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US banks and thrifts by highest price to estimated earnings

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US banks and thrifts by highest price to estimated earnings

At the end of May, California banks accounted for five of the 10 most expensive bank stocks in the country based on price-to-estimated earnings for 2018.

S&P Global Market Intelligence analyzed profitable U.S. banks and thrifts that appear to be valued more as a multiple of earnings than tangible book value. To be included in this analysis, a company had to report a return on average tangible common equity for the last 12 months above 8% and have at least three analyst EPS estimates available for fiscal 2018. In addition, the bottom 10% of banks and thrifts by price-to-tangible book value were excluded from the analysis.

As of May 31, Abilene, Texas-based First Financial Bankshares Inc. remained the most expensive bank stock, with a price 24.8x its 2018 estimated earnings. Analysts expect First Financial's earnings per share to grow by 24.8% in 2018, slightly lower than the median 27.4% for the industry as a whole. Meanwhile, First Financial's stock has returned 39.9% over the last year, nearly double the industry median of 21.6%.

San Rafael, Calif.-based Westamerica Bancorp. was the second-most expensive stock in the country, with a price-to-estimated earnings of 21.0x as of May 31. Four other California banks — First Republic Bank, SVB Financial Group, Opus Bank and CVB Financial Corp. — were among the top 10 as well.

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