Upgrades

* In light of regulatory reform delays, yield curve flattening and reserves at "near trough" levels, Raymond James analysts think potential positive catalysts for bank stocks are declining.

That said, they upgraded First Horizon National Corp. and UMB Financial Corp., both to "outperform" from "market perform."

Since the May 4 announcement of its pending acquisition of Capital Bank Financial Corp., Memphis, Tenn.-based First Horizon's stock price has fallen from its May 3 close of $18.82 — and not fully recovered. But the analysts think "sentiment ... has bottomed" and gave it a price target of $20.

Kansas City, Mo.-based UMB Financial also had a recent selloff. It reported second-quarter earnings after markets closed July 25, and since then has seen its stock price fall from $75.46 to $69.12 as of Aug. 9. But the analysts gave it a target price of $75, noting that its health savings accounts business is likely to attract attention as investors focus on deposit bases and betas.

Downgrades

* Meanwhile, the Raymond James analysts downgraded Cullen/Frost Bankers Inc., Howard Bancorp Inc., Investar Holding Corp., American River Bankshares, Commerce Bancshares Inc., Hilltop Holdings Inc., Prosperity Bancshares Inc. and Territorial Bancorp Inc.

Cullen/Frost, despite having a low loan-to-deposit ratio and a lot of noninterest-bearing deposits, has competitively raised deposit rates. The San Antonio, Texas-based company's rivals may end up following its lead, according to the analysts, "perhaps more quickly than is currently believed/modeled for." Still, the higher funding cost will hit near- to intermediate-term results. They downgraded the stock to "underperform" from "market perform."

Ellicott City, Md.-based Howard Bancorp's stock was lowered to "outperform" from "strong buy." The target price went down $2 to $21.

The stock of Baton Rouge, La.-based Investar was downgraded to "market perform" from "outperform."

The rest were lowered to "underperform" from "market perform." The analysts tagged Prosperity as "potentially at risk" from the increase in deposit pricing, and M&A as "increasingly unlikely" despite the company's continuing review of potential deals.

Initiations

* Compass Point's William Ryan initiated coverage of Capital One Financial Corp., rating it "neutral," with a price target of $90.

The rating reflects the credit stabilization in the company's energy and taxi medallion books, the potential credit leverage as recent vintages in its domestic card portfolio pass peak seasoning, and the growth opportunities from the Cabela's deal. It also reflects its above-peer subprime exposure.

The analyst further wrote: "Capital One has appropriately dialed back its growth in the domestic card business while some competitors appear to be accelerating their growth which we believe could have ramifications on the macro credit outlook in 2018."

* Mike Mayo, now with Wells Fargo Securities, has initiated coverage of four banks: Zions Bancorp., Northern Trust Corp., State Street Corp. and Bank of New York Mellon Corp.

Zions was rated "outperform," with a price target of $56. Mayo commented on the company's redundancies in systems and personnel — "a 1990s-type structure in the 2010s." He thinks Zions could lower headcount by an additional 5% and that, if the bank manages to be released from the Comprehensive Capital Analysis and Review, it could get "a further 5-10% permanent EPS boost."

State Street was also rated "outperform." The analyst calculates the Boston-based company could have a return on equity of 15% by 2019. Mayo gave it a price target of $115.

And Mayo rated Northern Trust and BNY Mellon "market perform," with price targets of $90 and $55, respectively. He called Northern Trust a "gem of a franchise [but with] a worse-than-peer pretax margin, which stagnated for ten quarters and will likely not increase by as much as expected." BNY Mellon, he thinks, has picked most of the low-hanging fruit in cost savings, and while new CEO Charlie Scharf is "capable," he also faces an "entrenched culture that may take time to evolve."

The analyst also resumed coverage of Citigroup Inc. (rated "outperform," with a price target of $90); JPMorgan Chase & Co. ("outperform," $110); Bank of America Corp. ("outperform," $30); SunTrust Banks Inc. ("outperform," $70); U.S. Bancorp ("market perform," $56); BB&T Corp. ("market perform," $44); Comerica Inc. ("market perform," $73); Fifth Third Bancorp ("market perform," $27); KeyCorp ("market perform," $19); PNC Financial Services Group Inc. ("market perform," $119); M&T Bank Corp. ("market perform," $170); and Regions Financial Corp. ("market perform," $16).

Citi, in particular, was added to Wells Fargo's priority stock list. "Performance metrics should improve from poor to average," Mayo wrote — and could even be good if shareholders encourage more restructuring, "such as the chairman leaving post 2018." He expects the stock price to hit $140 by 2022.

Notable reiteration

* Piper Jaffray's Matthew Clark and Nathan Race maintained their "overweight" rating of First Interstate BancSystem Inc. following recent conversations with its management.

The analysts said cost savings from the company's Cascade Bancorp acquisition are likely to be higher than expected. Management is also open to more M&A, preferably with targets holding more than $1 billion in assets and located in Washington, Oregon, Idaho and South Dakota. "CEO Kevin Riley is seeing the most (and saying no to a lot of) targets for sale in his career which has been a function of older managements / boards, better valuations, and stronger balance sheets," they wrote.

The stock has a price target of $44.