Bank stocks, while volatile, grew in March as the broader stock market, also volatile, remained anemic with mixed U. S. economic signals, quantitative easing, and geopolitical concerns in the Crimean region of Ukraine. The SNL U.S. Bank Index improved 5% in March 2014 with the index for banks between $1 billion and $5 billion growing 3% and banks less than $500 million growing 4% both outpacing the S&P 500 which remained nearly flat at 0.7% in March. Banks between $500 million and $1 billion nearly matched the growth of the S&P 500 growing a scant 0.8% during the month.
While the growth in bank pricing cooled in March, bank values remained well above their March 2013 values. The SNL U.S. Bank Index was up an impressive 29% since March 2013, as the S&P 500 gained 19% during the same period. The SNL U.S. Bank index for banks $1 billion to $5 billion posted a 31% increase while the smaller banks posted gains of approximately 15% to 24%.
REGIONAL PRICING HIGHLIGHTS
Public banks in the Southwest continued to capture top pricing ending March at 192% tangible book and 18.9x on last twelve months earnings while reporting the lowest non-performing asset levels. Western banks followed ending the month at 166% of tangible book and 17.5x last twelve months earnings. Both the Southwest and West public banks reported the highest equity levels and earnings levels. With the exception of Southeastern banks at 142% of tangible book, all other regions approximated or exceeded 150% of tangible book pricing.
PRICING BY SIZE
All financial institutions by size exceeded 110% of tangible book and 13x last twelve months earnings as of March 2014. Financial institutions in excess of $5 billion in assets continued to enjoy strong pricing multiples with banks $5 billion to $10 billion topping the charts at nearly 18x earnings and 200% of tangible book ending the quarter at 203% while banks greater than $10 billion in assets reached 184% of tangible book and 17x last twelve months earnings as of March 2014. The smallest institutions reported the lowest pricing between 112% and 115% of tangible book and between 13x and 14x last twelve months earnings for institutions with assets under $1 billion which also reported the lowest asset quality.
More information regarding nationwide M&A activity can be found here.