Upgrade
* David Long of Raymond James upgraded Wayzata, Minn.-based TCF Financial Corp.'s stock rating to "outperform" from "market perform" and set a price target of $30.
The analyst noted the "bullish-toned" investor meetings with Chairman, President and CEO Craig Dahl and CFO Brian Maass. The analyst also raised TCF Financial's EPS estimates by 2 cents for 2018 and by 7 cents for 2019 to $1.82 and $1.93, respectively.
Long wrote that TCF Financial "may lack overall [net interest margin] expansion and loan growth in the near-term." However, its focus on positive operating leverage, improving profitability and reducing balance sheet risk, according to the analyst, will garner increasing investor interest.
Downgrades
* Raymond James analyst Michael Rose downgraded his rating on Stuart, Fla.-based Seacoast Banking Corp. of Florida's stock to "market perform" from "outperform," based on its year-to-date and last-year outperformance versus the broader bank group.
The analyst noted that the "strong Florida economic backdrop" is poised to benefit Seacoast Banking's strong organic loan growth. Rose also mentioned Seacoast Banking's low-cost core deposit franchise and lower loan-to-deposit ratio, which should allow for net interest margin expansion despite deposit cost headwinds. According to Rose, Seacoast Banking's "organic growth will continue to be supplemented with accretive M&A, and its data analytics and digital delivery remain competitive advantages to peers and will help drive positive operating leverage and loan/deposit growth."
* Rose also downgraded Florida-based CenterState Bank Corp.'s stock rating to "market perform" from "outperform" due to the stock's strong year-to-date outperformance.
The analyst wrote that CenterState, over the last five years, has done an "enviable job growing the franchise both organically and through a series of strategic and financially attractive acquisitions which was capped off by its first foray outside of the Sunshine State" with its recently announced acquisition of West Point, Ga.-based Charter Financial Corp.
According to Rose, CenterState, as a result of this deal, is now the second-largest bank based in Florida by deposit market share and ranks 21st overall on a pro forma basis in Georgia.
Initiations
* Stephens Inc.'s Matt Olney is now covering Conroe, Texas-based Spirit of Texas Bancshares Inc.'s stock. He gave it an "overweight" rating and a price target of $26.
The analyst views Spirit of Texas Bancshares as an "attractive micro-cap bank with above average organic growth and strong fundamentals that should drive improving profitability in 2018-2019." If Spirit of Texas Bancshares successfully places its excess capital into accretive M&A, it could better its profitability toward peer levels earlier than the Stephens Inc.'s forecast, wrote Olney.
* Coverage of Spirit of Texas Bancshares' stock has also been initiated by Keefe Bruyette & Woods analyst Brady Gailey, with an "outperform" rating and a $25 price target.
The analyst wrote that Spirit of Texas Bancshares recently closed its IPO at $21 per share and that the company "exhibits many sought-after qualities such as strong insider ownership, a scalable infrastructure, nice fee-income businesses, clean credit quality and ample organic and acquisitive growth opportunities in attractive Texas geographies, such as Houston and Dallas."
* Brett Rabatin of Piper Jaffray also started coverage of Spirit of Texas Bancshares' stock. He has a "neutral" rating and a price target of $23 for the company.
The analyst expects Spirit of Texas Bancshares' profitability to improve toward peer levels over the next two years as management uses capital and organic growth results in operating leverage.
