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Hovde Group downgrades Opus Bank; Merion Capital upgrades WSFS Financial


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Hovde Group downgrades Opus Bank; Merion Capital upgrades WSFS Financial


* Hovde Group analyst Brian Zabora downgraded Irvine, Calif.-based Opus Bank to "market perform" from "outperform." Zabora cited the company's current credit deterioration and its capital raise as having negative effects on the stock price. The downgrade came amid the company's hiring of a new chief credit officer, as well as the initiation of a review of the loan portfolio by a third-party loan review firm.

"It is possible the company’s new Chief Credit Officer and the third-party loan review firm have identified and reserved for the loss content in the portfolio, but we feel at this point there is too much uncertainty," he wrote.

* Raymond James analyst Daniel Cardenas downgraded Stillwater, Okla.-based Southwest Bancorp Inc. to "underperform" from "market perform" due to its pending deal with Simmons First National Corp.

In an earlier report, Raymond James also downgraded Simmons First, noting that its three pending acquisitions pose an "execution risk." Southwest's downgrade is tied to the expected performance of Simmons First.

However, the company reported 2016 fourth-quarter EPS of 33 cents, higher than Cardenas' estimate of 27 cents and the consensus estimate of 28 cents. The analyst attributed this to lower-than-expected provisions and core operating expenses.

* Due to valuation, Sandler O'Neill & Partners analyst Stephen Scouten downgraded Atlanta-based Atlantic Capital Bancshares Inc. to "hold" from "buy," while maintaining his price target of $20.

His price target is a mix of where the company should trade on an earnings basis and what the bank could potentially get from a sale, but Scouten added that there is "obviously no visibility into a potential sale here."

Scouten noted that the company reported lower-than-expected core earnings, which he related to a $2 million reserve on a credit that was downgraded and expenses for closing two branches. However, he also believes the company can deliver modest operating leverage in 2017, assuming that its loan growth increases and costs are kept in check.

* Also at Sandler, analyst Frank Schiraldi downgraded Toms River, N.J.-based OceanFirst Financial Corp. to "hold" from "buy" due to valuation. Schiraldi also maintained his $32 price target.

The analyst noted the company is currently trading at 2.3x tangible book value per share and 14.3x his 2018 EPS estimate. He also thinks the company has strong assets, including its commercial loan portfolio and deposit franchise, which allow the company to hit its goals of 1.05% return on assets and 12% return on equity by year-end.


* Merion Capital Group analyst Joe Gladue upgraded Wilmington, Del.-based WSFS Financial Corp. to "outperform" from "neutral." Gladue increased his price target to $52 from $36.

Gladue noted the company is trading at 21.9x trailing-12-months EPS and 272.2% of tangible book value, which are "modest premiums" compared to peers. He also noted that the company reported good 2016 fourth-quarter results though a higher-than-expected loan loss provision saw the company miss his EPS estimate by 2 cents with a reported 56 cents per share.

* Gladue also upgraded Fairfax, Va.-based Freedom Bank of Virginia to "outperform" from "neutral." He noted that this quarter was "characterized by strong loan growth and solid mortgage banking income." Gladue also increased his price target to $13.50 from $10.

Gladue noted that the company operates in attractive markets that allow the company to grow earnings faster than peers while maintaining better asset quality, warranting a premium valuation. Freedom Bank is trading at 126.7% of tangible book value and 24.4x trailing-12-months EPS, the analyst noted.

* Gabelli & Co. analyst Steve Comery upgraded State Bank Financial Corp. to "buy" from "hold." Comery believes the company is performing well, with its two acquisitions that raised its assets to $4 billion, its excellent credit performance and its attractive market.

Comery pondered the potential deployment of excess capital at the Atlanta-based company, which has a common equity Tier 1 ratio of 14.76%. "Given the company's already relatively-high dividend yield, we continue to anticipate pursuit of an acquisition and think a fee-based target is more likely than a traditional depository institution due to better alignment with the company's pursuit of operating efficiency," he wrote.