Triumph Financial takes top spot as most richly valued bank stock

Dallas-based Triumph Financial Inc. surpassed Abilene, Texas-based First Financial Bankshares Inc. as the most richly valued U.S. bank stock by price-to-estimated 2023 earnings as of Feb. 16, according to an S&P Global Market Intelligence analysis.

S&P Global Market Intelligence analyzed U.S. banks that appear to be valued more as a multiple of earnings than tangible book value. To be included in this analysis, a company needs to have normalized EPS estimates from at least four analysts available for calendar year 2023. In addition, the bottom 20% of banks by price to tangible book were excluded.

Most richly valued banks

Triumph Financial traded at 26.6x its estimated 2023 EPS, compared to the industry median of 9.8x for the 116 banks included in the analysis. The company boasted one of the best-performing bank stocks in January, booking a month-to-date return of 14.0%.

First Financial slipped to the second spot with its price-to-estimated EPS multiple coming in at 22.8x as of mid-February.

Following the fourth-quarter 2022 earnings season, mean EPS growth estimates for 2023 for 18 of the 20 largest U.S. banks were lower than they were at the end of 2022, according to S&P Global Market Intelligence data. Those institutions included San Francisco-based First Republic Bank and Santa Clara, Calif.-based SVB Financial Group, which are also among the most expensive bank stocks.

First Republic traded at 21.4x its estimated 2023 EPS, while SVB Financial traded at 15.6x. As of Feb. 16, the companies' estimated 2023 EPS were down 25.8% and 23.7%, respectively, compared to their actual full-year 2022 results.

Kalispell, Mont.-based Glacier Bancorp Inc. ranked fourth in this analysis, trading at 17.8x, followed by Kansas City, Mo.-based Commerce Bancshares Inc., trading at 16.4x.

* View index prices at the Index Summary page in S&P Capital IQ Pro. * Create custom stock market charts using the Chart Builder in S&P Capital IQ Pro. * Read some of the day's top news and insights from S&P Global Market Intelligence.

Bank of Hawaii Corp. was also part of the list, trading at 14.5x. Compass Point Research & Trading analyst Laurie Hunsicker in late January downgraded the company to "neutral" from "buy" and trimmed her 2023 EPS estimate to $5.11 from $5.98. Headwinds to Bank of Hawaii's income statement are percolating through nearly almost all line items, the analyst said.

Boston-based Eastern Bankshares Inc. earned a spot on this list as it traded at 12.7x At January-end, J.P. Morgan analyst Janet Lee downgraded Eastern Bankshares to "underweight" from "neutral" and reduced 2023 EPS estimate to $1.15 from $1.58. Lee expects the company's key growth metrics to lag behind its peers. Janney Montgomery Scott analyst Jake Civiello also downgraded the company to "neutral" from "buy" and cut 2023 EPS estimate to $1.20 from $1.63.

Triumph's stock still red over last year

Though they have performed well so far in 2023, Triumph Financial shares still have a negative 34.6% return over the last 12 months. That is significantly worse than the S&P U.S. BMI Banks index's negative 15.5% return and the S&P 500's negative 7.0% return.

Of the 20 most valued banks by price-to-estimated 2023 earnings, 11 have positive returns year to date. Triumph Financial had the highest return through Feb. 16 at 31.3%, while Louisville, Ky.-based Stock Yards Bancorp Inc.'s stock had the lowest at negative 9.9%.