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Banking Essentials Newsletter: January 11th Edition


Banking Essentials Newsletter December 21st Edition


The Road to Basel IV: Navigating the challenge facing European banks


Basel Framework- Utilizing data to analyze the capital position of European banks.


Notable reiterations

FBR & Co. analyst Bob Ramsey reiterated his "outperform"rating for San Diego-based BofI HoldingInc., following its acquisitionof Pacific Western Equipment Finance from Beverly Hills, Calif.-based , a unit of .

The analyst calculated that this business can add 4 cents tothe company's annual operating EPS and believes that the deal is accretive to EPSin the first year, including purchase price and all one-time costs. Ramsey estimatedthat the transaction will generate $2.5 million to $3 million in incremental netincome, based on an average yield of 8% and estimated funding costs of 1%, 1% losses,and 50% efficiency.

Andrew Liesch, a Sandler O'Neill & Partners LP analyst, alsoreiterated his "buy" rating for BofI Holding, along with a price targetof $30, following the dealannouncement. He increased his 2016 and 2017EPS estimates to $2.03 and $2.37, from $2.00 and $2.33, respectively.

Liesch noted that the transaction is positive even though thepurchase is relatively small, with the leases representing roughly 2.5% of the bank'stotal loan book. The analyst believes that the deal has several strategic benefitsfor the company, "including adding some diversification to loan growth througha new commercially-oriented product and providing meaningful entry into the equipmentleasing space." He noted that the Pacific Western Equipment Finance team hasa nationwide platform, which BofI can scale further through its data-oriented approachto new customer acquisition. Liesch believes that it will provide an "untappedsource of growth" for the company.

Discontinued coverage

Mark Palmer, a BTIG LLC analyst, dropped coverage of Troy, Mich.-basedFlagstar Bancorp Inc.due to a reallocation of resources.

His final rating on the company shares is "neutral."

FBR's Ramsey dropped coverage of Allentown, Pa.-based its acquisition by BB&TCorp.