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

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

Despite liquidity issues and margin pressure, most U.S. bank and thrift stocks appreciated in September.

The market cap-weighted SNL U.S. Bank and Thrift index rose 7.1%, outdistancing the S&P 500's 1.9% increase.

The median monthly total return for the companies in the S&P Global Market Intelligence analysis was 5.2%, and just 15 of the 328 stocks surveyed saw declines in September.

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The companies relying less on net interest income tended to trade better. Banks that derived more than one-third of their operating revenue from noninterest income in the quarter had a median total return of 6.7%. All other companies in the analysis had a median return of 5.0%.

One of the top performers was State Street Corp., with a total return of 16.4% in the quarter. About 79% of State Street's second-quarter operating revenue came from noninterest income. Even with its recent valuation surge, State Street continued to trade at a lower adjusted price-to-tangible book value compared to two other large trust processing/wealth management banks: Bank of New York Mellon Corp. and Northern Trust Corp.

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Fishers, Ind.-based First Internet Bancorp and Johnstown, Pa.-based AmeriServ Financial Inc. remain the lowest-priced banks in the analysis. The former appreciated 6.2% in September, while the latter fell 0.2%.

Entering the bottom-25 list in September were Santa Ana, Calif.-based Banc of California Inc.; Dallas-based Texas Capital Bancshares Inc.; Costa Mesa, Calif.-based Pacific Mercantile Bancorp; and Seattle-based HomeStreet Inc.

Leaving the list were Coral Gables, Fla.-based Amerant Bancorp Inc.; Princeton, N.J.-based Bank of Princeton; Harrisburg, Pa.-based Riverview Financial Corp.; and Helena, Mont.-based Eagle Bancorp Montana Inc.

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

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