Banking & Finance

7 Big Banks Trading Under Book Value

Zions has well over 400 bank locations throughout  Arizona, California, Colorado, Idaho, Nevada, New Mexico, Oregon, Texas, Utah, Washington, and Wyoming. Its deposits were almost $49 billion at the end of June.

During the second quarter, Zions sold the remaining portfolio of its collateralized debt obligations and took a one-time pretax loss of approximately $137 million. Zions also said that its total loan growth was the major soft spot of the quarter, and the bank warned that the effects of the energy price decline are not yet fully manifested.

First Niagara Financial Group Inc. (NASDAQ: FNFG) was recently trading at $9.55 with a $3.4 billion market cap, and its book values per share were listed as $10.77 on a stated book value and $6.77 tangible book value per common share. First Niagara shares at $9.55 are actually above the consensus analyst price target of $8.85. Still, Jefferies recently gave it a $10.50 price target. The stock has a 52-week trading range of $7.00 to $9.86.

First Niagra has a dividend yield of 3.3%. The company recently said that its 2015 Dodd Frank Act Stress Testing results validate the low risk nature of its balance sheet and support its capital management strategies.  First Niagra had roughly 400 bank branches in the Northeast and is sometimes reviewed as a potential buyout candidate despite its own acquisition of NewAlliance in recent years.

Susquehanna Bancshares, Inc. (NASDAQ: SUSQ) is being acquired by BB&T Corp. (NYSE: BBT) in a deal expected to close in the coming days, which ought to make some eyes look at the discounts here. At $14.26 with a $2.6 billion market cap, its stated book value per common share was $15.27 at the end of its second quarter but the tangible book value per common share was down at $8.15.

Susquehanna represented that it had solid loan growth with strong asset quality, and also that its capital ratios are continuing to build. Its total deposits increased $224 million or 1.6% from March 31, 2015 to $14.0 billion at June 30, 2015. Its 52-week trading range is $9.00 to $14.64 and its last dividend yield was 2.5%. The company has a market cap of $2.6 billion.

Hancock Holding Company (NASDAQ: HBHC) was recently trading at $28.33 with a $2.2 billion market cap. Its second quarter book value per share was listed as $31.12. While that is still a steep discount, the tangible book value per share was down at $21.63. Hancock’s 52-week trading range is $24.96 to $35.67, and it has a consensus analyst price target of $31.00 and a dividend yield of 3.4%.

Hancock talked up its second quarter earnings and also talked up the improved quality of earnings. Hancock’s shares have been stuck a range mostly between $27 and $35 for the last five years. The bank said that it has been disclosing its focus on strategic initiatives to replace declining levels of purchase accounting income from acquisitions with improvement in core income. It further noted that the impact to its bottom line from net purchase accounting items has substantially diminished, and that the core results are now equal to operating results.

Some investors may not know this bank holding company. Its footprint is about 235 banking and financial services offices throughout Mississippi, Texas, Louisiana, Florida, and Alabama under the brand names Hancock Bank and Whitney Bank.

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Investors should pay attention to the stated book value versus the tangible book value. A stated book value is what the company would expect on a normalized basis, while the tangible book value per share is what common holders should expect to receive if the bank decided to liquidate immediately.

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