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FIG Partners on SouthCrest's Q4 loss; DA Davidson initiates Nicolet Bankshares

Upgrade

* Sandler O'Neill's Stephen Scouten upgraded State Bank Financial Corp. to "buy" from "hold" and raised the price target to $35 from $31, following an investor meeting with executives. He wrote that the bank has near-term upside from its asset-sensitive balance sheet, a growing presence in strong metropolitan markets and the ability to deploy excess capital into incremental mergers and acquisitions. The addition of AloStar Bank of Commerce should also give the bank an outlet for excess capital and generate assets that could mitigate runoff from loan purchase accretion. He added that the bank could be a seller in the next two to three years.

Initiation

* DA Davidson analyst Kevin Reevey initiated on Nicolet Bankshares Inc. with a "neutral" rating and a $61 price target. Nicolet, which had $2.85 billion in assets at the end of the third quarter, is Wisconsin's largest de novo bank and is a top-10 player in some of the state's most attractive markets, Reevey noted. He said the bank has a stable, low-cost deposit base with a "sizable, growing and diverse" source of fee income.

Company reports

* The management changes at Western Alliance Bancorp. that transitioned Chairman and CEO Robert Sarver to executive chairman were "expected even if the timing was uncertain," wrote FIG Partners analyst Timothy Coffey in a Dec. 15 report. The bank promoted President Kenneth Vecchione to CEO, with James Haught replacing Vecchione as president while retaining his current post as COO, according to a Dec. 13 news release.

Coffey wrote that the bank had alluded to succession planning when Vecchione rejoined the company as president in 2017, after a nearly four-year absence from management. The analyst believes the transition could benefit Western's strategic ambitions by allowing Sarver to spend more time on deal-making, continuing the company's efforts to grow into new markets and products.

* SouthCrest Financial Group Inc.'s consolidation charges and potential impairment of its deferred tax assets could create a loss of 50 cents for the bank's fourth-quarter earnings, wrote FIG Partners analyst Christopher Marinac in a Dec. 15 report. The bank said it would undertake branch rightsizing that will create an initial charge of $1.6 million but net annual savings of $500,000 to $600,000, fully phased in during the second quarter of 2018. It also said it expects "slightly negative" fourth-quarter results. Marinac assumed a $4 million deferred tax assets impairment if the U.S. federal statutory rate moves to 21% from 35%, as currently proposed in Congress.

Industry report

* DA Davidson analysts named F.N.B. Corp., Great Western Bancorp Inc., First Merchants Corp. and Pacific Premier Bancorp Inc. as their top picks for the new year in its 2018 Financial Institutions Outlook, published Dec. 15. Many of the share prices of the names that the analysts picked had underperformed during 2017, or are well-positioned to capitalize on future growth activities.