Upgrades
* Keefe Bruyette & Woods analyst Catherine Mealor upgraded her rating on Access National Corp. to "outperform" from "market perform" in an Oct. 7 report, following Access National's merger announcement with Union Bankshares Corp. She wrote that the deal was not a surprise because she viewed Access National as a seller and Union as the preferred buyer. The deal will create a larger commercial and industrial lending platform for the pro forma company and give the retail operations a better home.
She said the price was appropriate and attractive for Access National shareholders, but within acceptable parameters for Union Bankshares' currency. She increased Access National's price target to $34 from $29.
Keefe Bruyette & Woods advised Union Bankshares in the deal.
* Merion Capital Group research director Joe Gladue upgraded the buyer, Union Bankshares, to "outperform" from "neutral" in an Oct. 8 note. He wrote that the benefits of the transaction are compelling for the buyer's shareholders and that the price for Access was "reasonable." He raised his price target to $46.
Gladue also updated his 2018, 2019 and 2020 earnings per share estimates, including a set with merger expenses included and a set where they are excluded. For estimates with merger expenses included, he estimated 2018 EPS to be $2.34, 2019 EPS to be $2.54 and 2020 EPS to be $3.48. With them excluded, he estimated 2018 EPS to be $2.82, 2019 EPS to be $2.94 and 2020 EPS to be $3.48
* Sandler O'Neill managing director Frank Schiraldi upgraded Malvern Bancorp Inc. to "buy" from "hold" in an Oct. 8 report following the company's recent capital raise. Schiraldi wrote that the capital raise should support the bank's growth over the next 18 to 24 months and that the deal price reflects attractive levels for a Pennsylvania Main Line institution with increasing franchise value. He added that he still believes the endgame for the bank is a sale.
Sandler O'Neill & Partners LP served as the underwriter for the offering.
Downgrades
* The Union Bankshares deal and its accompanying math held less sway for Compass Point managing director Laurie Havener Hunsicker. She downgraded Union Bankshares to "neutral" on the announced Access National transaction in an Oct. 5 report.
Even though the acquisition is a "wonderful geographic expansion" for Union Bankshares, Hunsicker wrote that the tangible book value dilution and lengthy period to earn it back might mean that the bank's stock could be stuck in its current trading range for the next four to six quarters until full integration.
By Hunsicker's account, the deal dilutes tangible book value by 4.7% that will be earned back in 4.9 years — metrics that fall "just inside" the guidelines of 5% tangible book value dilution and earnback of five years. Her dilution calculation differed from management's figure of 3.6% because their figure excluded interest rate marks that increase intangibles and hits to tangible book value. Hunsicker estimated a rate mark of $30 million.
Hunsicker revised her full-year 2019 estimate to $2.77 from $2.72 and introduced the full-year 2020 estimate at $3.16. She revised the bank's price target to $41 from $46.