Sterne Agee Reiterates Buy, $17 On Washington Federal

In a note out today, Sterne Agee reiterated a buy rating and $17 price target on regional bank Washington Federal WFSL, implying substantial upside in shares of the Seattle-based bank following its acquisition of a failed Arizona-based rival. "In addition to the deal in spite of a MOU (implying regulatory confidence), we note the addition of assets should be a short-term modest positive for earning assets given what was less than stellar mortgage origination activity last quarter and the lack of anticipated balance sheet/loan growth. Further, while investors typically assume WFSL is less likely to be an acquiror than other commercial banks in the PacNW, the transaction lends some credence to WFSL being a player in consolidation as healthy bank M&A eventually returns. The transaction nonetheless is a smaller one and is not likely to impact the overall financial performance of WFSL significantly," Sterne Agee said in the note.