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

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

U.S. banking stocks have been on a rollercoaster ride recently, alternating between positive and negative months from February to May.

The 324 U.S. banks and thrifts in this S&P Global Market Intelligence analysis posted a median total return of negative 6.1% in May after posting a positive median return in April. The market-cap weighted SNL U.S. Bank and Thrift index fared even worse, posting a negative 9.5% total return in May.

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Three of the U.S. banks and thrifts that cleared the $10 billion total asset hurdle in the first quarter — McKinney, Texas-based Independent Bank Group Inc.; Wilmington, Del.-based WSFS Financial Corp.; and San Diego-based Axos Financial Inc. — continued to trade at premiums to the industry in May, although those gaps have narrowed during the last year.

WSFS Financial commanded the highest valuation in terms of price-to-adjusted tangible book value among the trio a year ago at 309.6%, more than 100 percentage points above the industry median. As of May 31, WSFS Financial's P/ATBV was down to 176.3%, trailing Independent Bank and Axos Financial but still 26 percentage points higher than the industry median.

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Nine companies in the analysis traded below adjusted tangible book value at the end of May. Fishers, Ind.-based First Internet Bancorp remained the lowest-priced institution, with a P/ATBV of 68.3%.

Six companies entered the bottom 25 valuation list in May: Malvern, Pa.-based Meridian Corp., which crossed over $1 billion in total assets in the first quarter; Costa Mesa, Calif.-based Pacific Mercantile Bancorp; Irvine, Calif.-based Opus Bank; Terre Haute, Ind.-based First Financial Corp.; McLean, Va.-based Capital One Financial Corp.; Honolulu-based Territorial Bancorp Inc.; and Uniondale, N.Y.-based Flushing Financial Corp.

Exiting the list were Willimantic, Conn.-based SI Financial Group Inc., which was acquired by Boston-based Berkshire Hills Bancorp Inc. on May 17; Hartford, Conn.-based United Financial Bancorp Inc.; Hampton, Va.-based Old Point Financial Corp.; Defiance, Ohio-based SB Financial Group Inc.; Louisville, Ky.-based Limestone Bancorp Inc.; Shippensburg, Pa.-based Orrstown Financial Services Inc.; and Hamilton, N.J.-based First Bank.

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