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KBW Says These Community Banks Could Challenge The Big Guys

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Analysts at Keefe, Bruyette & Woods said that there will be increased opportunities for certain community banks to grow, adopt new lines of business and challenge large financial institutions. Underlying this trend will be large macro forces that include changing technology, new regulation and economic need.

KBW said that the model for this is in the United Kingdom, where the government "supported the development of challenger banks, designed to create competition for their nation's ‘too big to fail' institutions." The UK banks showed "strong growth" and are now going public, KBW said.

The analysts identified 25 U.S. banks as part of this emerging group. These banks generally contain between $5 billion and $50 billion in assets, KBW said. However, KBW did break the banks into two groups: (1) banks that are challenging large national banks by changing the definition of community banking and developing niche vertical lines, and (2) banks that are excelling at traditional community banking and growing market share the "old-fashioned way."

Within that first group, KBW identified the following:

  • BofI Holding, Inc. (NASDAQ: BOFI)
  • East West Bancorp, Inc. (NASDAQ: EWBC)
  • EverBank Financial Corp (NYSE: EVER)
  • First Republic Bank (NYSE: FRC)
  • Opus Bank (NASDAQ: OPB)
  • PacWest Bancorp (NASDAQ: PACW)
  • Signature Bank (NASDAQ: SBNY)
  • SVB Financial Group (NASDAQ: SIVB)
  • Texas Capital Bancshares Inc (NASDAQ: TCBI)
  • Wal-Mart Stores, Inc. (NYSE: WMT)

Inside the second group, KBW pointed to the following:

  • BankUnited (NYSE: BKU)
  • Bank Of The Ozarks Inc (NASDAQ: OZRK)
  • Cathay General Bancorp (NASDAQ: CATY)
  • Columbia Banking System Inc (NASDAQ: COLB)
  • Eagle Bancorp, Inc. (NASDAQ: EGBN)
  • FCB Financial Holdings Inc (NYSE: FCB)
  • LegacyTexas Financial Group Inc (NASDAQ: LTXB)
  • Home Bancshares Inc (NASDAQ: HOMB)
  • Renasant Corp. (NASDAQ: RNST)
  • Pinnacle Financial Partners (NASDAQ: PNFP)
  • PrivateBancorp Inc (NASDAQ: PVTB)
  • South State Corporation (NASDAQ: SSB)
  • Sterling Bancorp (NYSE: STL)
  • Umpqua Holdings Corp (NASDAQ: UMPQ)

Latest Ratings for BOFI

Oct 2017FBR CapitalMaintainsBuy
Oct 2017Keefe Bruyette & WoodsDowngradesOutperformMarket Perform
Sep 2016Compass PointInitiates Coverage onBuy

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