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Piper Rolls Out Regional Bank Coverage: Sector Hitting Highs

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Piper Rolls Out Regional Bank Coverage: Sector Hitting Highs
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With a major regional bank fund hitting a 52-week high earlier this week, Piper Jaffray rolled out new coverage on nine of the institutions on Friday.

All but one of the banks were rated Overweight in individual reports from Piper's Matthew Clark and Brett Rabatin.

The Banking Industry

As an aside, the largest regional bank exchange-traded fund, SPDR KBW Regional Banking (ETF) (NYSE: KRE) recently hit a 52-week high and, as of Friday, was up nearly 10 percent year-to-date, versus less than 2 percent for the S&P 500.

"Interest rates are creeping up and regional banks could soon find themselves supported both by fund managers and the press," market consultant Skip Raschke wrote in a commentary on The Street.

Related Link: Citrix Continues To Rise After Multiple Wall Street Frims Upgrade

Regional Banks And Oil

Four of the regionals rated Overweight by Piper are located in the nation's oil patch.

"Assuming oil prices don't go lower, investors will become more comfortable with credit quality trends in a few quarters," Rabatin said of Tulsa, Oklahoma-based BOK Financial Corporation (NASDAQ: BOKF), on which he suggested a target of $76.50.

Other oil-patch banks rated Overweight include:

  • Hilltop Holdings Inc. (NYSE: HTH)
  • LegacyTexas Financial Group Inc (NASDAQ: LTXB)
  • Texas Capital Bancshares Inc (NASDAQ: TCBI)

Related Link: How To Get Positive Returns From Oil And Gas Stocks

The Asian Connection

Two of Piper's Overweight regionals have an Asian connection: Pasadena, California-based East West Bancorp, Inc. (NASDAQ: EWBC), which helps with small-business transactions between Asia and the U.S., and Hanmi Financial Corp (NASDAQ: HAFC), focused on California's Korean-American community.

"China and California are two of the world's largest economies," said Piper's Clark, who launched a $50 target on East West.

Additional Overweight Ratings

Clark also offered Overweight ratings on Opus Bank (NASDAQ: OPB) of Irvine, California, and Columbia Banking System Inc (NASDAQ: COLB) of Tacoma, Washington.

Underweighted

The lone Underweight rating on Piper's list: BBCN Bancorp Inc (NASDAQ: BBCN) of Los Angeles, California.

BBCN, also focused on the Korean American market, is rolling out new products at a cost that will cut profits, while facing higher provisions for loan losses, according to Clark.

Image Credit: Public Domain

Latest Ratings for BBCN

DateFirmActionFromTo
Dec 2015Keefe Bruyette & WoodsUpgradesMarket PerformOutperform
Dec 2015PiperJaffrayUpgradesUnderweightNeutral
Jul 2015Keefe Bruyette & WoodsMaintainsMarket Perform

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Posted-In: Asia banking Korea Oil regional banksAnalyst Color Analyst Ratings

 

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