NEW YORK (TheStreet) -- Long-term investors are looking at a golden opportunity to load up on shares of FirstMerit (FMER) of Akron, Ohio, according to Oppenheimer analyst Terry McEvoy, who sees 32% upside potential for the shares over the next 18 months.
Shares of the bank have pulled back 11% this year through Tuesday's close at $19.76, which the analyst attributes in part to "confusion" over the comments from FirstMerit executives last week about the company's outlook for 2014.
FirstMerit had $23.9 billion in total assets as of Dec. 31, with 412 branches in Ohio, Michigan, Wisconsin, Illinois and Pennsylvania. The company last April completed its acquisition of Citizens Republic Bancorp of Flint, Mich., which brought on $9.6 billion in assets and 219 branches. FirstMerit also has undergone a major expansion in the Chicago market, picking up 46 branches in the area during 2010.
The company cut expenses in 2013 by consolidating eight branches and CEO Paul Greig said last week that FirstMerit would consolidate another 26 branches during the first half of 2014.
Greig, during FirstMerit's earnings call on Jan. 28, said the bank's actions to cut costs would lead this year to "total additional expense reduction of $18 million on a full-year run rate and raise the total merger cost savings from $59 million to $77 million, or an increase of 31%," according to a transcript provided by Thomson Reuters.
"We initially forecast merger-related cost savings of 22% of Citizens' expense base. These additional expense reductions increase the total cost savings to 29% of their original expense base," Greig added.