Regional banks again dominated the list of least-expensive US bank stocks by price-to-estimated 2023 earnings per share as of mid-June, while Texas banks topped the most-expensive rankings.
Cheaply valued bank stocks
Western Alliance Bancorp. had the lowest price-to-estimated EPS multiple through mid month, trading at 4.8x, according to an S&P Global Market Intelligence analysis. The industry median for the 148 banks included in this analysis was 8.4x.
BofA Securities analyst Ebrahim Poonawala, who resumed coverage of Western Alliance at "buy," said a conversation with bank executives suggests that the impact of the stock volatility has been manageable.
"Strong execution, superior profitability, healthy capital levels combine for an attractive risk/reward despite the near-term uncertainty surrounding EPS power," Poonawala wrote in a May 16 note.
– 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.
Customers Bancorp Inc. ranked second with a price-to-estimated EPS multiple of 5.0x as of June 15, the day before it announced an acquisition of a $631 million venture banking loan portfolio from the Federal Deposit Insurance Corp. at about 85% of book value.
Buying that portfolio will be viewed as a significant positive for Customer Bancorp shares given "the discount, the further opportunity it entails and also coming along with the confidence of the regulators," Piper Sandler analyst Frank Schiraldi wrote in a June 16 note.
Citizens Financial Group Inc. and KeyCorp, each with more than $100 billion in total assets, were among the least-expensive bank stocks. Their price-to-estimated EPS multiples were 6.3x and 6.4x, respectively.
Other regionals on the list include Comerica Inc., Zions Bancorp. NA and PacWest Bancorp, ranking third, fourth and fifth with multiples of 5.3x, 5.4x and 5.6x, respectively.
Richly valued bank stocks list
Texas-based banks led the most-expensive US bank stocks ranking, with Dallas-based Triumph Financial Inc. topping the list for the fifth straight month. The company traded at 32.7x its estimated EPS.
Abilene, Texas-based First Financial Bankshares Inc. landed at the No. 2 spot as it traded at 20.7x its estimated EPS, followed by Dallas-based Hilltop Holdings Inc., which traded at 19.1x.
Total returns
Year to date through June 15, Western Alliance has logged a return of negative 33.6%, and Triumph Financial returned positive 26.1%. Among all the banks included in the analysis, PacWest logged the third-lowest year-to-date return at negative 63.8%.
In the last 12 months, the S&P US BMI Banks index returned negative 4.0%, and the S&P 500 returned positive 18.8%.
