Mid-Atlantic Community Banks Are Outperforming Their Peers

A disproportionate number of the best-performing community banks hail from the Mid-Atlantic region, according to data from OTC Markets Group.

Of April's 12 best-performing securities on the OTCQX Banks Index, which tracks the performance of financial institutions trading on the OTC Markets, seven hail from the area generally classified as the Mid-Atlantic region—Pennsylvania, Maryland, Delaware, Virginia, Washington D.C., and parts of North Carolina.

Security April Total Return
Communities First Financial Corporation CFST 7.29%
Coastal Carolina Bancshares Inc CCNB 7.11%
Westbury Bancorp, Inc. WBBW 6.19%
Franklin Financial Services Corp. FRAF 6.11%*
Highlands Bankshares, Inc. HLND 5.3%*
Croghan Bancshares, Inc. CHBH 5.17%
Pinnacle Bankshares Corp. PPBN 4.76%*
Delmar Bancorp DBCP 4.57%*
Harleysville Financial Corp. HARL 4.03%*
South Atlantic Bancshares, Inc. SABK 4.02%
Quaint Oak Bancorp, Inc. QNTO 3.6%*
Delmarva Bancshares, Inc. DLMV 3.43%*

*Indicates bank is located in Pennsylvania, Maryland, or Virginia

The strong performance is the latest example of banks in the region having success on the public markets. Of the 27 community banks to join the OTCQX Best Market in 2018, nearly a third—such as Delmarva, Revere Bank REVB, and Carter Bank & Trust CARE—are Mid-Atlantic firms. And, as of the end of April, three of the top 10 holdings in the index, Revere Bank, Isabella Bank Corp. ISBA Franklin Financial Services Corp. FRAF, are headquartered in the region.

This area of the country has long-benefited from a healthy lending environment. In 2016, S&P Global found that median loan growth for local banks with less than $10 billion in assets had “been strongest in the mid-Atlantic, driven specifically by commercial and industrial lending.”
Sandler O'Neill analyst Frank Schiraldi noted at the time that the region’s stable economic base was leading people to migrate to the area, which then, in turn, leads to more stability.

In the last quarter of 2018, Southeast and Mid-Atlantic community banks led all other areas of the country in C&I loan growth, with 2.5 percent and 2.2 percent growth respectively, compared to the 1.7 percent national average. The region also led the nation in gross loan and lease growth, CRE & multifamily loan growth, and mortgage & home equity loan growth.

As more businesses and jobs flock to this area of the country ((Amazon.com Inc&rsquo, NASDAQ:AMZN) decision to build its HQ2 in Crystal City, Virginia was a big win), the Mid-Atlantic economy looks poised to continue growing. Such an occurrence could only be a tailwind for the community banks looking to help fund that growth.

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