Meridian Interstate Bancorp (EBSB) in East Boston, Mass., is planning a second-step conversion.
The $2.7 billion-asset company said in a regulatory filing last week that, after the conversion, its bank will become a wholly owned subsidiary of a holding company that will be named Meridian Bancorp.
Meridian's book value could range from 88% to 109% following the conversion, Damon DelMonte, an analyst at Keefe, Bruyette & Woods, wrote in a Tuesday note to clients, citing the company's shelf registration. DelMonte also raised his 12-month price target for Meridian to $28 a share from $23.
Since Meridian operates in around Boston, DelMonte wrote that he expects the company to benefit from "a strong depositor showing" and will be able to produce strong levels of interest from depositors in its subscription offering. He warned that there are risks to his price target, including uncertainty over interest rates, asset quality and the successful deployment of excess capital.
"If the bank fails to successfully address these risks, future earnings and the value of the franchise may be negatively impacted," he wrote.
