3 Regional Banks whose results I closely monitor

Bank stocks have been battered for most of 2020, and with good reason. The global pandemic, low interest rates, restrictions on share buybacks and general economic uncertainty have put pressure on the banking industry.

As economic uncertainties slowly but steadily resolve, regional banks have performed well in recent months. The ETF SPDR S&P Regional Bank is up almost 40% since the beginning of November, compared to SPDR S&P 500 ETF Trust, which grew by 18% over the same period.

For this reason, I think that some regional banks present a good opportunity for value investors. While the big dogs in the banking industry have announced results in recent days, many regional banks have yet to announce. Three that I watch in the next few days are Axos Financial (NYSE: AX), United Bankshares (NASDAQ: UBSI), and Bancorp Glacier (NASDAQ: GBCI).

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First known as Bank of Internet USA, Axos was recently named America’s Best Online Bank for the third year in a row, according to independent financial comparison site MyBankTracker.com.

Rewards are great, but as investors we care about the results. Fortunately, Axos also shines in this area. The latest quarterly reporting period saw loans and leases increase 5.6% to $ 141 million, deposit interest charges fell nearly 50% due to falling interest rates and mortgage banking income increased to $ 19.5 million, or 600%, from the same quarter last year. . Together, all of these contributed to an increase in net income of $ 12 million, a 30% increase over the same quarter last year.

The bank’s growth came while maintaining strong financial measures. Return on equity for the quarter was 17% (above 10% is considered good). In addition, his efficiency report was 46%, which means that non-interest expenses were less than half of income (a value of less than 50% is considered good). Finally, its loan-to-value ratio is also promising, at 60% (less than 80% is preferable).

Profits will be announced Jan. 28 and analysts expect earnings per share (EPS) of $ 0.82 and revenue of $ 155.68 million, representing growth of 22% and 20% in these. domains, respectively. Investors will want to closely monitor the growth of loans and leases as well as mortgage banking income to see if the bank can maintain the meteoric growth in these areas.

United Bankshares has branches in the Mid-Atlantic region, with a presence as # 1 community bank in Washington DC and # 2 bank in West Virginia based on total deposits. Management is also optimistic about expanding operations to South Carolina and North Carolina, which are the sixth and eleventh fastest growing states in the United States over the past year, according to the U.S. Census. from 2020.

In recent quarterly results, the bank increased its interest income to $ 210 million, up 10% from the previous year quarter. It was also helped by a drastic reduction in interest charges, which increased net interest income after provisions for losses by 23%. While the bank saw 22% of commercial loans carried over at one point in 2020, that figure fell to 7% from its profits as of September 30.

The company is also an attractive option for dividend investors. The bank is proud of its ever-increasing dividend – which has grown for 47 years in a row and is currently earning 3.9%.

United Bancorp reports its results on Feb. 3, with analysts estimating EPS of $ 0.61 and revenue of $ 251.09 million. These estimates would mean EPS would remain stable year over year, but they represent a 40% growth rate in total revenue. One thing I’m looking for is continued growth in net interest income, along with a continued reduction in deferral business loans, as well as continued growth in the Carolinas.

Glacier Bancorp is a regional bank with branches in the Rocky Mountains and the Southwest. Over the past two years, the bank has made strategic acquisitions to expand its presence in Utah and Arizona, as well as to establish a new presence in Nevada with the purchase of Heritage Bank of Nevada.

The bank focuses on serving individuals, small and medium-sized businesses and community organizations, with an emphasis on senior mortgages, conventional loans secured by residential properties.

Some things attract me to this bank. The most recent quarterly results released in October showed positive results. Increased deposits, the issuance of $ 1.5 billion in Paycheck Protection Program loans (which attracted 3,000 new customers), and lower interest charges all helped increase revenue. . The bank saw its net interest income jump 13% from a slight increase in commercial loans and 25% in non-interest income from the gain on the sale of loans. For this reason, BPA increased by 42% during this period. It’s also another bank that pays good dividends – with a return of 2.3% at Monday’s prices.

What I find particularly interesting for this bank is that it is located in a geographically advantageous area of ​​the United States. Its presence coincides with some of the fastest growing US states according to the 2020 census. In fact, in 2020 the four fastest growing states were Idaho, Arizona, Nevada, and Utah. , all covered by Glacier Bancorp.

The company reports its results on January 28. Analysts expect EPS to be around $ 0.75 and revenue to $ 199.34 million, which would represent 21% growth for each of these metrics. As Americans continue to grow and move to the geographies covered by Glacier, I am looking for a continued upturn in residential and commercial lending activity to make it an attractive buy.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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