US banks with lowest price-to-adjusted tangible book values in July

In tandem with the broader market, U.S. bank stocks staged a sharp rebound in July, pushing up valuations across the sector.

The S&P U.S. BMI Banks index increased 7.9% on a total return basis, trailing the S&P 500's 9.2% return. The median appreciation for the 206 banks in the S&P Global Market Intelligence analysis was 8.3%. Just 14 of those banks traded lower in July.

The median price-to-adjusted tangible book value, or P/ATBV, for the industry was 157.5% at July 29, up 17 percentage points from the end of June and representing nearly the highest month-end valuation during the last year.

S&P Global Market Intelligence analyzes U.S. banks trading on the Nasdaq, NYSE or NYSEAM with total assets 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.

Even with a 14.0% total return in July, Citigroup Inc. ranked as the lowest-valued bank in the analysis by P/ATBV for the eighth-consecutive month at 61.2%. Despite second-quarter investment banking fees declining 46% year over year, Citigroup's pre-provision EPS rose 27%.

Philadelphia-based Republic First Bancorp Inc., ranked No. 5 by lowest P/ATBV, was one of few banks that bucked the market trend in July. Its negative 5.0% return was the fifth-worst in the analysis. Republic First faces a challenging interest rate environment with its large securities portfolio but still could be an attractive acquisition candidate.

Entries and exits

The composition of the bottom-20 valuation list was almost unchanged from the prior month. Louisville, Ky.-based Republic Bancorp Inc., which had the third-lowest monthly return in the analysis, was the lone entry, and Los Angeles-based Hanmi Financial Corp. was the only exit. Hanmi's second-quarter pre-provision EPS climbed 34% year over year, while Republic Bancorp's pre-provision earnings were flat.

* Click here to see S&P Global Market Intelligence's calculations for price-to-adjusted tangible book value as of July 29. * Read some of the top news and insights from S&P Global Market Intelligence.

Top market performers

La Jolla, Calif.-based Silvergate Capital Corp. and Wilmington, Del.-based The Bancorp Inc. recorded the top monthly total returns among the banks in the analysis at 74.3% and 26.0%, respectively. Both companies have consistently traded above the industry median in terms of P/ATBV during the last year, with digital currency-focused Silvergate fetching the higher valuation for all but two months.

Both companies, particularly Silvergate, experienced volatile trading activity. Silvergate's P/ATBV surged to over 500% in November 2021 before falling to 145.6% in June and then recovering to 284.2% in July.