FR: Is This the Best Bank in the Southeast?

Article: Is This the Best Bank in the Southeast?

The next “regional bank” article in my “Fool Revisited” series is going to cover the Southeast region, which covers all the banks from Florida to Louisiana, as well as Arkansas and Kentucky. All banks were screened based on the region they fell under using FinViz.com, my screener of choice back when I was writing for the Fool (it still is pretty cool, though a lot of the things I used it for in the past are no longer free and I don’t have the resources at present to pay for them). However, two of the banks – Renasant Corp (Nasdaq: RNST) and Simmons First National (Nasdaq: SFNC) – have been moved to the category of “money center” banks, most likely because they changed their business model slightly. I’ll still include them here for posterity.

As with the other articles within this mini “series within a series,” instead of writing about all of the banks in the region, I screened them down to a much more manageable list. First, I eliminated all banks with a market cap below $300 million. Then I used four other factors to get to my final list: only profitable banks (over the prior 12 months), a low P/B (looks like I only featured banks under 2, though lower is better), a positive dividend (over 2% in this case), and quality net income margin.

I know that you want to see it, so here is the old tweet of the article from back in the day:

 

Had this article been written a little later in my tenure at the Fool, my list probably would have been much smaller, if only because of the “tickering” rules in place at the time. I again ended up with a list of 7 banks from the region, and selected Renasant as the best bank in the region.

Renasant lived up to the hype, at least as far as this article was concerned, and rode this pole position to first place. However, the region as a whole was a bit weaker than the others, with only two other selected banks beating the S&P 500 – Simmons First National and Community Trust Bancorp (Nasdaq: CTBI), as you can see from the chart below. Using the compound annual growth rate (CAGR) and total growth, since article publication on October 11, 2011 through January 26, 2018:

Stock Start Price End Price CAGR Total Growth Value of $10,000
Renasant Corporation $11.98 $43.72 22.67% 264.94% $36,494
Republic Bancorp (Nasdaq: RBCAA) $16.50 $39.10 14.59% 136.97% $23,697
Community Trust Bancorp $18.68 $48.10 16.10% 157.49% $25,749
Simmons First National Corp $20.60 $59.10 18.09% 186.89% $28,689
Hancock Holding (Nasdaq: HBHC) $24.06 $55.20 14.00% 129.43% $22,943
Trustmark Corporation (Nasdaq: TRMK) $16.29 $32.23 11.37% 97.85% $19,785
IBERIABANK Corporation (Nasdaq: IBKC) $8.06 $21.58 16.92% 167.74% $26,774
S&P 500 $1,195.54 $2,872.87 14.93% 140.30% $24,030

Source: Yahoo! Finance & author calculation; Stock prices include dividends & stock splits

Looking at the same screening criteria for these banks again, only three banks meet all four: Republic Bancorp, Community Trust, and Trustmark Corporation. Each “wins” a different metric too, so parsing them could be difficult without further research – Republic has the lowest P/B ratio, Community Trust boasts the lowest P/E and highest net profit margin, and Trustmark has the highest dividend. However, this criteria should not be the only determining factor to invest, so I would have to look a little more closely at each bank before making a final determination.

Until next time…

Disclaimer: I do not personally own shares of the companies mentioned here, and I have no plans to purchase shares of any company mentioned within the next 60 days in any account in which I manage investment funds. You can read a little about my personal investment philosophy here.

One thought on “FR: Is This the Best Bank in the Southeast?

  1. Pingback: FR: These Davids Beat the Banking Goliaths | Trying Too Hard: A Blog

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s