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Merion Capital downgrades Home BancShares


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Merion Capital downgrades Home BancShares


* Merion Capital Group analyst Joe Gladue downgraded Home BancShares Inc. to "neutral" from "outperform" due to valuation.

Gladue thinks the premium the company trades at is well-deserved due to its efficiency, growth and profitability.

He also noted the company's fourth-quarter 2016 earnings results beat his estimate and that of the Street, but that was primarily due to a lower loan provision caused by the recovery of a previous charge-off.

However, without these major drives, Gladue thinks the company's fourth-quarter results fell within expectations.

He expects the company to continue performing well, and he increased his target price to $27 from $23.


* Sandler O'Neill & Partners analyst Stephen Scouten upgraded Simmons First National Corp. to "hold" from "sell" following its fourth-quarter earnings result. He also increased his price target to $62 from $61.

The analyst was impressed by the company's 16.4% net loan growth but noted that operating expenses were higher than expected. However, he believes Simmons is gaining momentum with its improved loan growth and fee income opportunity.

Scouten also believes the two pending acquisitions by Simmons First would positively affect growth for the company to some degree. In particular, he thinks benefits from the Southwest Bancorp Inc. deal would be felt in mid-2018 at the earliest. However, the uncertainty in closing the deals, such as the delay in the Hardeman County Investment Co. Inc. deal, hangs over the company's shares.

* Due to valuation, Hilliard Lyons analyst Andrew Stapp upgraded Community Trust Bancorp Inc. from "underperform" to "neutral," while maintaining his $44 price target.

The analyst noted that the company's fourth-quarter 2016 results were lower than his estimate, and that of the Street, and noted the increase in the company's operating noninterest expenses, which he attributes primarily to high personnel expenses, as a downside of its fourth-quarter results.

However, he also noted the company's net interest income increased 0.6% over the linked quarter, while average earning assets rose 0.7%. Operating noninterest income dipped 1.7%, which was slightly higher than his estimate.

* Vining Sparks analyst Marty Mosby upgraded KeyCorp to "strong buy" from "market outperform" following its fourth-quarter 2016 earnings results. The analyst noted the increase on the company’s return on tangible common equity from 10% to 12% from the year-ago period as excess capital was used for the First Niagara Financial Group Inc. deal, which closed in July, and synergies are beginning to be realized.

Mosby increased his price target to $22 from $21.

Notable Reiteration

* Sandler O'Neill & Partners analyst R. Scott Siefers maintained his rating of "hold" for TCF Financial Corp. amid the Consumer Financial Protection Bureau's lawsuit against the company regarding alleged overdraft practices. Siefers also maintained his price target of $20.

Siefers noted that the lawsuit "formalizes the seriousness of the issue," which had been disclosed for more than a year.

He added that, whether or not the new presidential administration will loosen regulatory policies that could potentially lessen the severity of the issue for the company, Siefers thinks the consequences of the issue would still affect profitability in the near-term.