32 JULY / AUGUST 2022 StockAnalysis Review as of May 31, 2022 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 May 31, April 30 and March 31, 2022, or visit: indiana.bank/bank-thriftstock-update. The Size, Pricing and Profitability Reports for Indiana Banks and Thrifts as of May 31, April 30 and March 31, 2022, 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 29 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 four bank and thrift indices are also tracked. The broad indices declined an average of 14.9% YTD, and the bank indices declined an average of 11.3% YTD as of May 31, 2022. In comparison, Indiana’s NASDAQ-traded banks are down a median of 10.0% YTD, while Indiana’s OTC/Pink Sheet-listed banks are flat YTD. Compared to May 31, 2020 when the world was dealing with the early stages of the COVID-19 pandemic, the broad and bank indices are up an average of 31.9% and 54.5%, respectively. Indiana’s NASDAQ-traded banks are up a median of 37.1%, and Indiana’s OTC/ Pink Sheet-listed banks are up 37.4% over the two-year period. The six selected banks headquartered outside Indiana with assets over $100 billion are trading at a median multiple of 200.1% of tangible book value and 12.1 times LTM earnings, while the eight selected banks headquartered outside Indiana with assets under $100 billion are trading at a median multiple of 181.1% of tangible book value and 12.7 times LTM earnings as of May 31, 2022. In comparison, Indiana’s NASDAQ-listed banks are trading at a median multiple of 142.6% of tangible book value and 10.3 times earnings, and OTC/ Pink Sheet-listed banks are trading at a median multiple of 120.7% of tangible book value and 9.2 times earnings as of May 31, 2022. The consistent theme is that the larger banks with greater liquidity trade at higher multiples. On balance, it appears that banks are holding onto the deposit growth that coincided with COVID-related government stimulus programs. Putting those funds to work as loans has continued to be challenging, as loan-to-deposit (L/D) ratios are well below pre-pandemic levels. The median L/D ratio for Indiana’s NASDAQ-listed and OTC/Pink Sheet-listed banks is approximately 76%, compared to 91% as of Dec. 31, 2020. This is consistent with the selected banks headquartered outside Indiana, which have a median L/D ratio of 72%, compared to 88% as of Dec. 31, 2020. While median net interest margins have narrowed over the last two years, efficiency ratios and asset quality ratios have remained strong and have generally contributed to good earnings. At this writing, broad market and bank stock prices have experienced significant volatility largely due to rapid inflation. The Federal Reserve is expected to continue and perhaps accelerate interest rate increases and other money supply tightening measures. While many observers expect a recession in the next year, the question is its depth and length. HB
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