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J.P. Morgan rates Metropolitan Bank Holding 'overweight'

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J.P. Morgan rates Metropolitan Bank Holding 'overweight'

Initiations

* J.P. Morgan Securities LLC began covering Metropolitan Bank Holding Corp., which had gone public in November.

Analyst Jason Oetting rated the stock "overweight," noting its "well-above-peer" balance sheet expansion and "long track record" of risk management. New York-based Metropolitan has room to grow, Oetting wrote, particularly with rivals pulling back from commercial real estate and its "impressive" transformation of its deposit mix. He pointed out noninterest bearing deposits comprised 53% of the bank's second-quarter total, compared with 18% in 2013.

Concerns over its CRE exposure, the analyst further noted, may be alleviated by the portfolio's diversity. No CRE product makes up more than 20% of the book and the majority are from repeat customers or word-of-mouth referrals, as opposed to brokers.

Oetting gave Metropolitan a price target of $50. The stock closed at $44.66 on Dec. 4.

* Sandler O'Neill & Partners now covers Western New England Bancorp of Westfield, Mass.

Mark Fitzgibbon, noting that the stock trades below peers' at 140% of tangible book, rated it "buy." The price target is $12.50.

The analyst, following discussions with management, reported that Western seems focused on improving its "comparatively high" efficiency ratio, and is working on changes to its loan and deposit mixes. CEO James Hagan appears "to have a solid plan" for the balance sheet and is looking to expand into new Connecticut markets and new business lines.

Fitzgibbon also pointed out that Western has "real scarcity value" that makes it "more and more appealing" to potential buyers.

Downgrade

* And Sandler's Cucharale downgraded the stock rating of Esquire Financial Holdings Inc. on valuation.

The analyst changed it to "hold," with a target of $22, from "buy," with a price target of $18.

The Jericho, N.Y.-based company's stock closed at $21.00 on Dec. 4. Its initial public offering in June priced at $14 per share.