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US banks trading at lowest price-to-adjusted tangible book value in August

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US banks trading at lowest price-to-adjusted tangible book value in August

U.S. banking stocks underperformed the broader U.S. stock market in August as inversions in the yield curve, global trade tensions and other economic uncertainties sparked worries of an impending recession.

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While the S&P 500 returned negative 1.6% from July 31 to Aug. 30, the market-cap weighted SNL U.S. Bank and Thrift index fell 7.5%. The median total return in August for the banks and thrifts in this S&P Global Market Intelligence analysis was negative 6.5%.

Among U.S. banks, a pair of Los Angeles-based institutions catering to Korean Americans saw significant underperformance during the month.

Hanmi Financial Corp. was one of the worst performers, down 15.7% in August. The bank was not able to file its second quarter Form 10-Q on time with the Securities and Exchange Commission because it is evaluating how to categorize a construction and business credit relationship and investigating "a possible internal control deficiency primarily relating to construction lending."

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Another Los Angeles-based bank with a Korean-American focus, Hope Bancorp Inc., declined 9.1%. Hope Bancorp subsidiary Bank of Hope is one of the largest U.S. banks with a significant commercial real estate concentration.

On the other hand, Hanmi and Hope peer PCB Bancorp was down just 0.4%.

For the past year, all three banks have traded at a substantial discount to the industry median in terms of price-to-adjusted tangible book value.

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For the broader U.S. banking group, several banks entered the bottom 25 list in August: Little Rock, Ark.-based Bank OZK; Hanmi Financial; Burr Ridge, Ill.-based BankFinancial Corp.; Helena, Mont.-based Eagle Bancorp Montana Inc.; Los Angeles-based OP Bancorp; and Philadelphia-based Republic First Bancorp Inc.

Meanwhile, six banks exited the list: Stroudsburg, Pa.-based ESSA Bancorp Inc.; Louisville, Ky.-based Limestone Bancorp Inc.; Franklin, Tenn.-based Franklin Financial Network Inc.; Seattle-based HomeStreet Inc.; Manitowoc, Wis.-based County Bancorp Inc.; and Hamilton, N.J.-based First Bank.

Click here to see S&P Global Market Intelligence's calculations for price-to-adjusted tangible book value as of Aug. 30, 2019.