26 MAY / JUNE 2023 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, 2023, or visit: indiana.bank/bank-thriftstock-update. StockAnalysis Review as of March 31, 2023 INDIANA BANK & THRIFT STOCK UPDATE The Size, Pricing and Profitability Reports for Indiana Banks and Thrifts as of Mar. 31, Feb. 28 and Jan. 31, 2023, 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 sudden collapse of Silicon Valley Bank, Silvergate Capital and Signature Bank in March have had a profound impact on financial sector stocks and may have long-term lingering repercussions. To summarize, SVB failed because it had a concentration of large corporate depositors that, through social networking, effectively caused a run on the bank’s deposits after the bank disclosed it sold securities at a loss and announced plans to raise capital. A large percentage of the bank’s deposits were in accounts that exceeded the $250,000 FDIC insurance cap. Despite regulatory oversight and standard interest rate risk testing requirements, SVB had deployed short-term deposits into long-term, fixedrate investment securities before the Federal Reserve increased interest rates almost 5% in just over a year. Astute depositors understood their loss exposure as the growing unrealized loss on these investments imperiled equity in the event the bank was forced to sell the assets for liquidity purposes. The phenomenon resulted in similar deposit runs at Silvergate and Signature, both of which also had large exposures to cryptocurrencies. Regulators and the U. S. Treasury Department took swift and unprecedented actions to take over the banks, protect otherwise uninsured depositors and create other backstops to reduce the possibility of additional bank failures and to mitigate the risk of further contagion. Apart from nostalgic memories of watching the holiday movie “It’s A Wonderful Life,” these events are a reminder that no bank is immune to a run on deposits. The lingering impacts for banks will undoubtedly include higher costs due to greater regulatory burden and increased FDIC assessments, heightened depositor concerns and greater investor scrutiny of financial stocks. The movement in the average of the four bank and thrift indices noted above tells the story about how these events have caused bank stocks to be out of favor compared to the broad market. The bank indices were up 8.3% YTD in January, up 6.5% YTD in February, and down 17.8% YTD in March. Compared with the movement in the average of the four broad market indices noted above, the indices were up 6.6% YTD in January, up 3.9% YTD in February, and up 7.7% YTD in March. At this writing, the concern about future runs on deposits has abated. The Federal Reserve has continued to raise interest rates but is expected to stop in the near term. HB
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