32 MAY / JUNE 2021 Stock Analysis Review as of March 31, 2021 INDIANA BANK & THRIFT STOCK UPDATE Michael A. Renninger Principal Renninger & Associates LLC mrenninger@ renningerllc.com Renninger & Associates LLC is a Diamond Associate Member of the Indiana Bankers Association. Securities offered through Ausdal Financial Partners Inc. Member FINRA/SIPC. 5187 Utica Ridge Road, Davenport IA 52807 563-326-2064. Renninger & Associates and Ausdal Financial Partners Inc. are separately owned and operated. Indiana Statistics Click on the hand icon in HB Digital to access statistics through March 31, Feb. 28 and Jan. 31, 2021, or visit: indiana.bank/bank-thriftstock-update. The Size, Pricing and Profitability Reports for Indiana Banks and Thrifts as of March 31, Feb. 28 and Jan. 31, 2021, are available by clicking on the icon on this page in HB Digital or by visiting the designated website location. These reports present the stock price changes for the 30 Indiana banks and thrifts that are traded on the NASDAQ and Over-The-Counter markets over the prior two years, one year and year-to-date, in addition to pricing and performance metrics. Selected banks headquartered outside Indiana, four broad market indices, and five bank and thrift indices are also tracked. As of March 31, all but one of these nine indices have steadily improved since the Jan. 31 analysis. Only the NASDAQ has retraced slightly from its mid-February all-time high as tech stocks took a breather. The other three broad indices and even the five bank indices finally set new five-year highs in March. Of course the impetus for these improvements can be widely debated. The economy continues to reopen as more people receive COVID-19 vaccinations, resulting in lower unemployment. The government is inclined to provide additional stimulus payments to individuals, companies and governmental units in the hopes of ensuring a speedy economic recovery. The Federal Reserve has signaled its intention to keep interest rates low for the foreseeable future, incentivizing borrowing and economic expansion, while pushing some investors to seek higher potential yields by investing in stocks instead of bonds. At the same time, there seems to be only modest concern about inflation, and not nearly enough concern, in this writer’s opinion, about the speed of growth and overall size of government debt. While there is optimism about continued upward trends in the stock market, the impact of anticipated increased government regulation, higher income taxes and the cost of social programs may have a muting effect. Most banks have experienced significant asset growth over the last year, due in part to pandemic relief-inspired deposit growth. As of this writing, the latest asset balances available are Dec. 31, 2020. The 30 Indiana banks tracked in the accompanying Reports grew 13.5% since Dec. 31, 2019. This growth is in line with the eight out-of-state banks under $100 billion in assets (12.5%) and higher than the six out-of-state banks over $100 billion in assets (7.7%). Some banks are limiting asset growth caused by increased deposits by paying off Federal Home Loan Bank advances and other debt. Loan-to-deposit ratios are down markedly over the same time period, as loan growth has been challenged while “COVID bloat” deposits have seemingly not subsided. Current year actual and anticipated additional stimulus payments may exacerbate the situation, which will probably not be fully understood until Sept. 30, 2021, data are available. Meanwhile, quarterly bank profitability is recovering as large loan loss provisions made in the early quarters of the pandemic were not fully warranted. Bank management appears to be offsetting net interest margin pressure by implementing operating efficiencies. On balance, bank stock prices are dependent on earnings, and bank earnings are traditionally highly correlated with the overall economy. HB
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