48 JULY / AUGUST 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 May 31, April 30 and March 31, 2023, or visit: indiana.bank/bankthrift-stock-update. StockAnalysis Review as of May 31, 2023 INDIANA BANK & THRIFT STOCK UPDATE The Size, Pricing and Profitability Reports for Indiana Banks and Thrifts as of May 31, April 30 and March 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 broad indices increased an average of 9.9% YTD as of May 31, 2023, but the performance of the various indices varied greatly. The Dow Jones – dominated by large industrial conglomerates – was down 0.7% while the NASDAQ Composite – dominated by large tech stocks – was up 23.6%. Meanwhile, the bank indices declined an average of 24.7% YTD. The divergence between the broad and bank market indices has not been this significant since 2020 when bank stocks didn’t bounce back from pandemic impacts as well as the broad market. In comparison, Indiana’s NASDAQtraded banks are down a median of 30.9% YTD, while Indiana’s OTC/Pink Sheet-listed banks are only down 3.1% YTD. So while large tech stocks have enjoyed a good run, bank stocks continue to suffer the carnage brought on by the failures of Silicon Valley Bank and others. The failures, largely brought on by deposit runs that forced the banks to sell otherwise held-to-maturity investments at large losses, have heightened concern among depositors, will likely increase regulatory scrutiny and increase regulation, and have put banks and other financial stocks out of favor with investors. This means even as banks continue to report strong earnings and good asset quality, economic and geo-political headwinds raise concerns about the future. The yield curve inversion (i.e., two-year treasury rates are higher than 10-year treasuries) often indicates a recession, but there is a wide range of estimates as to its likely length, breadth and depth. The Federal Reserve has indicated its intent to continue to raise interest rates in their continued effort to restrain inflation. This will likely result in banks reporting increased unrealized losses on available-for-sale (AFS) investments and decreased capital ratios. A common theme is the NYSE- and NASDAQ-traded banks are larger, more diverse in geography and offerings, more efficient and profitable, have greater stock liquidity and tend to trade at higher multiples of book value and earnings compared to OTC/Pink Sheet banks. This was not the case as of May 31, when the median YTD price-to-tangible book value multiple (110.2%) and YTD Price-to-LTM earnings (7.4 times) exceeded the medians for Indiana’s NASDAQ-traded banks (98.2% and 6.4 times, respectively). In comparison, the seven selected banks headquartered outside Indiana with assets over $100 billion are trading at a median multiple of 149.8% of tangible book value and 7.2 times LTM earnings, while the seven selected banks headquartered outside Indiana with assets under $100 billion are trading at a median multiple of 123.8% of tangible book value and 8.0 times LTM earnings as of May 31. HB
RkJQdWJsaXNoZXIy MTg3NDExNQ==