5 Regional Banks that are Making Bank: ZION, VLY, SFBS, WAL, PPBI

We’re coming up on one year since regional banks showed signs of weakness. In March of 2023, there were

2 casualties to insolvency, Silicon Valley Bank(SVB) and Signature Bank(SBNY);  then in May of 2023, First Republic Bank(FRCB), followed by Heartland Tri-state Bank(HLAN) in July of 2023 fell to high-interest rates.

In March the Fed responded with the opening of The Bank Term Funding Program. This program was established in December of 2002.  It was never funded until March of 2023 and by the end of the month, banks had borrowed funds from this program to the sum of $62.645 billion. This indicated that many banks suffered from the strains of inflationary interest rate hikes.

What led to the demise of these banks was the simple fact that they had such a high ratio of investments to deposits that were beyond their regulatory limits.

Many banks were able to escape this peril by getting access to these loans and the first round of loan payments are due in March of 2024. This leads to the prediction that the Fed may cut interest rates in March to help lenders who have borrowed from the program obtain a bit of ease of payment. At present the funds that have been borrowed from the program are $174 billion. 

5 regional stocks that appear to have weathered the interest rate shock and are displaying good returns are Zions Bancorporation, National Association (ZION), Valley National Bancorp (VLY), ServisFirst Bancshares, Inc. (SFBS), Western Alliance Bancorporation (WAL), Pacific Premier Bancorp, Inc. (PPBI).

ZION stock VLYstock  SFBS stock WAL stock  PPBI stock bank and banks

Zions Bancorporation, National Association (ZION) whose stock has gone from $29.69 on 10/23/23 to $45.67 on 12/14/23 a 54% return, and now trading at $43.93 showed a more prudent approach to managing their assets and deposits. In December of 2022, they had $89.5 billion in total assets, $71.7 billion in deposits; $55.1 billion in loans & $23.51 billion in total investments. October 2023 Quarterly report shows total assets of $87.3 billion, $75.4 billion in deposits, $56.2 billion in loans, and $20.74 in total investments.

Valley National Bancorp (VLY)  stock has gone from $7.75 on 10/23/23 to $11.03 on 12/14/23  a 42% return, and now trading at $10.58 appears to position itself as a traditional bank lending institution. In December of 2022, they had $56.9 billion in total assets, $47.6  billion in deposits; $46.9  billion in loans & $5.2 billion in total investments. October 2023 Quarterly report showed total assets of $61.1 billion, $49.8 billion in deposits, $50.9 billion in loans, and $6.05 in total investments.

ServisFirst Bancshares, Inc. (SFBS) stock price inflated from $46.79 on 10/23/23 to $65.11 on 12/14/23  a 39% return, and now trading at $62.80 also follows the old school model banking. In December of 2022, they had $14.6 billion in total assets, $11.55  billion in deposits; $11.6  billion in loans, and $1.6 billion in total investments. October 2023 Quarterly report showed total assets of $16 billion, $13.1 billion in deposits, $11.6 billion in loans, and $1.87 in total investments.

Western Alliance Bancorporation (WAL) stock soared from $41.41 on 10/23/23 to $66.30 on 12/14/23  a 60% return, and now trading at $64.53 continues to show their strong conservative credit culture serving diverse organizations. In December of 2022, they had $67.7 billion in total assets, $55.6  billion in deposits; $52.2  billion in loans, and $8.5 billion in total investments. October 2023 Quarterly report showed total assets of $70.9 billion, $54.3 billion in deposits, $48.1 billion in loans, and $10.4 in total investments.

Pacific Premier Bancorp, Inc. (PPBI) stock also had an impressive run from $20.02 on 10/23/23 to $29.55 on 12/14/23  a 48% return, and now trading at $27.80,  markets themselves as a disciplined institution, focusing on prudent and proactive risk, liquidity, and capital management. In December of 2022, they had $21.7 billion in total assets, $17.74 billion in deposits; $14.8 billion in loans, and $4.1 billion in total investments. October 2023 Quarterly report showed total assets of $20.3 billion, $16 billion in deposits, $13.67 billion in loans, and $3.83 in total investments.

With the spring not too far in focus, interest rate cuts may show a positive position for those banks who are following traditional banking strategies and may have the brightest outcome. 

Look for many postings like these and other simple trading ideas in the near future.