highlighted the inclusion of a strategic plan in MiddleburgFinancial's earnings release as an "attempt to demonstrate that managementis taking profitability improvements seriously" but specified the need to seemore numbers and a timeline.

Initiation

Following its mergerwith Baylake Corp., SandlerO'Neill & Partners analyst R. Scott Siefers initiated coverage of Green Bay,Wis.-based Nicolet Bankshares Inc.,with a "hold" rating and gave it a target price of $47.

Siefers' 2016 and 2017 EPS estimates are $2.47 and $2.97, respectively.

The analyst finds the deal provides two strong performing bankswith the scale they require to boost growth and performance. He noted that Nicoletshares have outperformed the Nasdaq Bank Index since the deal announcement and,at 15.3x his 2017 EPS, are "fairly valued."

Discontinued coverage

Raymond James analyst Daniel Cardenas dropped coverage of St.Louis-based Pulaski Financial Corp.after its acquisitionby Champaign, Ill.-based First BuseyCorp.

His final rating for the bank was "market perform."