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Sandler downgrades Flagstar Bancorp, Farmers National Banc Corp.

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Sandler downgrades Flagstar Bancorp, Farmers National Banc Corp.

Downgrades

Analyst R.Scott Siefers of Sandler O'Neill & Partners downgraded his stock rating forTroy, Mich.-based FlagstarBancorp Inc. to "hold" from "buy," citing the stock'sstrong performance in the market over the past few months. He added that thecurrent value already factors in the positives for the company, including itsstrong and high-quality earnings performance, improvements in its risk profileand the TARP repayment.

EPSestimates were unchanged at $2.42 for 2016 and $2.50 for 2017, and the 12-monthprice target for the company's stock is $29.50.


Siefersalso downgraded Canfield, Ohio-based Farmers National Banc Corp. to "hold" from"buy," also citing strong performance over the last several months.He also noted that the stock has exceeded the old price target, and establisheda new 12-month price target of $11.50.  

The analystwrote that the company "remains on very good footing," pointing outthat there continues to be a strong loan growth outlook for the company, inaddition to its good fee momentum, low levels of nonperforming assets, goodmanagement team, and stable net interest margin.

EPSestimates for the company are 76 cents for 2016 and 83 cents for 2017.

Initiation

Hovde Groupanalyst Brian Zabora initiated coverage of Independent Bank Corp. with a "market perform"rating, along with a price target of $17.50. EPS estimates were set at $1.04for 2016, $1.12 for 2017, and $1.19 for 2018 — implying core EPS growth of 25%this year, 8% in 2017 and 6% in 2018.

Zaboraexpects the company to repurchase shares and to see a return on assets ofroughly 1.0% and 7-8% loan growth. He forecasts modest net interest margincompression in the near-term as yields on new loan originations are below theoverall portfolio yield, but he also expects a mix shift with lower yieldingcash/investment securities being replaced by higher yielding loans.

The analystalso pointed out that Independent has managed to bring down costs steadilysince 2009, and projected an efficiency ratio of 73.4% for 2016 and 70.5% for2017.