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FIG Partners downgrades First NBC, CU Bancorp

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FIG Partners downgrades First NBC, CU Bancorp

Downgrades

* FIG Partners analyst Christopher Marinac downgraded New Orleans-based First NBC Bank Holding Co. to "market-perform" from "outperform," with the price target at $5.50.

The downgrade was due to lack of management changes and a negative FDIC call report. Marinac noted that repositioning with a new CEO and CFO will require additional capital. He has factored in his forecast $200 million in additional capital at an equity issue price of $4.00 by mid-2017.

The analyst also noted that the company's Tier 1 leverage ratio fell below 5%, amid the pending branch sale to Whitney Bank. He projected the company's capital ratio to increase following this deal's completion but thinks the additional credit provisions and deferred tax assets impairment would affect the company's capital needs.

"There is upside once leadership and capital questions have been answered," he wrote.

* Also at FIG Partners, analyst Timothy Coffey downgraded CU Bancorp to "market-perform" from "outperform." The Los Angeles-based company reported 2016 fourth-quarter EPS of 39 cents, higher than the analyst's estimate of 35 cents and the non-FIG Partners consensus estimate of 36 cents. The analyst increased his price target to $40 from $35.

The downgrade was based on Coffey's estimates of the company's earning power in a higher rate environment, as well as the company's overall franchise value reflecting its consent order over Bank Secrecy Act/anti-money laundering issues. The analyst thinks the consent order could hinder the "ultimate appreciation of the stock."

Upgrades

* Compass Point Research & Trading LLC analyst Laurie Havener Hunsicker upgraded Kearny Financial Corp. to "buy" from "neutral." She also increased the price target to $17 from $16.

Hunsicker noted that the Fairfield, N.J.-based company "continues to be one of the most attractively priced" on a price-to-tangible book basis, trading at 128% of tangible book value. She also thinks its management has efficiently run the company, and she projected that the company would be a "desirable franchise" if it decides to pursue a sale after its three-year conversion anniversary in 2018.

* Hunsicker also upgraded Pittsfield, Mass.-based Berkshire Hills Bancorp Inc. to "neutral" from "sell" and increased the price target to $33 from $29. She said the company' stock will continue to trade at current levels as it prepares to cross the $10 billion-asset threshold.

The analyst projected the company's next acquisition to be outside the 5% tangible book dilution and five-year earnback parameters but noted that "while management won't commit to staying under the 5% hit to tangible book scenario, we believe they will actually be respectful of tangible book dilution."

Hunsicker also noted the company's acquisition of Firestone Financial Corp. in 2015, deeming it as an out-of-market strategy for the company. "We remain cautious on this and other potential similar acquisitions that may occur going forward," she said.