Market Overview

First Mid-Illinois Bancshares Trading At Attractive Entry Point, DA Davidson Upgrades

Share:

First Mid-Illinois Bancshares, Inc. (NASDAQ: FMBH) shares have declined 11 percent in the year-to-date period compared to the 2 percent gain for the Nasdaq Bank Index, an analyst at DA Davidson noted.

The Analyst

DA Davidson analyst Kevin Reevey upgraded First Mid-Illinois from Neutral to Buy, with a 12-18 month price target of $43.

The Thesis

First Mid-Illinois, which trades at a 1 percent discount to its peer group,  deserves a premium multiple, given its strong operating metrics and enhanced growth trajectory from the pending First BancTrust Corporation (OTC: FIRT) deal, Reevey said in a note.

Reevey estimates the First BancTrust deal to add 5.5 percent to First Mid-Illinois' 2019 earnings per share, which assumes the 28 percent cost savings the latter is envisaging is achievable. The doability of the cost savings target, according to Reevey, is due to the in-market nature of the deal and the management's proven acquisition experience.

DA Davidson assumes healthy organic period-end loan growth of about 6 percent for 2018, in line with the management guidance of 5-8 percent.

"Furthermore, FMBH remains on the M&A hunt, mainly for banks with attractive deposit franchises as well as banks in higher-growth markets to drive lending growth, mostly in the $400M-$1B asset size range," the firm said.

Reevey sees high-quality and low-cost deposit franchise to support loan growth, with 52 percent of its deposit base comprising of non-interest and interest-bearing checking accounts, and core deposits accounting for 85 percent of total deposits.

The Price Action

Shares of First Mid-Illinois are down over 7 percent over the past year.

Related Links:

The Big Bank Q4 Earnings Roundup: Tax Charges Drag Bottom Lines

Running To Regional Bank ETFs

Latest Ratings for FMBH

DateFirmActionFromTo
Oct 2018Raymond JamesMaintainsOutperformOutperform
Jul 2018Raymond JamesInitiates Coverage OnOutperform
Jun 2018DA DavidsonMaintainsBuyBuy

View More Analyst Ratings for FMBH
View the Latest Analyst Ratings

Posted-In: DA Davidson Kevin ReeveyAnalyst Color Upgrades Analyst Ratings

 

Related Articles (FMBH + FIRT)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
SCCOBradescoUpgrades42.0
PFODFJefferiesUpgrades0.0
TEDUJefferiesDowngrades5.8
INVVYJefferiesDowngrades0.0
UMPQPiperJaffrayUpgrades20.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Helios And Matheson CEO: MoviePass Open To Netflix, Amazon Prime Partnerships

DA Davidson's Bullish Stance On CSS Industries No Longer Applies