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Small Banks See Small Gains in Valuation: An Update on the Little Guys

October 12th, 2012 |

where-u-stand.pngSmall bank stocks that don’t trade on the big exchanges have missed out on the price gains of the big bank stocks lately. During the third quarter, the Monroe Securities community bank stock index rose .7 percent and its thrift index climbed 4.1 percent, while the SNL Bank and Thrift Index climbed 7.1 percent, according to the firm, which is a market maker for more than 1,000 community bank stocks.

That’s a change from the second quarter, when big banks were sucking wind and community stocks saw slight gains.

Valuations for community banks improved slightly during the third quarter. The average price to tangible book value for community banks, defined as banks below $1 billion in assets, was 78 percent, according to Monroe Securities. That was an improvement from about 76 percent in the prior quarter but a big climb from end of 2011, when community bank stocks sunk to a low of about 66 percent price to tangible book value.

The number of small bank mergers or acquisitions improved slightly in the quarter, at 49, compared to 45 the quarter before, and 50 deals in the first quarter. M&A deal values fell a bit, from 125 percent of tangible book value to 95 percent in the third quarter.

Monroe Securities uses stock values based on OTC Markets and OTC Pink, an electronic bulletin board for stocks that don’t trade on the New York Stock Exchange or NASDAQ OMX.

For the full report, click here.

* Trends are based off banks with less than $1 billion in assets.
* Source: Monroe Securities

nsnyder

Naomi Snyder is the managing editor for Bank Director, an information resource for directors and officers of financial companies. You can follow her on Twitter at twitter.com/naomisnyder or get connected on LinkedIn.

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