36 SEPTEMBER / OCTOBER 2021 Stock Analysis Review as of July 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 July, 31, June 30 and May 31, 2021, or visit: indiana.bank/bank-thriftstock-update The Size, Pricing and Profitability Reports for Indiana Banks and Thrifts as of July 31, June 30 and May 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. The broad indices improved an average of 15.3% YTD and the bank indices improved an average of 19.5% YTD. While the four broad indices continue to set fresh all-time highs, the bank indices have declined slightly over the last two months after setting new highs earlier this year. In comparison, Indiana’s OTC/Pink Sheet-listed banks are up a median of 16.2% YTD, but NASDAQ-traded banks are only up a median of 8.9% YTD. Indiana’s NASDAQ-listed banks are trading at a median multiple of 141.2% of tangible book value, and OTC/Pink Sheet-listed banks are trading at a median multiple of 110.2% of tangible book value as of July 31, 2021. While these median multiples are much improved from the depths of the pandemic in July 2020 when median book value multiples were 113.3% and 91.2% of tangible book value respectively, Indiana’s NASDAQ-listed and OTC/Pink Sheet-listed banks have not recovered from the pre-pandemic median levels of 181.5% and 110.2% of book value, respectively, on Dec. 31, 2019. It is well understood that banks of all sizes and geographies are experiencing net interest margin compression and are challenged to deploy significant deposit growth resulting largely from pandemic-related government assistance programs. Indiana’s NASDAQ-traded banks had a median net interest margin of 3.17% and a median loan/deposit ratio of 78% as of March 31, 2021. This compares to a pre-pandemic median margin of 3.64% and a median loan/deposit ratio of 91% as of Dec. 31, 2019. First Financial Corporation (Terre Haute) announced on Aug. 10, 2021, that it will acquire Hawesville, KY-based Hancock Bancorp Inc. ($344M in assets) for $31.4M in cash. The price represents 108% of tangible book value and 13.2 times LTM earnings, which is well below the median YTD Midwest book value multiple of 135.8% and earnings multiple of 18.6 times. The acquisition fills a geographic void between THFF’s legacy footprint and its acquisition of Hopfed Bancorp, based in Hopkinsville, KY, in 2019. This transaction represents the continuation of a trend in which Indiana’s larger banks are acquiring substantial banking assets in surrounding states. Old National announced a 56%/44% merger of equals transaction with Chicago-based First Midwest Bancorp ($21B in assets) on June 1. In addition, Horizon Bancorp announced on May 25 the acquisition of 14 Michigan branches required by regulators to be divested by Huntington Bancshares to gain approval of its acquisition of TCF Financial. HB
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