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RankingBanking banks overall, which include East
3.35% for 2021 to 3.55% for 2022; it report-
West, reported a median return on average equity
ed a net interest margin of 4.67% for the first
of 16.36%. Asset quality remained pristine. But
quarter 2023. Unlike banks such as SVB that
these top performers had a total shareholder re-
saw long-term bonds go under water as rates rose,
turn for 2022 of just 6.5%, compared to 36.31%
short-term, floating rate loans on The Bancorp’s
for 2021. Overall, the 300 examined banks had a
balance sheet have allowed it to adjust to changes
median return of -5.9%. The biggest banks fared
in the interest rate environment. You’ll find more
the worst, with a median TSR of -19.0%.
about this strategy on pg. 28 of this report.
Rising rates pressured bank stocks last year. As
The Bancorp has taken a unique approach to
of mid-2023, the market has been even harder for
banking. But for most financial institutions, Fitz-
regional banks, including those that traditionally
gibbon sees two characteristics that investors val-
performed well in Bank Director’s RankingBank-
ue today: historically good asset quality and high
ing analysis — Western Alliance Bancorp. and
capital ratios. “Companies with tons and tons of
East West. “Last year, bank stocks, as measured
excess capital,” says Fitzgibbon, “even if they
by the Nasdaq bank index, were down 18%,” says
make a few mistakes, they’re going to be OK, and
Mark Fitzgibbon, managing director and head of
they’re going to have capital to take advantage
financial services research at Piper Sandler & Co.
of the more difficult environment. So, when other
“Five months into the year, we’re down 33%.”
banks are pulling back, they’ll be able to go and
Investors have doubts about an industry char-
make loans at much wider spreads.”
acterized by three recent — and sizable — bank
Raleigh, North Carolina-based First Citizens
failures, along with an uncertain credit outlook as
BancShares, which acquired Silicon Valley Bank
the Federal Reserve continues to fight inflation by
from the Federal Deposit Insurance Corp., has
raising interest rates.
proven to be another exception to the downturn
The Bancorp, with $8 billion in assets, has
in bank stocks in 2023. While it had a -8.4%
been one of the exceptions to the recent carnage
TSR for 2022, its stock rose when it acquired
in bank stock prices. Year-to-date, its stock price
SVB from the Federal Deposit Insurance Corp.
increased 38% through July 26, 2023. The Wilm-
on March 27, and was up 88% for the year, as of
ington, Delaware-based bank leverages a unique
July 26. It ranked second for capital adequacy in
model focused on payments and a banking as a
its peer group of big banks in our analysis, with a
service platform. It ranked No. 16 overall in Bank
TCE ratio of 7.62%. Overall, the now $215 bil-
Director’s analysis.
lion bank ranked 23rd among the largest banks.
Christopher Marinac, director of research at
But for many banks, “investor sentiment’s pret-
Janney Montgomery Scott, says investors like The
ty tough right now,” says Christopher McGratty,
Bancorp’s above-average growth. “Banks are not
head of U.S. bank research at Keefe Bruyette &
necessarily growth vehicles, but when you have
Woods. With its stock price down 5% for the year
a company that is doing better than many other
as of July 26, East West has performed slightly
peers, there are investors who gravitate to that
better than the KBW Nasdaq Regional Banking
because of [the] growth rate,” explains Marinac.
Index. In contrast, the S&P 500 was up 19%
Frank Schiraldi, managing director and senior
research analyst at Piper Sandler, adds that de-
over the same period.
The
bank’s
fundamentals
appear
sound.
posit outflows haven’t been strong at The Ban-
“They’ve got a great balance sheet. They’ve got
corp, and its net interest margin expanded from
very good earnings power, and the valuation is