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Republic Bancorp, 3 others downgraded on valuation

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Republic Bancorp, 3 others downgraded on valuation

Downgrades

* Hovde Group's Kevin Swanson downgraded Republic Bancorp Inc. to "market perform" from "outperform," mainly on valuation.

The analyst raised the price target by $2 to $41. The Louisville, Ky.-based company's stock has risen approximately 15% since a March upgrade.

* Wedbush's Peter Winter downgraded Texas Capital Bancshares Inc. to "neutral" from "outperform," also on valuation.

The price target was lowered by a dollar to $87.

The analyst also hiked the forecast for third-quarter provisions by $4 million to $17 million, in light of damages from Hurricane Harvey. Winter further noted that the company's restructuring- and expansion-related expenses are close to being at a full run-rate.

* Keefe Bruyette & Woods analysts commented on Texas Capital as well, in their third-quarter bank preview, "Same Trade, Different Quarter."

In the Oct. 3 report, they wrote that the Dallas-based company "was among the strongest performers" for the quarter thanks to loan growth, asset sensitivity and fewer energy book concerns. It is a "prime example" of how higher deposit betas don't necessarily exclude margin expansion, they added.

But banks in general may show "more material" increases in deposit pricing, according to the analysts, particularly in the Northeast and Mid-Atlantic where many have heavier commercial real estate concentrations, as well as among ethnic banks that traditionally experience higher pricing. They downgraded the stock rating of Souderton-based Univest Corp. of Pennsylvania to "market perform" from "outperform," partly due to deposit cost concerns. They noted that the third quarter is typically Univest's slowest loan-growth period, and it has a buildup in municipal deposits that could pressure net interest margin. The price target is $32.

The KBW analysts also lowered Community Bankers Trust Corp. to "market perform" from "outperform," now that the stock price has passed the $9 target. The Richmond, Va.-based company's stock was approximately $7.25 at the start of the year. It closed at $9.10 on Oct. 3.

The analysts similarly downgraded American National Bankshares Inc. to "market perform" from "outperform." The Danville, Va.-based company's stock closed at $42.10 on Oct. 3, passing the $39 price target.

Industry report

* And Marty Mosby, in an email accompanying Vining Sparks' September review of large-cap U.S. banks, noted that though "geopolitical tensions, falling interest rates, and a continued stalemate in Washington" have been a drag on stocks, the lower bound for the current trading range nevertheless seems to be "at a much higher level."

He also touched on Wells Fargo & Co. CEO Tim Sloan's recent testimony before the Senate Banking Committee. The analyst wrote: "To be clear, there was no winning ... but, we believe that Mr. Sloan survived and in doing so probably solidified his position as the new leader of WFC." The analyst recommends keeping an eye out for a good entry point to invest in 2018.

Also expected to earn "significantly above the market's [2018] expectation" are Huntington Bancshares Inc., KeyCorp and SunTrust Banks Inc. The three are rated "strong buy."