{"id":4603,"date":"2023-05-05T11:13:58","date_gmt":"2023-05-05T15:13:58","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/thinking-of-buying-bank-stocks-youll-need-a-strong-stomach\/"},"modified":"2023-05-05T11:13:58","modified_gmt":"2023-05-05T15:13:58","slug":"thinking-of-buying-bank-stocks-youll-need-a-strong-stomach","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=4603","title":{"rendered":"Thinking of Buying Bank Stocks? You&#8217;ll Need a Strong Stomach."},"content":{"rendered":"<div id=\"js-article__body\" itemprop=\"articleBody\" data-sbid=\"WP-BAR-0000637434\">\n<div data-layout=\"wrap\n              \" data-layout-mobile=\"\" class=\"\n        media-object\n        type-InsetMediaIllustration\n          wrap\n  article__inset\n        article__inset--type-InsetMediaIllustration\n          article__inset--wrap\n    article__inset--lead\n  \"><\/p>\n<figure class=\"\n        media-object-image\n        enlarge-image\n        img-wrap\n        article__inset__image\n      \" itemscope=\"\" itemtype=\"http:\/\/schema.org\/ImageObject\"><\/p>\n<\/figure><\/div>\n<p>A vengeful market is laying waste to regional bank stocks. Should bold investors look for names to buy?<\/p>\n<p>Not quite yet.<\/p>\n<p>No one wants to buy bank stocks ahead of a recession, said UBS analyst Erika Najarian. But given the week\u2019s pricing action, she sees some long-only investors as well as hedge funds dipping in their toes.<\/p>\n<div class=\"paywall\">\n<p>Valuations seem to be discounting a potential recession and the industry\u2019s long-term changes, she said. Large-cap banks are trading between 1.2 and 1.3 times their tangible book value, including the noncash impact of bond portfolio losses. Back out those items, and the stocks are close to one-times book, a level that has traditionally attracted buyers.<\/p>\n<p>Bearish rhetoric around the industry has distracted investors from the qualities of big banks like<br \/>\n        Bank of America<br \/>\n       (ticker: BAC), said Najarian. While it\u2019s now down near book value, BofA has a strong base of small depositors, more retail than commercial business, and solid levels of capital. At a time when investors worry about flighty deposits, BofA is attractively boring.<\/p>\n<p>Another bank whose share price has fallen to silly levels, said the UBS analyst, was<br \/>\n        Citizens Financial Group<br \/>\n       (CFG). The Rhode Island-based regional bank has robust levels of regulatory capital, yet it trades at six times next year\u2019s earnings and under 0.9 times tangible book (including noncash accruals).<\/p>\n<p>When the banks see the other side of the current storm, Najarian thinks their stocks will trade at 10 times earnings and 1.5 times tangible book.<\/p>\n<p>It\u2019s been a \u201cbrutal\u201d year for Dave Ellison, who manages two bank-stock mutual funds at Hennessy Funds.<\/p>\n<p>Banks have been battered by rising short-term rates, commercial real estate worries and tepid demand for loans, he noted. The industry has dealt with those issues before, but now it\u2019s also dealing with the novel afflictions of deposit flight at the speed of light and panic-sowing social media.<\/p>\n<p>\u201cI\u2019m just trying to stay out of the way,\u201d said Ellison. \u201cThis is a time to be paying attention and looking for stocks that are beaten down. But that doesn\u2019t mean it\u2019s time to buy.\u201d<\/p>\n<p>Ellison has maintained his holdings of favorite names like Citizens Financial, but said he can\u2019t be sure what will be in his portfolio if the turmoil continues storming through regional bank stocks. \u201cI can\u2019t be wed to anything right now,\u201d he said.<\/p>\n<p>The problem of evaporating deposits is harder to model than traditional loan book issues, said Abbott Cooper, who runs the activist bank investment firm Driver Management.<\/p>\n<p>\u201cThe risks in some of these bank stocks can\u2019t really be quantified,\u201d Abbott said. \u201cIt takes a really strong stomach to wade into these waters.\u201d<\/p>\n<p>That said, he likes banks with balanced businesses that aren\u2019t dependent on a particular product or industry group. Among the small but solid banks in his portfolio are Oklahoma City\u2019s<br \/>\n        BancFirst<br \/>\n      (BANF), Reno-based<br \/>\n        Plumas Bancorp<br \/>\n       (PLBC), and<br \/>\n        Codorus Valley Bancorp<br \/>\n       (CVLY), a York, PA-lender that settled a proxy fight with Cooper\u2019s firm last year.<\/p>\n<p>\u201cWhatever we\u2019re going through now is going to abate at some point,\u201d Cooper said. \u201cIt can\u2019t be soon enough.\u201d<\/p>\n<p>Write to Bill Alpert at william.alpert@barrons.com<\/p>\n<\/p><\/div>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.marketwatch.com\/articles\/buying-bank-stocks-1d1f2a08?mod=markets\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>A vengeful market is laying waste to regional bank stocks. Should bold investors look for names to buy? Not quite yet. No one wants to buy bank stocks ahead of a recession, said UBS analyst Erika Najarian. But given the week\u2019s pricing action, she sees some long-only investors as well as hedge funds dipping in [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":4604,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-4603","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Thinking of Buying Bank Stocks? You&#039;ll Need a Strong Stomach. | iFintechWorld<\/title>\n<meta name=\"description\" content=\"A vengeful market is laying waste to regional bank stocks. Should bold investors look for names to buy? Not quite yet. 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