20 MARCH / APRIL 2019 Michael A. Renninger Principal Renninger & Associates LLC mrenninger@ renningerllc.com Renninger & Associates LLC is a Diamond Associate Member of the Indiana Bankers Association. Indiana Statistics Click on the hand icon in HB Digital to access statistics through Jan. 31, 2019; Dec. 31, 2018; and Nov. 30, 2018 – or visit: indianabankers.org/bank-thrift-stock-update The Size, Pricing and Profitability Reports for Indiana Banks and Thrifts as of Jan. 31, 2019, Dec. 31, 2018, and Nov. 30, 2018, are available by clicking on the icon on this page or by visiting the designated website location. These Reports present the stock price changes for the 33 Indiana banks and thrifts that are traded on the NASDAQ and Over-The-Counter (OTC) markets over the prior two years, one year and year-to-date, in addition to pricing and performance metrics. Four broad market indices and five bank and thrift indices are also tracked. At a very high level, it is fair to say that the broad and bank indices at Jan. 31, 2019, after being decimated in late December, have largely recovered to the levels reviewed in my last report as of Nov. 30, 2018. The volatility is a reflection of manic periods of optimism and pessimism about the net economic impact of resolving, or not resolving, a number of substantial issues. At the forefront is the evidence of economic weakness abroad and the expectation that U.S. domestic weakness is bound to follow, despite the current climate of a relatively good economy, low unemployment and contained inflation. International geopolitical issues, such as the trade wars, tariffs and sanctions, threaten to disrupt trade. Domestic political dysfunction, manifested in harsh discourse and a long partial government shutdown, creates investor uncertainty. Federal Reserve interest rate policy, at one point hawkish and more recently somewhat dovish, impacts economic growth expectations. Numerically, the four broad indices as of Jan. 31, 2019, were up an average of 8.31 percent since Dec. 31, 2018, and down only 1.66 percent since Nov. 30, 2018. The five bank indices as of Jan. 31, 2019, were up an average of 10.23 percent since Dec. 31, 2018, and down 4.72 percent since Nov. 31, 2018. Taking a longer-term view, the four broad indices as of Jan. 31, 2019, are up an average of 23 percent from two years ago and down 3.62 percent from one year ago. The five bank indices as of Jan. 31, 2019, are up an average of just 0.21 percent from two years ago and down a significant 13.27 percent from one year ago. Bank indices continue to trail the broad indices, despite generally positive bank earnings reports and near-term prospects. NASDAQ-traded Indiana banks have a median decrease of 5.54 percent and 14.4 percent over two years and one year, respectively, and up 5.07 percent year-to-date. NASDAQ-traded Indiana banks are trading generally in concert with the similarly sized, out-of-state regional banks with a significant presence in Indiana. In contrast, OTC/Pink sheet-traded Indiana banks have an increase of 20.64 percent and 2.55 percent over the two-year and one-year time horizons, respectively, and down 0.15 percent year-to-date. It stands to reason that banks that did not experience dramatic declines in December would be relatively flat in January as the higher volume stocks recovered. Two Indiana banks are expanding into nearby states through acquisition. First Financial Corporation based in Terre Haute (THFF - $3.0B in assets) announced the acquisition of Hopfed Bancorp Inc. based in Hopkinsville, KY ($905M in assets) on Jan. 7, 2019. THFF will significantly expand its current market area of Western Indiana and Eastern Illinois to Kentucky and Tennessee. The $128.3M purchase price will be paid with 50 percent stock and 50 percent cash, and represents 152.5 percent of tangible book value and 31.8 times earnings. German American Bancorp Inc. based in Jasper (GABC - $3.9B in assets) announced the acquisition of Citizens First Corp. based in Bowling Green, KY ($476M in assets) on Feb. 21, 2019. The acquisition is a natural add-on to its recent purchase of First Security Inc., which has a presence in Bowling Green. The $68.2M purchase price will be paid with 77 percent stock and 23 percent cash, and represents 148 percent of tangible book value and 14.2 times earnings. HB STOCK ANALYSIS Indiana Bank & Thrift Stock Update Review as of Jan. 31, 2019
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