The recent bank failures have caused a lot of confusion and uncertainty among investors. However, these failures have been contained and while they are significant do not pose a large threat to the industry as a whole. In this newsletter, I wanted to highlight some banks and their abnormally low valuations.
Hingham Institution For Savings (NASDAQ: HIFS — $516.04m) is as we already know an interesting (and excellent) bank. If you want a go in-depth check this write-up I did on it. The ~20% efficiency ratio bank is more undervalued than at any other time in recent history at 1.35x Price/Book. This isn’t a huge difference to the 5-year average of 1.9x, but the bank doubles book value every 5 years (historically) and pays dividends that get more value to shareholders.
Glacier Bancorp (NYSE: GBCI — $4.88b) is currently trading at a 1.72x Price/Book which is a decent discrepancy from their 5-year average of 2.1x. Mick Blodnick grew this to the conglomerate we now know stretching throughout the Rocky Mountains in the western United States. The bank still has plenty of room to grow. Their strategy is based on finding secluded pockets of civilization in the mountains with little infrastructural connection to hubs like Denver or Boulder for Colorado. This gives them a strong moat to snatch up a collection of these local brands and hold them under a conglomerate. On top of this, the company pays a 3% forward dividend.
Bank Of America (NYSE: BAC — $228.7b) is also trading at an extremely low 0.93x Price/Book valuation compared to the 1.17x 5-year average. This is even more enticing because I don’t believe many customers would’ve pulled their money out of BofA because of uncertainty like many did with First Republic. Further, some First Republic and Silicon Valley Bank customers could’ve moved to BofA to feel safer (growing their book value). On top of all this, they pay a ~3.1% forward dividend.
Until Tomorrow,
Soren
Take a look at FFIN. Only company I know that has increased earnings for 36 consecutive years at ~10% CAGR. Even more impressive that they are a bank...
Strong core deposit base with limited competition (rural texas)
Excellent credit underwriting (charge offs topped out at 36 bps in 2009)
Unique operating structure (decentralized model with 12 geographic subsidiaries with full autonomy)
Growing Texas population
Well capitalized (18% T1 capital)