US banks with lowest price to adjusted tangible book values in September

As investor sentiment deteriorated in the broader markets, U.S. banking stocks experienced a significant decline in September. The S&P U.S. BMI Banks index returned negative 7.9%, compared to a negative 9.2% return for the S&P 500.

The median total return for the 206 banks in the S&P Global Market Intelligence analysis was negative 4.9% last month. Just 10% of those companies had positive returns, led by Charleston, W.Va.-based City Holding Co.'s 4.3% and Louisville, Ky.-based Stock Yards Bancorp Inc.'s 3.1%.

S&P Global Market Intelligence analyzes U.S. banks trading on the Nasdaq, NYSE or NYSEAM with total assets of greater than $3 billion in the most recent quarter available. Excludes banks in the mutual holding company ownership structure, other operating subsidiaries, and mutual bank conversions until financial data is available for the quarter following the conversion date. Adjusted tangible book value is calculated as the sum of tangible common equity and loss reserves less nonperforming assets and loans 90 or more days past due but still accruing interest divided by common shares outstanding.

* Explore S&P Global Market Intelligence's calculations for price to adjusted tangible book value as of Sept. 30. * Set email alerts for future Data Dispatch articles.

Big banks

Each of the 19 largest banks by total assets at June 30 traded down in September. Shares of Citigroup Inc. decreased 14.6% on a total return basis in September, at least 5 percentage points worse than peers JPMorgan Chase & Co., Bank of America Corp. and Wells Fargo & Co.

Citigroup was the lowest-valued bank in the analysis by price-to-adjusted tangible book value for the 10th consecutive month. Its P/ATBV of 48.8% at Sept. 30 was 8 percentage points lower than at the previous month-end, 22 percentage points lower than the No. 2 bank in the analysis and at least 68 percentage points lower than the other "Big 4" members.

After trading at a premium to the industry median for the last year, Bank of America ended September at a 3-percentage point discount. In contrast, JPMorgan retained its premium valuation status, although the gap has narrowed considerably during the last 12 months. Wells Fargo's discount to the industry median has ranged from 8 percentage points to 33 percentage points since September 2021.

Bottom 20 banks by valuation

Merger partners Flagstar Bancorp Inc. and New York Community Bancorp Inc. were in the bottom-20 valuation group by P/ATBV. Troy, Mich.-based Flagstar was ranked No. 2 at 70.5% and Hicksville, N.Y.-based New York Community was 18th at 98.5%. New York Community also has by far the highest dividend yield among the banks in the analysis at nearly 8% as of Sept. 30.

Five of the bottom-20 banks, including Citigroup and New York Community, are headquartered in the New York-Newark-Jersey City, NY-NJ-PA metropolitan statistical area. The only other MSA with multiple institutions in the bottom 20 is Los Angeles-Long Beach-Anaheim, CA, with two.

Entries and exits

Three banks entered the bottom-20 list for P/ATBV in September: Los Angeles-based Hope Bancorp Inc.; Seattle-based HomeStreet Inc., one of the largest banks under the pivotal asset threshold of $10 billion; and New York Community.

The three exits from the list were Dallas-based Texas Capital Bancshares Inc., which is undergoing a strategic transformation; Leawood, Kan.-based CrossFirst Bankshares Inc.; and McLean, Va.-based Primis Financial Corp.