UPDATE: DA Davidson Upgrades Eagle Bancorp Montana to Buy; Branch Purchase Expedites Capital Leverage

DA Davidson raises its rating on Eagle Bancorp Montana

from Neutral to Buy and raises its price target from $11 to $13. DA Davidson comments, "Eagle Bancorp announced the signing of a definitive agreement to purchase seven branch locations from Sterling Savings Bank, a subsidiary of Sterling Financial Corp. (STSA- BUY- $19.40), significantly expanding its footprint throughout Southern Montana. Pro-forma branch count will grow to 13 (from 6) at the close of the deal, slated for EBMT's fiscal Q2'13. … According to the company, Eagle's TCE will adjust from 16% to 9%. The loan to deposit ratio moves from the low 80% range into the mid 50% range, offering ample opportunity for loan growth but in the near term will likely drive NIM compression (although absolute spread income levels should increase)." EBMT closed at $10.09 on Monday.