Are These 3 Community Banks Investment Opportunities? Analysts Discuss

Keefe, Bruyette & Woods analysts commented on three community banks Friday.

Analyst Brian Zabora anticipated a modest impact to earnings following CoBiz Financial Inc’s COBZ announcement that its would close its investment banking subsidiary, Green Manning & Bunch as of March 31, 2015.

The unit was only responsible for 3 percent of total revenues. According to Zabora, the company “cited a combination of a focus on recurring revenues for its fee-based business lines and increasing regulatory costs as drivers” as reasons for its closure.

The firm reduced its 2015 and 2016 EPS estimates by $0.01 each to $0.79 and $0.89, respectively.

Zabora felt the stock should trade at a premium valuation to its peers and maintained an Outperform rating with a $13.25 price target.

CoBiz Financial Inc recently traded at $11.39, down 1.68 percent.

Analyst Collyn Gilbert indicated that Dime Community Bancshares, Inc. DCOM “is one of the few multifamily banks we follow where its NIM is likely to stabilize in 2015.”

Gilbert raised  2015 and 2016 EPS estimates to reflect “the improving earnings outlook.”  The positives included 1) assets and liabilities that are “fairly even matched,” improving deposit growth, “stellar credit trends,” and an “attractive dividend yield.”

The price target was raised from $16.00 to $16.50 and the firm maintained a Market Perform rating.

Dime Community Bancshares, Inc. recently traded at $15.64, down 0.13 percent.

Analyst Damon DelMonte said that Horizon Bancorp’s HBNC acquisition of People’s Bancorp would expand “its footprint further into northeast Indiana and southwest Michigan.”

The deal was valued at approximately $73.1 million and would bring pro forma assets to $2.6 billion, according to DelMonte.

“A reasonable valuation multiple, modest earnings accretion and enhanced market positioning all lead us to view this deal favorably,” the analyst concluded.

DelMonte reiterated a Market Perform rating on the stock and raised the price target to $26.

Horizon Bancorp recently traded at $22.58, up 0.07 percent.