3 Jan, 2024

Blue Ridge Bankshares became the cheapest US bank stock at year-end 2023

Charlottesville, Va.-based Blue Ridge Bankshares Inc. finished 2023 trading as the cheapest bank in the sector by price to adjusted tangible book value per share, according to an S&P Global Market Intelligence analysis.

Blue Ridge ended the year trading at 40.1% of adjusted tangible book value (TBV), nearly 3 percentage points lower than any other bank in the analysis. After signaling a capital raise in light of more stringent regulatory requirements, Blue Ridge announced definitive agreements for a $150 million private placement on Dec. 22, 2023. Despite a 12.2% return in December, the bank's shares plunged 75.2% for the entire year.

Blue Ridge became the cheapest bank for the first time in the analysis, which began in March 2023.

Only a dozen of the 210 banks in the analysis registered a total return below 10% in December. Just two of those banks — Raleigh, NC-based First Citizens BancShares Inc. and Wilmington, Del.-based The Bancorp Inc. — had negative returns for the month. Both of those banks were up substantially on a year-to-date basis: First Citizens returned 87.7%, which was second-best in the analysis, and The Bancorp appreciated 35.9%, which was 10th.

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S&P Global Market Intelligence analyzed US banks trading on the Nasdaq, NYSE or NYSE American with total assets of greater than $3 billion as of the most recent quarter. The analysis excludes banks with a negative HTM and credit-adjusted TBV, banks in the mutual holding company ownership structure, other operating subsidiaries and banks that completed a mutual bank conversion or reverse merger after Sept. 30, 2023.

HTM and credit-adjusted TBV is calculated as the sum of tangible common equity; unrealized gain or loss from HTM securities, tax-adjusted at the 21% corporate rate; and loss reserves; less nonperforming assets and loans 90 or more days past due but still accruing interest; divided by common shares outstanding.

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Least expensive banks

HomeStreet Inc. had been the cheapest bank in the analysis from April 2023 through November 2023. As of Dec. 29, 2023, the Seattle-based bank was the second-lowest-valued bank at 42.8% of adjusted TBV. HomeStreet was the second-best market performer in December, returning 52.6%.

Fishers, Ind.-based First Internet Bancorp, the third-lowest-valued bank, filed a mixed shelf registration statement on Dec. 19, 2023. Dallas-based First Foundation Inc., ranked fifth, was the top performer by monthly return, shooting up 64.6%.

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The sixth-cheapest bank, Bayonne, NJ-based BCB Bancorp Inc., announced a new president and CEO last month. Los Angeles-based RBB Bancorp, 14th on the list, appointed an interim CFO after the previous executive resigned.

On Dec. 20, 2023, Kearny Financial Corp. announced that it sold $122.2 million of available-for-sale debt securities, resulting in a $12.9 million loss after taxes. The Fairfield, NJ-based bank had the 20th-lowest valuation at the end of the year.

SNL Image Access S&P Global Market Intelligence's calculations for price to adjusted tangible book value as of Dec. 29, 2023.
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Most expensive banks

For the third consecutive month, Honolulu-based Bank of Hawaii Corp. was the highest-valued bank in the analysis. As of Dec. 29, 2023, it traded at 568.2% of adjusted TBV, more than 300 percentage points higher than its price-to-basic TBV because of unrealized losses on held-to-maturity securities. Bank of Hawaii was the most shorted US bank stock trading on a major exchange as of the end of November.

Other banks with a high level of unrealized securities losses not reflected in basic TBV included Michigan City, Ind.-based Horizon Bancorp Inc.; Bank of America Corp.; Ontario, Calif.-based CVB Financial Corp.; and Honolulu-based First Hawaiian Inc.

Horizon Bancorp was one of several banks that announced a loss on the sale of investment securities in the fourth quarter. For Horizon Bancorp, the pretax loss from the securities sale was $31.6 million.

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