+ 0.40
+ 0.12%
+ 1.41
+ 0.41%
+ 1.40
+ 0.34%
+ 1.00
+ 0.6%

6 Images Every Regional Bank Investor Should See

January 6, 2015 11:19 am
Share to Linkedin Share to Twitter Share to Facebook Share to Print License More

The graphs below were produced by Capital Market Labs.

There are 80 North American regional banks in the United States with assets above $5 billion.

They each have unique areas of risk and types of loans they position themselves for — each faces the realities of earnings margins and non-performing loans based on those risk decisions.

This is a fascinating group. Though each have different operating procedures, they can be examined measure-by-measure to find the most profitable, fastest growing and least risky.

Let's do that, in six charts.

The following scatter plots will chart total assets on the x-axis, while the y-axis will vary.

Let's start with non-performing loans over total loans on the y-axis; this is a broad-based measure of risk across all types of loan strategies.


The banks with the lowest non-performing loans to total loans are First Republic Bank (NYSE: FRC), SVB Financial Group (NASDAQ: SIVB), Signature Bank (NASDAQ: SBNY), City National Corp (NYSE: CYN) and TowneBank (NASDAQ: TOWN). The first three will show up again.

Meanwhile, the banks with the largest risk to their balance sheets (with respect to non-performing loans) are First Bancorp (NYSE: FBP), Capital Bank Financial Corp (NASDAQ: CBF), Park National Corporation (NYSEMKT:PRK), Popular Inc (NASDAQ: BPOP) and Farmers & Merchants Bank (Long Beac(NDA) (OTC: FMBL).

Next, let's plot revenue per employee (in millions of dollars) on the y-axis.


SVB Financial, Signature Bank and First Republic again are in the top five, with CIT Group Inc. (NYSE: CIT) and PrivateBancorp Inc (NASDAQ: PVTB) joining the group.

The banks with the lowest values in this measure are BancFirst Corporation (NASDAQ: BANF), Chemical Financial Corporation (NASDAQ: CHFC), First Merchants Corporation (NASDAQ: FRME) and Renasant Corp. (NASDAQ: RNST).

Now, let's plot earnings from continuing operations margin percentage on the y-axis.


Again, SVB Financial, Signature Bank and First Republic appear. Also in this top-performing group are CVB Financial, Western Alliance Bancorporation (NYSE: WAL), Canadian Western, Prosperity, East West and CIT Group.

The worst-performing regional banks for this measure are Popular, First Community Bancshares Inc (NASDAQ: FCBC), Sterling Bancorp (NYSE: STL), First Citizens BancShares Inc. (NASDAQ: FCNCA) and Zions Bancorporation (NASDAQ: ZION).

Now, let's dive a bit deeper and examine the types of loans these banks pursue as an operational strategy, beginning with commercial loans over total loans on the y-axis.


CIT Group, SVB Financial (again), BOK Financial Corporation (NASDAQ: BOKF), Firstmerit Corp (NASDAQ: FMER) and Wintrust Financial Corp (NASDAQ: WTFC) are making commercial loans at a much greater pace than the rest of the regional bank peers.

Investors Bancorp, Inc. (NASDAQ: ISBC), Farmers & Merchants, Bank Of The Ozarks Inc (NASDAQ: OZRK) and a number of others are avoiding this type of loan.

Next, let's turn to exposure to consumer debt on the y-axis.


Huntington Bancshares Incorporated (NASDAQ: HBAN), NBT Bancorp Inc. (NASDAQ: NBTB) and Community Bank System, Inc. (NYSE: CBU) round out the top three regional banks with exposure to the consumer.

At the bottom are SVB Financial and Signature Bank (again), as well as Western Alliance and PacWest Bancorp (NASDAQ: PACW).

Finally, let's turn to real-estate debt exposure on the y-axis.


Both Signature Bank and First Republic are among the top, executing on a strategy surrounding real-estate loans, while Firstmerit, SVB Financial and KeyCorp (NYSE: KEY) chose not to make real-estate debt a large portion of their portfolios.

The banks with the least non-performing loans to total loans are First Republic, SVB Financial, Signature Bank, City National and TowneBank.

The banks the largest revenue per employee are SVB Financial, Signature Bank, First Republic, CIT and PrivateBancorp.

In particular, note the repetition of First Republic, SVB Financial and Signature Bank. 

The banks the highest earnings from operations margin percentage are SVB Financial, Signature Bank, First Republic, CVB Financial Corp. (NASDAQ: CVBF), Canadian Western Bank (TSE:CWB), Prosperity Bancshares, Inc. (NYSE: PB), East West Bancorp, Inc. (NASDAQ: EWBC) and CIT.

The banks with the largest exposure to commercial loans, meanwhile, are CIT, SVB Financial, BOK Financial, Firstmerit and Wintrust. Those with the largest exposure to consumer loans are Huntington Bancshares, NBT Bancorp and Community Bank.

Finally, the regional banks with the largest exposure to real-estate loans are Investors Bancorp, Farmers & Merchants, Bank Of The Ozarks, Renasant, Home Bancshares Inc (NASDAQ: HOMB), First Republic and Signature Bank.

Image credit: Public Domain

Ophir Gottlieb can be found on Twitter @OphirGottlieb.

Related Articles

Earnings Expectations for the Week of January 16

Stocks That Have Crossed 52-Week Highs (FUBC, AXAS, ABCB, VOXX, BANF)