UPDATE: Miller Tabak Downgrades First Midwest Bancorp to Sell
Miller Tabak has published a research report on First Midwest Bancorp (NASDAQ: FMBI) after the company was downgraded today from Neutral to Sell.
In the report, Miller Tabak writes, "As FMBI's stock price has raced ahead of other regional banks' in recent weeks, we remain concerned about FMBI's underlying asset quality and credit metrics. While we can hope that FMBI begins to show accelerated improvement in non-performing assets, 3Q 2011 NPAs were only (3%) below 2Q, and both net charge-offs and net new NPAs increased sharply from 2Q 2011. With loss reserves only 67% of NPAs -- nicely up from a low of 48% in 4Q 2009, but still well below the 110% average of our regional bank coverage -- we believe FMBI has above-average risk if we see a new recession or a further slowing in the Midwest economy in 2012. Furthermore, FMBI's "deadweight ratio" -- NPAs as percentage of earning assets -- at 2.64%, remains one of the highest in our bank coverage. Put simply, compared with other regional banks, we think FMBI has about an equal upside but potentially greater downside risk."
Miller Tabak has initiated a $9.93 price target on First Midwest Bancorp, which is currently trading down $0.20 from Friday's $11.25 closing price.
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