Shares of Trustmark Corp. rose on Monday after an analyst upgraded the stock, saying the regional bank has cash to make potentially lucrative acquisitions after repaying federal bailout money.
Keefe, Bruyette & Woods analyst Brian Klock upgraded the stock to "Outperform" from "Market Perform" in part due to what he called the bank's "attractive valuation compared to peers."
But Klock also wrote in a research note that the parent of Trustmark Bank has "substantial dry powder" after recently raising net proceeds of $109.3 million through a stock offering, and also repaying the Treasury Department's Troubled Asset Relief Program. Last week, Jackson, Miss.-based Trustmark said it had paid back the agency's $215 million investment through a buyback of all 215,000 shares of preferred stock that the government had been issued.
The repayment leaves Trustmark with a "war chest of capital" and strong balance sheet, Klock wrote. The bank is in position to participate in potential government-brokered deals under which Trustmark could acquire troubled banks, he said.
Trustmark, which operates more than 150 offices in Florida, Mississippi, Tennessee and Texas, also could add at least $1 billion in assets to its balance sheet and boost earnings through "organic growth and acquisition," Klock said.
In upgrading the stock, Klock raised his price target for Trustmark's shares to $24 from $21.
Shares of Trustmark rose $1.02, or 5 percent, to $21.29 in midday trading.