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US banks at lowest price-to-adjusted tangible book values in December '19

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University Essentials | COVID-19 Economic Outlook in Banking: Rates and Long-Term Expectations: Q&A with the Experts

Estimating Credit Losses Under COVID-19 and the Post-Crisis Recovery

US banks at lowest price-to-adjusted tangible book values in December '19

Large-cap U.S. banks continued to outperform the broader stock market in December 2019.

The SNL U.S. Bank and Thrift index rose 3.9% last month, ahead of the S&P 500's 3.0% total return. The median return for the 318 banks in the S&P Global Market Intelligence analysis was 3.2% in December 2019. Only three of the top 50 U.S. banks by market capitalization — Wells Fargo & Co., U.S. Bancorp and Valley National Bancorp — experienced a negative monthly return.

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McKinney, Texas-based Independent Bank Group Inc. and Dallas-based Texas Capital Bancshares Inc. announced a merger of equals on Dec. 9, 2019. Independent Bank Group has consistently traded at a premium to the industry median in terms of price-to-adjusted tangible book value. At year-end 2019, the gap was about 34 percentage points. On the other hand, Texas Capital's P/ATBV ratio was 51 percentage points below the industry median. It has traded at a significant discount since the fourth quarter of 2018.

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New entrants to the bottom-25 valuation list in December 2019 were Stroudsburg, Pa.-based ESSA Bancorp Inc., Burr Ridge, Ill.-based BankFinancial Corp., Southfield, Mich.-based Sterling Bancorp Inc., Coral Gables, Fla.-based Amerant Bancorp Inc. and Los Angeles-based PCB Bancorp.

Sterling Bancorp was by far the worst market performer in the analysis, with a negative return of 16.4%. Last month, the bank temporarily suspended its Advantage Loan program, which represented 79% of its residential loans as of Sept. 30, 2019, according to the most recent Form 10-Q. Sterling Bancorp also disclosed in its quarterly filing that last November it terminated two loan producers within the program in conjunction with an internal compliance review.

Five companies exited the list: Costa Mesa, Calif.-based Pacific Mercantile Bancorp, Princeton, N.J.-based Bank of Princeton, Defiance, Ohio-based SB Financial Group Inc., Lubbock, Texas-based South Plains Financial Inc. and Houston-based Cadence Bancorp.

Click here to see S&P Global Market Intelligence's calculations for price-to-adjusted tangible book value as of Dec. 31, 2019.