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Evercore downgrades Zions; Stephens upgrades Independent Bank Group

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Evercore downgrades Zions; Stephens upgrades Independent Bank Group

Downgrades

Evercore ISI analyst John Pancari downgraded Salt Lake City-basedZions Bancorp. to "hold"from "buy," but maintained his 12-month price target of $27.

The analyst also lowered his 2016 EPS estimate to $1.70 from$1.72, primarily due to a higher loanloss provision, but maintained his 2017 EPS estimate of $1.97.

The company reported first-quarter EPS excluding extraordinaryitems of 38 cents — or a core 39 cents — beating the analyst's estimate of 37 centsper share, because of a lower tax rate, higher net interest income and higher fees,partly offset by a higher loan loss provision. Pancari noted that company management'stone was guarded on energy loss content and loan loss provisioning during the earningsconference call, whichhe thought was surprising following the recent rebound in oil prices and a somewhatencouraging message during Zions' investorday.

As a result, the analyst thinks persistent energy uncertaintyand recent solid outperformance in the shares can pose a risk to its valuation inthe near term.


Piper Jaffray analyst Peyton Green downgraded Moultrie, Ga.-basedAmeris Bancorp to "neutral"from "overweight," based on valuation.

The analyst reiterated the company's 2016 and 2017 EPS estimatesof $2.10 and $2.32, respectively, and introduced a 2018 EPS estimate of $2.55.

The analyst noted that the company is currently trading at 13.8x2017 estimated EPS and 2.44x tangible book value per share. The analyst believesthe recent rally in price has left the shares fairly valued, considering the decreasein its 2016 and 2017 EPS estimates by 11% and 9%, respectively, on a year-to-datebasis. However, Green's model suggests that the company will continue to generatereturn on assets of 1.15% and return on tangible common equity of 15.4%.


Timothy Coffey, a FIG Partners LLC analyst, downgraded his ratingon Billings, Mont.-based First InterstateBancSystem Inc. to "market-perform" from "outperform,"but maintained his price target of $30.50.

The analyst also lowered his 2016 and 2017 EPS estimates to $2.13from $2.18, and to $2.29 from $2.37, respectively.

Coffey's updated rating reflects a more conservative approachtoward the company's forward valuation given uncertainties in its energy portfolio.The analyst noted that the company's oil and gas credits, both committed and unfunded,totaled less than $95 million, on a $5.2 billion loan portfolio. However, investors'concerns regarding bank exposure to the sector in general can limit the company'snear-term multiple expansion.

The analyst noted that the company's first-quarter EPS of 45 cents missedhis projection of 50 cents per share.

The analyst does not expect the company's energy exposure toderail management's capital strategies going forward. He highlighted that the companyrecently increased itscash dividend to 22 cents per share; repurchased 948,000 shares during the firstquarter; and announced its pending acquisitionof Bigfork, Mont.-based Flathead Bankof Bigfork Montana in early April. He believes that the company willcontinue to consider more deals and address dividend and buyback opportunities asthey come up.

Upgrades

Stephens Inc. analyst Matt Olney upgraded McKinney, Texas-basedIndependent Bank Group Inc.to "overweight" from "equal-weight" and increased his 12-monthprice target to $43 from $34.

His operating 2016 and 2017 EPS estimates are $2.76 and $3.08,respectively.

The analyst noted that the company reported first-quarter operatingEPS of 72 cents, above the consensus estimate of 64 cents. Furthermore, managementprovided additional details on energy credit during its earnings conference call,which in the analyst's view suggested that negative credit migration was limited.

The company reportedan energy loan balance of $185.9 million, or 4.5% of total loans, down 9.3% comparedto $204.9 million at the end of the fourth quarter of 2015. Also, the analyst notedthat the company's nonperforming energy loans increased to $24 million from $7 million,while the energy allowance on loans and leases was 5%, an increase from 3.7%.

However, he is encouraged that energy net charge-offs will belimited and believes investors will refocus the company's valuation on EPS outlook.


Merion Capital Group analyst Joe Gladue upgraded Ellicott City,Md.-based Howard Bancorp Inc.to "outperform" from "neutral," while maintaining his 12-monthprice target of $14.

The analyst also reduced his 2016 EPS estimate to 73 cents from87 cents, primarily reflecting a lower net interest margin and higher expenses,and 2017 EPS estimate to 96 cents from 97 cents, while he introduced his initial2018 EPS estimate of $1.13.

The analyst believes that the company will show above-averageearnings growth relative to peers over the next few years, and trade at a modestpremium to the current peer valuations of 14.6x trailing-12-months EPS and 113.2%of tangible book value.