Zacks Bull and Bear of the Day Highlights: Natural Resource Partners, Hercules Technology, JPMorgan Chase & Co., U.S. Bancorp and BB&T

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Jan 11, 2011, 09:39 ET

CHICAGO, Jan. 11, 2011 /PRNewswire/ -- Zacks Equity Research highlights: Natural Resource Partners (NYSE: NRP) as the Bull of the Day and Hercules Technology (Nasdaq: HTGC) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on JPMorgan Chase & Co. (NYSE: JPM), U.S. Bancorp (NYSE: USB) and BB&T Corporation (NYSE: BBT).

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Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.

Here is a synopsis of all five stocks:

Bull of the Day:

Natural Resource Partners (NYSE: NRP) had an impressive third quarter with earnings and revenue beating Zacks Consensus Estimates. Going forward, we expect the partnership to benefit from the improvement in coal market fundamentals, as well as recent acquisitions, its strong liquidity position and solid quarterly results.

We note that the partnership's strategy of growth through acquisition offers long-term upside to unit-holders. Further, we believe the partnership will continue to grow its distributions in the future, driven by increased cash flows from its coal royalties business and the cancellation of the incentive distribution rights.

We have upgraded our recommendation on the stock to Outperform on the strength of Natural Resource's robust quarterly results together with a promising distribution growth outlook going forward.

Bear of the Day:

We are downgrading our recommendation on Hercules Technology (Nasdaq: HTGC) to Underperform from Neutral based on its rising expenses and weak fundamentals. Third quarter distributable net operating income came in ahead of the Zacks Consensus Estimate but remained below the prior-year quarter.

Our six-month target price of $9.50 per share equates to about 11.7x our distributable net operating income (DNOI) estimate for 2010. This price target implies an 8.3% expected negative return over that period, which is consistent with our long-term Underperform recommendation.

The quantitative Zacks Rank for Hercules is currently #5, indicating a significant likelihood of downward pressure on the shares over the near term.

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2011 Bank Failures Start with 2

The failed banks are:

Orlando, Florida-based First Commercial Bank of Florida, with total assets of about $598.5 million and total deposits of about $529.6 million as of September 30, 2010.

Scottsdale, Arizona-based Legacy Bank with about $150.6 million in total assets and $125.9 million in total deposits as of September 30, 2010.

These bank failures represent another blow to the Federal Deposit Insurance Corporation (FDIC) fund meant for protecting customer accounts, as it has been appointed receiver for these banks.

The FDIC insures deposits in 7,760 banks and savings associations in the country as well as promotes the safety and soundness of these institutions. When a bank collapses, the FDIC reimburses deposits of up to $250,000 per account.

Though the FDIC has managed to shore up its deposit insurance fund during the last few quarters, the outbreak of bank failures has tested its limits. As of September 30, 2010, the fund remained in the red with a deficit of $8 billion despite adding $7.2 billion during the quarter.

The failure of First Commercial Bank of Florida is expected to cost the FDIC about $78.0 million, and Legacy Bank will cost about $27.9 million.

Boca Raton, Florida-based First Southern Bank agreed to assume the assets and deposits of First Commercial Bank of Florida. Conjointly, FDIC and First Southern Bank will share losses on $484.3 million of First Commercial Bank of Florida's assets.

St. Louis, Missouri-based Enterprise Bank & Trust has agreed to assume the assets and deposits of Legacy Bank. The FDIC and Enterprise Bank & Trust have agreed to share losses on $119.8 million of Legacy Bank's assets.

In the third quarter of 2010, the number of banks on the FDIC's list of problem institutions grew to 860 from 829 in the previous quarter and 552 in the year-ago quarter. This is the highest since the savings and loan crisis in the early 1990s.

Banks with high exposure to the problem list are most likely to crash, though some may survive and pull out of the crisis. As of now, only less than a quarter of the banks on FDIC's problem list have actually failed. This ratio, however, is likely to change. While the list is increasing gradually, bank failures are snowballing.

Increasing loan losses on commercial real estate are expected to lead to hundreds of bank failures in the next few years. The FDIC expects bank failures to cost about $52 billion over the next three years.

The failure of Washington Mutual in 2008 was the largest in the U.S. banking history. It was acquired by JPMorgan Chase & Co. (NYSE: JPM). The other major acquirers of failed institutions since 2008 include U.S. Bancorp (NYSE: USB) and BB&T Corporation (NYSE: BBT).

Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.

About the Bull and Bear of the Day

Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.

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