After the two day FOMC meeting ended Wednesday, Federal Reserve’s new chairman Janet Yellen acknowledged that the bond buying stimulus program could end this fall and the benchmark interest rates will increase six months later. The Fed trimmed its monthly bond purchases to $55 billion from $65 billion on the back of improving U.S. economy. On interest rates, the Fed officials predicted that their target interest rate would be 1% by the end of 2015 and 2.25% a year later as they upgraded projections for improving labor market. During yesterday’s trading session, financials stocks, especially banks performed better than the rest of the market as banks are likely to benefit from higher interest rates. The 10-year U.S. Treasury note yield, a benchmark for many kinds of loans including mortgages, jumped 10 basis points to 2.77%, competing with the dividend yields offered by utilities.
Ubika Research has shortlisted eleven U.S. banking stocks which are likely to benefit from increasing interest rates announced by Fed yesterday, as the banks can charge more for loans and credit card balances. We note that these stocks have recorded growth in net interest income, strong net interest margins and offer attractive return on assets as per their latest reported quarterly results. Moreover, these stocks are trading at low forward P/B multiple of under 2.0 and have low non-Performing Assets (NPA) in proportion to their total loans. We note that these stocks have recorded gains during the past 3 months with average traded volume in excess of 100,000.
|
Company Name |
Exchange |
Ticker |
Market Cap |
Last Price |
Average Volume |
Price Change (3-Month) |
Net Interest Income Growth* |
Net Interest Margin* |
Return On Assets* |
Price to Book Ratio |
NPA to Total Loans* |
|
Dime Community Bancshares Inc |
NASDAQ |
DCOM |
0.6 |
17.54 |
119,069 |
4.4% |
259.8% |
3.4% |
1.1% |
1.4 |
0.4% |
|
Cullen/Frost Bankers Inc |
NYSE |
CFR |
4.6 |
75.60 |
406,095 |
3.8% |
39.4% |
3.1% |
1.0% |
1.8 |
0.7% |
|
FNB Corp/PA |
NYSE |
FNB |
2.2 |
13.23 |
970,960 |
6.7% |
13.9% |
3.5% |
0.9% |
1.2 |
1.3% |
|
Columbia Banking System Inc |
NASDAQ |
COLB |
1.5 |
29.01 |
242,928 |
5.8% |
40.6% |
5.5% |
1.0% |
1.3 |
1.3% |
|
Wilshire Bancorp Inc |
NASDAQ |
WIBC |
0.9 |
11.51 |
449,855 |
7.6% |
26.1% |
3.8% |
1.4% |
1.9 |
1.6% |
|
OFG Bancorp |
NYSE |
OFG |
0.8 |
17.32 |
434,328 |
3.0% |
158.1% |
5.6% |
1.1% |
1.1 |
2.1% |
|
Washington Federal Inc |
NASDAQ |
WAFD |
2.4 |
23.57 |
333,854 |
1.2% |
3.0% |
3.1% |
1.1% |
1.2 |
2.5% |
|
BBCN Bancorp Inc |
NASDAQ |
BBCN |
1.4 |
17.73 |
409,372 |
7.3% |
12.1% |
4.5% |
1.4% |
1.6 |
NA |
|
Prosperity Bancshares Inc |
NYSE |
PB |
4.3 |
65.65 |
364,982 |
5.0% |
34.3% |
3.5% |
1.3% |
1.5 |
NA |
|
Hanmi Financial Corp |
NASDAQ |
HAFC |
0.8 |
24.56 |
234,263 |
11.9% |
4.4% |
4.0% |
1.3% |
1.7 |
NA |
|
Pinnacle Financial Partners Inc |
NASDAQ |
PNFP |
1.4 |
38.28 |
160,380 |
18.9% |
6.5% |
3.7% |
1.1% |
1.6 |
NA |
Source: Bloomberg; * Latest Reported Quarter
NPA: Non-Performing Assets
Company Description:
Dime Community Bancshares Inc (NASDAQ: DCOM)
Dime Community Bancshares is a holding company for Dime Savings Bank of Williamsburgh. The bank provides financial services and residential mortgage loans to the greater New York metropolitan area.
Cullen/Frost Bankers Inc (NYSE: CFR)
Cullen/Frost Bankers, Inc. is the holding company for The Frost National Bank. The bank provides commercial banking, consumer services, investment banking, international banking, trust services, correspondent banking, discount brokerage, and insurance services through a network of offices in Texas.
FNB Corp/PA (NYSE: FNB)
F.N.B. Corporation is a financial services holding company. The Company, through its subsidiaries, provides a variety of financial services, primarily to consumers and small to medium-sized businesses. F.N.B.’s subsidiaries operate through a network of offices in Pennsylvania, northern and central Tennessee, and eastern Ohio.
Columbia Banking System Inc (NASDAQ: COLB)
Columbia Banking System, Inc. is the holding company for Columbia Bank, a full service commercial bank. The bank serves small and medium-sized businesses, professionals, and other individuals through office in the Tacoma metropolitan area and contiguous parts of the Puget Sound region of Washington, as well as the Longview and Woodland communities in southwestern Washington.
Wilshire Bancorp Inc (NASDAQ: WIBC)
Wilshire Bancorp, Inc. is the holding company of Wilshire State Bank, which serves businesses and consumers in Los Angeles and Orange Counties in California and also has loan offices in Northern California, Washington, Oklahoma, Nevada and Texas. The bank specializes in making Small Business Administration and other loans to minority-owned businesses.
OFG Bancorp (NYSE: OFG)
OFG Bancorp is the holding company for Oriental Bank & Trust. The bank provides trust, money management, financial planning, and investment brokerage services, as well as consumer banking and mortgage banking. OFG Bancorp operates through a network of branch offices in Puerto Rico.
Washington Federal Inc (NASDAQ: WAFD)
Washington Federal, Inc. is a bank holding company.
BBCN Bancorp Inc (NASDAQ: BBCN)
BBCN Bancorp, Inc. is the holding company for BBCN Bank, a commercial bank that serves individuals and small- to medium-sized businesses. The bank accepts deposits and originates a variety of loans, and offers equipment lease financing and postdated check discount and factoring. BBCN Bank operates in California, New York, New Jersey, Washington, and Illinois.
Prosperity Bancshares Inc (NYSE: PB)
Prosperity Bancshares, Inc. is the holding company for Prosperity Bank. The bank attracts deposits from the general public and uses those funds to originate a variety of commercial and consumer loans. Prosperity Bank operates in the greater Houston metropolitan area and neighboring counties in Texas.
Hanmi Financial Corp (NASDAQ: HAFC)
Hanmi Financial Corporation is the holding company for Hanmi Bank. The bank is a business bank with its primary focus on servicing multi-ethnic small businesses in southern California. Hanmi’s services include commercial small business association loans, trade finance, and consumer lending.
Pinnacle Financial Partners Inc (NASDAQ: PNFP)
Pinnacle Financial Partners, Inc. is a holding company for Pinnacle National Bank. The bank operates as a community bank emphasizing personal banking relationships with individuals and businesses located in its primary service area, which is comprised of the metropolitan Nashville, Tennessee area and surrounding counties.
