Carpenter & Company -- 2013 INDUSTRY VALUATION The number of bank merger announcements in 2013 was essentially unchanged from the number of mergers announced in 2012. There were a total of 244 merger announcements involving U.S. ϐinancial institutions made in 2012, according to SNL Financial. In 2013, the total number of ϐinancial institution merger announcements equaled 242. Of the 2012 merger announcements, 218 were completed by year‐end 2013, ϐive were still pending, and 21 had been terminated. Through the ϐirst 17 days of 2014, 143 of the mergers announced in 2013 had been completed, 85 were still pending, and 14 had been terminated. For the merger transactions with reported deal ratios, the average price to tangible book value (P/TBV) ratio for the 2013 announcements at 1.28x was slightly higher than the average P/TBV ratio of 1.20x for the 2012 merger announcements. Assets to be acquired under the 2012 non‐terminated merger announcements totaled $137.1 billion, compared with $111.6 billion for the non‐terminated merger announcements made in 2013. The largest merger by target size for the 2013 announcements was the pending acquisition by Umpqua of the $9.9 billion Sterling Financial. The largest merger from the 2012 announcements was M&T Bancorp’s planned acquisition of the $43.6 billion Hudson City Bancorp. The M&T deal, which was announced on August 27, 2012, is currently scheduled to close by the end of 2014. According to company ϐilings, regulatory approval had been held up by BSA issues at M&T. INDUSTRY VALUATIONS: BANK MERGER AND ACQUISITION ACTIVITY CONTENTS Bank Merger activity ..................................................... 1 National bank stock prices ......................................... 2 California bank stock prices ....................................... 3 CA banks under $125 million ..................................... 4 CA banks $125‐$250 million....................................... 6 CA banks $250‐$500 million....................................... 8 CA banks $500 million‐$1 billion.............................. 9 CA banks $1‐$5 billion ................................................ 11 CA banks $5‐$10 billion ............................................. 12 CA banks $10‐$100 billion........................................ 13 CA thrifts ........................................................................... 14 California mergers ........................................................ 16 LTM P/E ratios ............................................................... 18 Price/Book ratios.......................................................... 19 Ratio comparisons ........................................................ 20 Stock performance under $125 million .............. 21 Stock performance $125‐$250 million ............... 22 Stock performance $250‐$500 million ............... 23 Stock performance $500 mln‐$1 bln.................... 24 Stock performance $1‐$5 billion............................ 25 Stock performance $5‐$10 billion ......................... 25 Stock performance $10‐$100 billion.................... 26 Stock performance thrifts ......................................... 26 Return rankings ............................................................. 27 The number of banks continued to dwindle in 2013, yet bank stocks recorded an exceptional year. At the end of 2013, there were 6,813 FDIC‐insured ϐinancial institutions, a decline of 279 institutions over the year. That 3.9% drop essentially matched the percentage decline in 2012 and brought the number of banks to an historic low in the annuls of FDIC history. By the end of 2013, there were 17 fewer ϐinancial institutions headquartered in California than at the start of the year. The number of publicly‐traded California banks declined, with 2013 ending with seven fewer banks in the Carpenter & Company tracking report. Scarcity may be a contributing factor for the exceptional stock performance of the California banking industry. Over 83% of the companies tracked in the Carpenter & company stock report recorded higher stock prices, and more than 85% of the companies with rising stock prices experienced price gains well in excess of 10%. Largely due to the run‐up in stock prices, the market capitalization of California’s publicly‐traded banks and thrifts was 67% higher than at the end of 2012. NOTE: This analysis utilized data for bank assets, earnings, and share counts, as of September 30, 2013.
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Carpenter & Company --
2013 INDUSTRY VALUATION
Thenumberofbankmergerannouncementsin2013wasessentially unchanged from the number of mergersannounced in 2012. There were a total of 244 mergerannouncementsinvolvingU.S. inancialinstitutionsmadein 2012, according to SNL Financial. In 2013, the totalnumber of inancial institution merger announcementsequaled 242. Of the 2012 merger announcements, 218were completed by year‐end 2013, ive were stillpending,and21hadbeen terminated.Throughthe irst17daysof2014,143ofthemergersannouncedin2013had been completed, 85were still pending, and 14 hadbeenterminated.For the merger transactions with reported deal ratios,the average price to tangible book value (P/TBV) ratioforthe2013announcementsat1.28xwasslightlyhigherthan the average P/TBV ratio of 1.20x for the 2012mergerannouncements.Assets to be acquired under the 2012 non‐terminatedmergerannouncementstotaled$137.1billion,comparedwith $111.6 billion for the non‐terminated mergerannouncements made in 2013. The largest merger bytargetsizeforthe2013announcementswasthependingacquisition by Umpqua of the $9.9 billion SterlingFinancial. The largest merger from the 2012announcementswasM&TBancorp’splannedacquisitionofthe$43.6billionHudsonCityBancorp.TheM&Tdeal,whichwas announced on August 27, 2012, is currentlyscheduled to close by the end of 2014. According tocompany ilings,regulatoryapprovalhadbeenheldupbyBSAissuesatM&T.
INDUSTRY VALUATIONS: BANK MERGER AND ACQUISITION ACTIVITY
Thenumberofbankscontinuedtodwindlein2013,yetbankstocksrecordedanexceptionalyear.Attheendof2013, therewere6,813FDIC‐insured inancial institutions,adeclineof279 institutionsover theyear. That 3.9% drop essentially matched the percentage decline in 2012 and brought the number ofbankstoanhistoriclowintheannulsofFDIChistory.Bytheendof2013,therewere17fewer inancialinstitutions headquartered in California than at the start of the year. The number of publicly‐tradedCaliforniabanksdeclined,with2013endingwithsevenfewerbanksintheCarpenter&Companytrackingreport. Scarcity may be a contributing factor for the exceptional stock performance of the Californiabankingindustry.Over83%ofthecompaniestrackedintheCarpenter&companystockreportrecordedhigherstockprices,andmorethan85%ofthecompanieswithrisingstockpricesexperiencedpricegainswellinexcessof10%.Largelyduetotherun‐upinstockprices,themarketcapitalizationofCalifornia’spublicly‐tradedbanksandthriftswas67%higherthanattheendof2012.NOTE:Thisanalysisutilizeddataforbankassets,earnings,andsharecounts,asofSeptember30,2013.
Carpenter & Company --
Industry Valuations
Forthemergerannouncementsmadein2013,Texaswasthestatewiththemostmergertargetsat29.ThestateinthedistantsecondpositionformostmergerswasIllinoisat14,andCaliforniawasthirdwith13.Thetargetassetsizeforthe2013classofmergerannouncementsrangedfrom$4.2million(OakwoodStateBank)to $9.9 billion (Sterling Financial). The average asset size of the targets equaled $492 million, while themedian sizewas $168million. In 2012, the acquisition target size ranged between $7.4million and $43.6billion.Theaveragetargetsizeforthe2012mergerannouncementsequaled$615million,whilethemedianmergersizewas$126million.A total of 13 merger announcements in 2013 involved California institutions, compared with 14announcements in2012.All14of the2012Californiamergerannouncementswerecompletedbyyear‐end2013,while eight of the13announcements from2013were closed in2013.Of the ivependingCaliforniaacquisitions, two transactions involved the recapitalization of institutions by private investors, while theotherthreetransactionswillresultinthefurtherreductioninthenumberofbankingchartersinthestate.Forthe irst27daysof2014,therehadbeen15bankmergerannouncementsmadeandinvolved$9.1billionintargetassets.Threeoftheannouncedacquisitionstargetedinstitutionswithmorethan$1billioninassets.Reported deal ratios for the 2014 mergers announced through January 27 indicated a step‐up in pricingrelative totangiblebookvalue.Dealratioswerereported for13of the15mergerannouncements,withanaveragepricetotangiblebookvalueof1.45x.Twooftheearly2014announcementsinvolvedtheacquisitionsofpublicly‐tradedCaliforniabanks,speci icallyBankonIt,Inc.andNorthValleyBancorp.
INDUSTRY VALUATIONS: NATIONAL BANK STOCK PRICES Oneofthemostfeaturedeconomicnewsitemin2013wastheexceptionalperformanceofthestockmarket.TheDowJonesIndustrialAverageclimbed26.5%in2013forthebestmarketadvancesince1997.In2012,theincreasefromyear‐endtoyear‐endfortheDowequaled7.3%.In2011,thegainwas5.5%.At no time over the course of last year was the Dow ever below its start‐of‐the‐year level. Over the 252tradingdaysin2013,theDowwashigherin146ofthosedaysfora58%ratioofup‐days.Inaddition,for43ofthetradingdates,theDowincreasedbymorethan100points.The rise inequitymarketpriceswasbroadlybased.TheS&P500 index climbed29.6%over the courseof2013, comparedwith the 13.4% rise in 2012 and no change in 2011. The trends for theNASDAQwere adeclineof1.8%in2011,andgainsof15.9%in2012and34.0%in2013.Thebankingindustryexceededtheexceptionalstockperformanceofthebroadermarket,asre lectedintheresults of the Dow, S&P 500, and NASDAQ indices. The KBW Bank stock index increased 35.1% over thecourseof2013,besting therise in theDowbymorethan8.5percentagepoints.The35.1%advance in theKBWindexin2013followedthe30.2%advancethatoccurredin2012,thusproducingatwo‐yearincreaseintheKBWindexof76%.Thetwo‐yeargainintheDowwas36%.
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Carpenter & Company --
Industry Valuations
INDUSTRY VALUATIONS: CALIFORNIA BANK STOCK PRICES The trend towarddecliningpopulationsofCaliforniabanksand thrifts continued in2013.Atyear‐end2013,therewere a total of 224California‐headquarteredbanks and thrifts, a reductionof 17 over year‐end2012.Sixteen banks were acquired by other inancial institutions, and there was one voluntary liquidation of abankingcharter.NoCalifornia inancialinstitutionfailedin2013,norwasthereanybankestablished.The number of publicly and actively‐traded California banks and thrifts declined in 2013, in line with thegeneraltrendsforthebankingindustry.Overthepastthreeyears,thenumberofbankslistedintheCarpenter&Companystocktrackingreportdeclinedbythefollowingcounts:tenin2011,sixin2012,andsevenin2013.Theseven‐bankreductionin2013occurreddespiteaddingCapitalSourceBanktothetrackingreport.Attheendof2013, therewere137companies featured in the tracking report,down from150 in2011and144 in2012.Thedeclineoccurredentirely in thecommercialbankingsector.Atyear‐end2013, the tracking reportfollowedsixthriftsand131commercialbanks.Bank stock prices continued on an increasingly upward course in 2013. In 2012, 78% of the stocks in theCarpenterstudyexperiencedstockpricegainsfortheyear.In2013,thegainingratioroseto83%.Theshareofstocks with annual price declines fell from 22% in 2012 to 15% in 2013. In contrast, 59% of the trackedcompaniesin2011reportedstockpricedeclinesonayear‐endtoyear‐endbasis. Asa resultof the impressivegains in stockprices in2013,Californiabanksachievedsigni icant increases inprice to tangiblebookvalue (P/TBV) ratios.At theendof2011,only39of the150publicly‐traded inancialinstitutions,(a26%share)carriedvaluationsinexcessoftangiblebookvalue.In2012,54ofthe144publicly‐traded inancialinstitutions(a38%share)werepricedabovebookvalue.Bytheendof2013,88bankswerevaluedaboveTBVfora63%share.Thenumberofseverelyundervaluedstockswassigni icantlylesslastyear.In 2011, there were 23 companies valued at less than 50% of tangible book value. There were seveninstitutionsatlessthan50%ofTBVin2012andonly ivein2013. Banksweregroupedbysizewithinsevenassetclassi ications,andtherewasoneclassentirelyofthriftsinthetracking report. All eight classes achieved increased ratios of average stock prices to tangible book value in2013.Comparedtothewatershedyearforvaluationsin2006,however,onlytwoassetclassesreportedhigherP/TBVratiosin2013thanin2006.Theassetclassesthatexceeded2006ratioswere$5‐$10billionbanksandthethriftindustry.Exceptforthesmallestbankingassetclass(under$125million),thegroupsanalyzedwerepricedabovetangiblebookvaluein2013,upfrom2012whenonlyfouroftheeightgroupswerevaluedaboveTBV.ThehighestaverageratioforP/TBVoccurredforbanksinthe$10‐$100billionrange,beatingoutthe$5‐$10billiongroup,whichhadcarriedthehighestP/TBVaveragein2012.ThefollowingtabledisplaystheP/TBVaveragesfortheeightassetclassesusedintheCarpenter&Companystocktrackingreport.
From2006through2010,thethriftclasshadbeenthelowestperforminggroupintermsofP/TBV.Thriftsweretiedforthethirdlowestinperformancein2011andclimbedtothirdbestoftheeightin2013.Thriftsrecordedin2013thelargestpercentageincreaseinP/TBVamongtheassetclasses,up74%.Thesmallestgainin2013P/TBVwasthe9%advanceforbanksunder$125million.ThemarketcapitalizationfortheCaliforniapublicly‐tradedbanksandthriftstrackedbyCarpenter&Companyincreased67%in2013toatotalof$43.2billion,comparedwith$26.8billionin2012.Thisgainintotalmarketcapitalization occurred despite the seven‐bank reduction in the number of banks. As a result, the per‐bankmarketcapitalizationin2013expanded75%overthepreviousyear.
INDUSTRY VALUATIONS: BANKS UNDER $125 MILLION Bankswereanalyzedbyassetsize in theCarpenter&Companystockmarket report.Thesmallestassetsizestudiedwerebanksunder$125million.Attheendof2013,therewere22publicly‐tradedCaliforniabankswithassetslessthan$125million.Theassetsforthisgroupandforalloftheassetclassesinthisreportwerebasedupondataavailableatyear‐end2013,whichwereinformationfromtheSeptember30,2013CallReports.Thereported data for assets, share counts, tangible book value, and last twelve month (LTM) earnings utilizedinformationasofSeptember30,2013.Thereweretwofewerbankswithlessthan$125millioninassetsattheendof2013thanayearearlier.Themovementinthisassetclassincludedthreebanksthatgrewabove$125million,onebankthatwasacquired,andtwobanksthatdeclinedinassetstorejointhisclass.Twentybankscarriedoverinthisgroupfrom2012.MojaveDesertBank,N.A.wasacquired in January2013byMissionBancorp, theparentcompanyofMissionBank,whichisheadquarteredinBakers ield.The$7.1millionpurchaseofMojaveDesertBankwasacashandstock transaction, priced at 0.82x tangible book value. The price represented a 42% premium to the pre‐announcementtradingpriceofMOJA.Northern CaliforniaNational Bank, Paci ic Alliance Bank, andVibra Bank grew above $125million in assetsoverthecourseof2013tojointhenextlargerassetclass.BankonIt,Inc.andCoastBancorpdeclinedinsizetorejointhisgroup.Asthecostofcompilingwithbankingregulationsincreasedtorepresentarisingexpenseforbanksofallsizes,investorperceptionsoftenviewedthatacertainsizeofoperationswascriticalforpro itableandfuturegrowth.Asaresult,someinvestorsheldthatverysmallbanksmayfaceoperationalandearningschallenges.Theunder$125millionclasshadthelowestshareofrisingstockpricesamongtheeightassetclassesanalyzed.Only54%ofthe22stocksinthisgroupexperiencedstockpricegainsin2013.Thenextlowestshareofpricegainswasthe$125‐$250milliongroupwitha77%shareofstockpricegainers.In2013,stockpricesfor13ofthe22banksinthisgroupwerehigherovertheyear,whileeightstocksdeclinedinprice,andonebankreportednochange instockprice. In2012, thegroupof24banksunder$125millionreported13bankswithprice gains and11bankswithpricedeclines. The steepestpercentageprice gain in2013wasthe122%advanceinthepriceofMissionOaksBancorp,whereinitsstockpriceincreased$0.11overtheyearfrom$0.09/sharein2012to$0.20/shareattheendof2013.Intotal,tenofthebanksinthiscategoryexperienced signi icant percentage gains in stockprices. Signi icant price gainswere de ined as increases inexcessof10%.InadditiontoMissionOaks,othersigni icantpricegainswererecordedbyMotherLodeBank,SierraVistaBank,ChinoCommercialBancorp,CoastBancorp,PanPaci icBank,BankonIt,Inc.,DeltaNationalBancorp,SecurityFirstBank,andFriendlyHillsBank.Ofthe11bankswithdecliningstockpriceslastyear,fourstocksdroppedbymorethan35%.Thesteepeststockpricedeclinewas60%forU.S.MetroBank.
Carpenter & Company --
Industry Valuations
Theunder$125millionassetclasswastheonlygroupwithanaverageprice/tangiblebookvalueratiothatwasless than 1.0x, that is, valued under tangible book. Only three banks in this class traded above book value,notablyChinoCommercialBancorp,MotherLodeBank,andTri‐ValleyBank.ChinoCommercialBankhadthehighestP/TBVof1.57x.Therewerethreebanksthattradedatlessthan50%ofbookvalue.ThelowestP/TBVforthisgroupandforallpublicly‐tradedinstitutionswas0.08xforGoldenStateBank.Theotherbankspricedunder50%ofbookvaluewereCaliforniaBusinessBankandDeltaNationalBancorp.Four companies,CoastBancorp,MissionOaksBancorp,PanAmericanBank,andSaigonNationalBank,didnothavemeaningfulP/TBVratiosandwerenotincludedintheaverage.TheaverageP/TBVforthegroupwithmeaningfulP/TBVequaled0.75x,upfromthe0.69xin2012.Asarule,whenaP/Eratioexceeded50x,itwasdeterminedthatpro itsweretoolowrelativetopricingtoyieldameaningfulratio.Hence,P/Eratios inexcessof50xwerecitedasNMornotmeaningful. Inaddition, if thebank sustained losses, theP/E ratiowas shownasNM.Twelve of the22banks reportedpro its for the lasttwelve months (LTM) ending September 30, 2013. Of these 12 pro itable banks, ten of the banks hadmeaningfulpriceearningsratios,thatis,aratiobelow50x.ThemeaningfulpricetoLTMearningsratiosforthisasset class ranged from 9.55x for Cornerstone Community Bank to 33.52x for Sutter Community Bank. TheaverageP/Eforthisclassequaled16.6xin2013,upslightlyfromthe16.3xaveragefor2012.Thetradingvolumeforthesebankswasgenerallyquitesmall.Thevolumeofoutstandingshares,notablythosesharesnotheldby insiders,alsotendedbequite limitedforthisassetclass.Asaresult, theper‐banktradingvolumeforthisassetclasswasthesmallestofanyoftheclasses.Nonetheless,allofthebankstradedoverthecourseof theyear,andonlytwobanksdidnottradeduringDecember.Onebankhad its lastpostedtrade inMay.Thecombinedvolumeofsharestradedoverthecourseof theyearequaled4.1million,anapproximateannual volume of 187,500 shares per bank. This average trading volume in 2013was 23% lower than theaveragevolume for the$125‐$250millionassetclass.Thestockwith thehighestannualvolumeof trades in2013wasAmericas United Bankwith over 1million shares traded. The lowest volumewas the 324 sharestradedforDeltaNationalBancorp.Thebankwiththelargestmarketcapitalizationattheendof2013wasAmericasUnitedBankat$16.5million.Twobankscarriedmarketcapitalizationoflessthan$1million,notablyCaliforniaBusinessBankat$784,426andGoldenStateBankat$341,251.Thetotalmarketcapitalizationofthisgroupequaled$151million,downfromthe$172millionin2012marketcapitalization.Attheendof2013,thereweretwofewerbanksthanintheprioryear.Marketcapitalizationonaper‐bankbasis,however,edgedlowerin2013to$6.8millionfrom$7.1millionattheendof2012.Ofthe22companiesinthisgroup, ifteenreportedyear‐over‐year(YoY)increasesinmarketcapitalization,sixweredownovertheyear,andonewasessentiallyunchanged.Recapitalizationbyaprivate investorbrought$7.9millionofnewcapital toCaliforniaBusinessBank.SierraVistaBankgenerated$1.5millioninnewcapitaloverthelasttwelvemonthsendingSeptember30,2013.
INDUSTRY VALUATIONS: BANKS BETWEEN $125 AND $250 MILLION Theassetcategorywiththelargestnumberofbankswasintherangeof$125and$250millionbanksbaseduponSeptember30,2013data.AttheendofDecember2012,therewere47banksinthisclass.Overthecourseofthepastyear,thisgroupdeclinedbyeightto39banks.Within this class, 36banks remained in the groupover the year.Oneof these carry‐over banks changed itsnamefromOjaiCommunityBanktoOCBBancorp.Elevenbanksexitedthisclass.Twobanksdeclinedinsizetorejointhesmallestassetclass.Threebankswereacquiredbyotherbanks.Sixbanksgrewinassetstojointhe$250‐$500millionclass.Threebanksgrewintothisclassfromtheunder$125milliongroup.Threepublicly‐tradedbanksfromthe$125to$250milliongroupwereacquiredin2013.VisaliaCommunityBankwasacquiredon July1,2013byCentralValleyCommunityBancorp ina50/50cash/stocktransaction.The$21.3milliondeal forVisaliaCommunityBankwasvaluedat1.24x tangiblebookvalue.Paci icPremierBancorpclosedonitsacquisitionofSanDiegoTrustBankonJune24,2013.TheacquisitionofSanDiegoTrustBank was through a cash/stock transaction valued at $31.1 million or 1.21x tangible book value. SterlingFinancialCorporationacquiredCommerceNationalBankonOctober1,2013inacashpurchasevaluedat$42.9million or 1.43x tangible book value. Subsequently, Sterling Financial Corp. of Washington became theacquisitiontargetofUmpquaHoldingsCorp.ofOregon.Growing into this asset class from the under $125 million group were Northern California National Bank,Paci icAllianceBank,andVibraBank.Leavingthisassetclasstorejointheunder$125milliongroupwereBankon It, Inc.andCoastBancorp.Growing into the$250‐$500milliongroupwereFocusBusinessBank,MissionValley Bancorp, Open Bank, Redwood Capital Bancorp, and Seacoast Commerce Bank. Coronado First Bankacquired privately‐held SanDiego Private Bank onApril 2, 2013 in an all‐stock transaction valued at $13.6millionor1.04xtangiblebookvalue.CoronadoFirstBankchangeditsnametoSanDiegoPrivateBankanditstickersymbolSDPBandgrewintothe$250‐$500millionclass.In addition to the completed transactions involving banks in this group, Independence Bank announced onNovember 4, 2013 its intention to acquire Premier Service Bank. This pending 55% cash/45% stocktransactionwasvaluedat$8.6millionforapricetotangiblebookvalueratioof1.26x.Atthebeginningof2013,Premier Service Bank had been under a merger agreement with First California Financial Group, Inc.; thisagreementwasterminatedonJanuary30,2013.Ofthe39banksinthe$125‐$250milliongroupattheendofDecember2013,31banksreportedYoYgainsinstockprices. Sevenbanks reported lower stockprices, andonebankwasunchanged in stockpriceover theyear.Twenty‐threebanksreportedstockpricegainsinexcessof10%.Onlyoneofthepricedeclinesexceeded10%, notably OCB Bancorp at ‐14%. AltaPaci ic Bank ended 2013 with no change in stock price, despitereportingstocktradingactivity.Acquisition‐target Premier Service Bank experienced the steepest price increase last year, up 583%. Othertriple‐digitpricegainswererealizedforCalWestBancorp(278%),ValleyCommunityBank(221%),NorthernCalifornia Bancorp, Inc. (200%), and Uniti Financial Corp (149%). Other signi icant stock price gains wererecorded for American California Bank, American Riviera Bank, Bank of Napa, N.A., Bank of Santa Clarita,CommunityBusinessBank,CommunityBankoftheBay,Community1stBank,BankofSouthernCalifornia,N.A.,First Mountain Bank, Golden Valley Bancorp, Liberty Bancorp, Inc., MNB Holdings Corp., Orange CountyBusinessBank, PinnacleBank, Paci ic AllianceBank, Paci ic CommerceBank, ProAmericaBank,RiverValleyCommunityBank,andSummitBancshares,Inc.
Carpenter & Company --
Industry Valuations
Bankswithinthe$125‐$250millionassetclasswerevalued,onaverage,inexcessoftangiblebookvaluefortheirsttimesince2007.In2013,thisassetclasscarriedaP/TBVof1.05x,upfrom0.93xin2012.Despitethe50%recoveryfromthe2009lowinP/TBVforthisassetclass,thisvaluationratiowasstill51%belowthepeakratioof 2004. Twenty of the 39 banks in this classwere valued in excess of tangible book value. For the secondconsecutiveyear,CapitalBankgeneratedthehighestpricetoTBVforthisclasswithitsP/TBVratioof2.05x.Ofthe10banks in thisclass thatwerevaluedbelowtangiblebookvalue, twobankshadnot‐meaningfulP/TBVratios.Twobankswerevaluedatlessthan0.50xtangiblebookvalue,speci icallyNorthernCaliforniaBancorpandValleyCommunityBank.Banks that reportedpro its for the last twelvemonths throughSeptember30,2013 represented87%of theassetclass.Only iveofthe39bankshadLTMlosses.Threeofthepro itablebanks,speci icallyAltaPaci icBank,Northern California Bancorp, and Vibra Bank, produced price/earnings ratios that exceeded 50x, thuswerecounted as having not‐meaningful ratios. The range of ratios for the 31 banks with meaningful P/E ratiosequaled3.05x forPinnacleBank to 36.25x forOrangeCountyBusinessBank. The averageP/E ratio for thisassetgroupwas16.14x,downfrom17.2xin2012.The total of numberof shares traded last year for this asset class equaled9.5million.Theper‐bank tradingvolumeaveraged242,417,a31%increaseovertheper‐banktradingvolumein2012.Share liquidity forthisassetclasswaslimited,nearlycomparabletothesmallestassetclass.Thelowestvolumesofsharestradedin2013were1,439forBankofSouthernCalifornia,whilethemostsharestradedwerepostedbyCommunity1stBank at 911,327 shares. All but four of the stocks recorded a trade inDecember. Only one stock, AmericanCaliforniaBank,didnotrecordatradeinthefourthquarterof2013.Themarketcapitalizationofthisassetclassequaled$683millionattheendof2013,baseduponyear‐endstockprices and September 2013 share counts. The 2013market capitalization for this class contrastedwith the$760millionmarketcapitalizationattheendof2012.Withthisclassreportingeightfewerbanksthanattheendof2012,theper‐bankmarketcapitalizationactuallyrose16.4%overtheyearfrom$15.03millionattheendof2012to$17.50millionattheendof2013.The bankwith the highest reportedmarket capitalization at the end of 2013was AltaPaci ic Bank at $39.2million. That bank had the highestmarket capitalization in 2012 aswell. The bankwith the lowestmarketcapitalization continued to be Northern California Bancorp, although at $2.1 million, that bank’s marketcapitalizationwasup200%fromitsvalueatyear‐end2012.Thesigni icantgainsinstockpricesexperiencedbythemajorityofthisassetclassweretheprimaryfactorsforthestep‐upinper‐bankmarketcapitalizationin2013.CapitalBankacquirednearly$2millioninadditionalcapitalduringthetwelvemonthsendingSeptember30,2013.Fiveofthe39banksexperiencedreductionsinmarketcapitalizationin2013.
INDUSTRY VALUATIONS: BANKS BETWEEN $250 AND $500 MILLION The number of banks in the $250‐$500 million asset class was unchanged in 2013 at 23 for the thirdconsecutiveyear.Despitetheconsistency inthenumberofbanks, thecompositionofbankswithinthisassetclassvariedovertheyear.Asin2012,therewere17carry‐overbanksfromthepreviousyear.Sixbanksjoinedthisclassfromthe$125‐$250milliongroup.Fivebanksgrewto jointhe$500millionto$1billionclass.Onebankwasacquiredbyalargerin‐statebank.Joining this class in 2013 from the smaller groupwere Focus Business Bank,Mission Valley Bancorp, OpenBank,RedwoodCapitalBancorp,SeacoastCommerceBank,andSanDiegoPrivateBank.Fiveofthesesixbanksexperiencedorganicassetgrowth,whilethegrowthinSanDiegoPrivateBankwasassistedbythemergerofequalsbetweenCoronadoFirstBankandin‐marketSanDiegoPrivateBank.Growingintothenextlargerassetclass were California First National Bancorp, Commonwealth Business Bank, 1st Century Bancshares, Inc.,PlumasBancorp,andSecurityCaliforniaBancorp.BankofAlameda,thesubsidiarybankofNorCalCommunityBancorp,wasacquiredonNovember29,2013byBankofMarinBancorp.BankofMarinpaid$32.5millionor1.23xTBVinacash/stocktransactionforBankofAlameda.The acquisition of NCAL Bancorp by privately‐held Grandpoint Capital, Inc. was terminated on January 28,2013.OnSeptember16,2013,anannouncementwasmadethataprivateinvestorwouldinfuse$23.5millioninnewcapital toobtainamajorityownershipofNCALBancorp,andexistingdirectorswill investanadditional$1.5millionintothecompany.Thistransactionwasanticipatedtocloseinthe irsthalfof2014.HeritageOaksBancorpannouncedonOctober21,2013itsintentiontoacquirein‐marketMissionCommunityBancorp.Thiscash‐stocktransactionincludedtheassumptionofdebtinadealvaluedat$56.0millionor1.63xtangiblebookvalue.Overthecourseof2013,nineteenbanksinthisclassexperiencedstockpricegains,whilefourstocksdeclinedin price. Following the termination of the announced acquisition by Grandpoint, the price of NCAL edgedsteadilylowerovertheyeartoproducethesteepestannualstockpricedeclineof72%.Seventeenofthe19stocksrecordedsigni icant,over10%,gainsinstockpricesin2013.Thesteepestpricegainwas recorded for Open Bank, up 257%. Other double‐digit rates of stock price gains were reported forAvidbank Holdings, Inc., Bay Commercial Bank, California Bank of Commerce, CommerceWest Bank, FocusBusinessBank,MissionCommunityBancorp,ManhattanBancorp,MissionValleyBancorp,PresidioBank,PlazaBank,RedwoodCapitalBancorp,SeacoastCommerceBank,SantaCruzCountyBank,SanDiegoPrivateBank,SummitStateBank,andValleyCommerceBancorp.
Theaveragepricetotangiblebookvalueforthisassetclassequaled1.18xin2013,upsigni icantlyfromthe0.87xaveragein2012.Eighteenofthe23bankswerepricedabovetangiblebookvalue.Fouroftheremainingivebankswerevaluedwithin11basispointsoftangiblebookvalue.ThevaluationforUnitedAmericanBankwasdeemedtobenotmeaningful.ThehighestvaluationwascarriedbySeacoastCommerceBankat2.03x,while thebankswith the lowestmeaningful P/TBVwere tied at 0.89x forBayCommercialBankandNCALBancorp.TheP/TBVratioforthisassetclassralliedgreatlyfromits2009cyclicallow,increasing82%throughtheendof2013.Despitethisrecovery,theP/TBVratioattheendof2013wasstill55%belowthepeakratiothathadoccurredin2004.Onlytwobanksinthisgroupof23 inancial institutionssustainedlossesforthelasttwelvemonthsthroughSeptember30,2013,notablyNCALBancorpandUnitedAmericanBank.LTMpro itsat SeacoastCommerceBankproducedaP/Eratioinexcessof50xand,therefore,theratioforthatcompanywasdeemedtobenotmeaningful. The average P/E ratio for the remaining 30 companies averaged 17.88x at the end of 2013,compared to the 15.31x ratio in 2012. The P/E ratios ranged from 8.72x for Redwood Capital Bancorp to36.85xforPresidioBank.Trading activity for banks in the $250‐$500million class wasmore robust than for the two smaller assetclasses.All23bankstockstradedinDecember,andallbuttwobankspostedtradesduringthe inalweekoftheyear.Thesumofalltradesin2013forthisclassequaled11.1millionsharesforaper‐bankaveragetradingvolume of 480,884 shares or 156%more than the under $125 million bank group. The volume of tradesrangedfrom25,009sharesforValleyRepublicBankto1.47millionsharesforSummitStateBank.Themarketcapitalization for thisclassequaled$898million,upmarginally from$830million in2012.Theaverageper‐bankmarketcapitalizationequaled$39.0millioncomparedto$36.1millionin2012.Therelativestabilityoftheyear‐over‐yearmarketcapitalizationcomparisoncouldbeslightlymisleading.Thebanksthatgrewoutofthisgroupreportedaggregatemarketcapitalizationof$334million,whilethebankscomingintothisclasshadatotalmarketcapitalizationof$196million,or$138millionlessthantheexitinggroup.Therangeinmarketcapitalizationattheendof2013equaledalowof$1.3millionforNCALBancorptoahighof$60.3millionforCommerceWestBank.Withinthisassetgroup,increasesinmarketcapitalizationoccurredforallofthebanks,exceptGreaterSacramentoBancorp.Theannualriseinmarketcapitalizationresultedfromthesteepincreasesstockpricesthatwereexperiencedbythemajorityofthesecompanies.In addition to the price‐driven increase in market capitalization, two banks generated merger‐relatedincreasesinsharecountandcapital.SanDiegoPrivateBankrecognizedmerger‐relatedincreasesincapitalof$16.2million.MissionBank reported a $3.5million increase in capital as a result of itsmerger. Twootherbanksreportedstockofferingorconversionsthataddedmorethan$1millionincapital,speci icallythe$1.5millioncapitalincreasefor1stCapitalandthe$7.9millionofferingbyAvidbank.
INDUSTRY VALUATIONS: BANKS BETWEEN $500 MILLION AND $1 BILLION
CaliforniaFirstNationalBancorp,CommonwealthBusinessBank,1stCenturyBancshares,PlumasBancorp,andSecurity California Bancorp exceeded $500million in assets by September 30, 2013 to join this asset class.Paci icMercantileBancorpdeclinedbelow$1billioninassetstorejointhisclass.CentralValleyCommunityBank,byvirtueofitsacquisitionofthe$200millionVisaliaCommunityBank,grewabove$1billionduring2013.BancofCaliforniacompleteditsacquisitionofThePrivateBankofCaliforniaonJuly1,2013.Thisstock/cashtransactionwasvaluedat$52.0millionor1.28xtangiblebookvalue.ThePrivateBankofCaliforniaacquisitionwasintwophases.First,BeachBusinessBankwasmergedintoThePrivateBankofCalifornia,andlaterThePrivateBankofCaliforniawasmergedintoBancofCalifornia.WilshireStateBankacquiredtheKorean‐American‐focusedSaehanBankinacash/stocktransactionvaluedat$105.0million.TheWilshire‐Saehandealwasvaluedat1.81xoftangiblebookvalueandclosedonNovember20,2013.Ofthe19banksinthe$500millionto$1billionassetclass,18experiencedstockpricegains,whileonebanksustained aminimal price decline over the year. Sixteen of the 18 stock price gainswere considered to besigni icant increases, that is in excess of 10%. The steepest stock price gain was the 139% advance forCommonwealth Business Bank. The price of Paci ic City Financial Corp. stock increased 122%. Double‐digitpercentage increases in stock prices occurred for American River Bancshares, Bank of Commerce Holdings,California Republic Bank, Community West Bancshares, 1st Century Bancshares, 1st Enterprise Bank, FNBBancorp, First Northern Community Bancorp, North Valley Bancorp, Oak Valley Bancorp, Plumas Bancorp,SecurityCaliforniaBancorp,SunwestBank,andUnitedSecurityBancshares.Thenumberofbankstradingabovetangiblebookvalueincreasedto13bytheendof2013.Ayearearlier,thenumberofbankswithinthisclasswithaprice/tangiblebookvalueratioover1.0xwas ive.Inadditiontothe13bankstradingabovetangiblebookvalue,therewerefourbankswithinstrikingdistanceof1.0x,withratiosrangingbetween0.96xand0.99x.ThehighestP/TBVwas carriedbyCaliforniaRepublicBankat2.13x.ThiswasthesecondconsecutiveyearthatCaliforniaRepublicBankhadthehighestP/TBVforthisassetclass.ThelowestP/TBVwasforthethinly‐tradedSunwestBankat0.78x.TheaverageP/TBVratioforthisassetcategoryequaled1.19xattheendof2013.Thatratiowasupfromthe0.97x average P/TBV at the endof 2012. Since the 2009 low in the ratio, theP/TBVaverage for this grouprecovered92%.Nonetheless,P/TBVforthisgroupwas57%belowthe2004peakratioof2.77x.OnlyonebankinthisgrouprecordedalossforthelasttwelvemonthsendingSeptember30,2013.Therefore,out of the 19 banks, there was only one not meaningful P/E ratio at the end of 2013. The average price/earnings ratio for this class equaled 14.74x, comparedwith the 14.19x P/E at the end of 2012. The lowestreportedP/Ewas5.31xforPaci icCityFinancialCorp.ThehighestP/Ewas40.23xforNorthValleyBancorp.
BANKS BETWEEN $500 MILLION AND $1 BILLION (continued)
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PricetoBook‐‐CABanks$500Mln‐$1Bln
Carpenter & Company --
Industry Valuations
Thetotalnumberofsharestradedin2013forthe$500millionto$1billionassetgroupequaled33.3millionforanaveragevolumeperbankof1.75millionshares.Thisaveragetradingactivityrepresenteda35%increaseoverthevolumein2012.SunwestBank,withits$33,000averagesharepriceanditsclosely‐heldownership,reportedthefewestnumberofsharestradedat198sharesfortheentireyear.Incontrast,thelargestnumberofsharestradedoccurredforPaci icMercantileBancorpat9.0millionshares.Withinthisassetclass,eightofthe19bankshadtradingvolumesinexcessof1millionsharesin2013.Themarketcapitalizationof thisclass in2013 totaled$1.6billion,up from$988million in2012.Partof the63% increase in total market capitalization was the addition over the year of three banks to this group.Nonetheless, theper‐bankmarket capitalization increased37% to$84.6million from$61.7million in 2012.Thelowestmarketcapitalizationwas$29.7millionforPlumasBancorp.ThelargestmarketcapitalizationwasheldbyCaliforniaFirstNationalBancorpat$157.8million,whichwasmorethan4timesgreaterthanPlumasBancorp.OnlyOakValleyBancorpsustainedaYoYreductioninmarketcapitalization.
INDUSTRY VALUATIONS: BANKS BETWEEN $1 AND $5 BILLION Thenumberofbanksinthe$1‐$5billionassetclassdecreasedbytwoin2013to18.Thetwo‐bankreductionmatchedthereductioninthesizeofthisclassthathadoccurredin2012.Therewasconsiderablemovementinthisassetclass.CentralValleyCommunityBank,throughitsacquisitionofVisaliaCommunityBank,grewabove$1billion inassets.Farmers&MerchantsBankgrewabove$5billionto jointhenext largerassetclass.FirstCaliforniaFinancialGroupwasacquiredbyPacWestBancorp.Paci icMercantileBankdroppedbelow$1billioninassetstorejointhesmallerassetclass.Seventeenbankscarriedoverinthisclassfromtheprioryear.All18banksinthisclassreportedannualgainsinstockprices.Allbutonebankreporteddouble‐digitratesofincreaseinstockprices.TheFarmers&MerchantBancorpofLongBeachstockpriceincreaseof3.0%wasthesmallestgainofthegroup.WilshireBancorp,Inc.experiencedthesteepestincreaseof86%.Otherstockpricegainsinexcessof50%wererecordedbyHanmiFinancialCorp.,Paci icPremierBancorp,andTricoBancshares.Only three banks in this groupwere valued below 1.0x price/tangible book value, notablyMechanics Bank,ExchangeBank,andRiverCityBank.MechanicsBankwithits0.85xP/TBVcarriedthelowestratioofthegroup.WestamericaBancorpat3.75xP/TBVhadthehighestvaluationofthegroupandhadthesecondhighestratioofallthepublicly‐tradedcompaniesanalyzed.BridgeCapitalHoldingsandWilshireBancorp,Inc.tradedabove2.0xP/TBV.
BANKS BETWEEN $500 MILLION AND $1 BILLION (continued)
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PricetoBook‐‐ CABanks$1‐$5Billion
Carpenter & Company --
Industry Valuations
Theaverageratioofpricetotangiblebookvaluefortheentireclassequaled1.64xin2013,upfrom1.23xin2012.Theaveragepricetotangiblebookvalueforthisclassrankedfourthhighestoftheeightassetclassesanalyzed.FromitslowinP/TBVin2009,theratioexpanded62%throughyear‐end2013.Allbanks inthisgroupreportedpro its forthetwelve‐monthsendingSeptember2013.Allof theP/Eratioswere meaningful statistics. The range in the price/earnings ratios for this class varied between 8.69x forExchangeBank to 25.80x for Paci ic Premier Bancorp. The average ratiowas 16.89x, a steep rise from the12.21xratioin2012.Thetotalvolumeofsharestradedforthisassetclassequaled254.6millionshares,representinganaverageper‐company trading volume of 14.1 million shares. The 14.1 million shares per‐company trading volumematched the comparable statistic for 2012. Three stocks in the class, speci ically Farmers & MerchantsBancorpofLongBeach,MechanicsBank,andRiverCityBank,werepricedatorabove$100pershare.Forthatreason,therewasconsiderablevariationintradingvolumesbetweenthecompaniesinthisgroup.MechanicsBank,whichclosed2013atapriceof$13,000pershare,hadthelowestannualtradingvolumeat269shares.Incontrast,WilshireBancorp,Inc.recorded93.5millionsharestradedduring2013.This classofbankswasactive in theacquisitionof inancial institutions.Sevenof the18banks in thisclassannounced and/or completed bank acquisitions, including the late January 2014 announcement by TricoBancsharesofitsintentiontoacquireNorthValleyBancorp.BankofMarinBancorpacquiredthe$243millionBankofAlamedaonNovember29,2013.CentralValleyCommunityBancorpacquiredthe$200millionVisaliaCommunityBankon July 1, 2013.Hanmi Financial Corp. announcedonDecember16, 2013 its intention toacquire the $1.6 billion Central Bank of Garland, Texas. Heritage Oaks Bancorp entered into a mergeragreement on October 21, 2013 with the $447million Mission Community Bank. Paci ic Premier Bancorpcompletedtwoacquisitionsin2013,speci icallytheacquisitionsofthe$375millionFirstAssociatesBankofDallas,Texas,andthe$242millionSanDiegoTrustBank.WilshireBancorp,Inc.closedonitsacquisitionofthe$542millionSaehanBancorponNovember20,2013.The market capitalization for the entire class equaled $6.5 billion, a 22% increase over 2012’s marketcapitalizationof$5.4billion.Withtwofewerbanksthanin2012,theper‐bankmarketcapitalizationexpanded36%to$362.9million,up from2012’saverageof$267.7million.Allof thebanks in thiscategory reportedincreasesinmarketcapitalizationlastyear.Marketcapitalizationforthisgrouprangedfromalowof$118.3millionforExchangeBankto$1.5billionforWestamericaBancorp.The following banks reported stock conversion and/or capital acquisition in lows in excess of $1 millionduringtheyearendingSeptember30,2013:AmericanBusinessBank,BridgeCapitalHoldings,BankofMarinBancorp, CU Bancorp, and Preferred Bank. In addition, Central Valley Community Bancorp realized a $24millionincreasetocapitalasaresultofitsacquisitionofVisaliaCommunityBank.
INDUSTRY VALUATIONS: BANKS BETWEEN $5 AND $10 BILLION At the end of 2013, the number of banks with assets, as of September 2013, between $5 and $10 billionequaled ive,atwo‐bankincreaseoveryear‐end2012.Farmers&MerchantsBankgrewintothisclassfromtheunder $5 billion group. The tracking report initiated coverage in 2013 of Capital Source, Inc. BBCN, CVBFinancialCorp.,andPacWestBancorpwerecarry‐oversfromthepreviousyear.On July 22, 2013, PacWestBancorp announced its intention to acquire $8.9 billion Capital Source, Inc. in amixed transaction valued at $2.4 billion or 1.71x tangible book value. Additionally, PacWest closed on itsacquisitionofFirstCaliforniaFinancialGrouponMay31,2013.
Forthesecondconsecutiveyear,allofthebanksinthe$5to$10billionrangeexperiencedannualstockpricegains. In 2013, all ive banks reported stock price gains in excess of 20%. The steepest gain occurred formerger‐targetCapitalSource, Inc.,up90%.Thesecondlargestprice increasewasfortheacquirerofCapitalSource,notablyPacWestBancorp,whichregistereda70%stockpricegain.Fourof the ivebanks inthisclasstradedabovetangiblebookvalue.TheexceptionwasFarmersMerchantsBank at 0.91x tangible book value. The highest price/tangible book value ratio was carried by PacWestBancorpat3.35x.Thegroup’saveragepricetotangiblebookvalueequaled2.14x,thesecondhighestpricetotangiblebookvalueoftheeightclassesanalyzed,andwas94%abovetherecession’slowratioin2009.The ive banks all reported pro its for the twelve months ending September 2013, and each bank hadmeaningfulprice/earningsratios.TheP/Eratiosrangedfrom11.3xforFarmers&MerchantsBankto27.2xforPacWestBancorp.Theaverageprice/earningsratioforthisgroupequaled18.47x,thesecondhighestP/Eoftheeightclassesandwasupfromthe15.72xratioattheendof2012.Thecombinedannual tradingvolumefor the ivebanksequaled778.6millionshares in2013,producinganaveragesharevolumeperbankof155.7millionshares.Farmers&MerchantsBank,withits$5,226pricepershare, reported the fewest shares traded in 2013 at 4,417. In contrast, Capital Source, Inc. experienced anannualtradingvolumeof468.4millionshares.The totalmarket capitalization forbanksbetween$5 and410billion equaled$8.6billion, producing aper‐bank market capitalization of $1.7 billion, compared with $973 million in 2012,. The per‐bank marketcapitalizationincreased76%lastyear.Allofthebanksreportedastep‐upinmarketcapitalization.Thelowestmarketcapitalizationwas$684millionforFarmers&MerchantsBank,whileCapitalSourcehadthehighestmarket capitalization at $2.8 billion. Capital Source, BBCN Bancorp, and PacWest Bancorp experiencedadditionstocapitalthatexceeded$1millionduringtheyearendingSeptember30,2013.
INDUSTRY VALUATIONS: BANKS BETWEEN $10 AND $100 BILLION ThenumberandcompositionoftheCaliforniapublicly‐tradedbankswithassetsbetween$10and$100billionheldsteady,asofyear‐end2013.All ivebanksreportedsigni icantgainsinstockpricesduring2013,withtheprice advances ranging from 37% to 87%. The steepest increase occurred for SVB Financial Group, whileCathay General Bancorp had the lowest percentage gain in stock prices. The rise in stock prices for CityNationalCorp,EastWestBancorp,andFirstRepublicBankwereallaroundthenarrowrangeof60%to63%.
Allofthebankswerepricedabovetangiblebookvalue,withfourofthebanksvaluedover2.30xtangiblebookvalue.Thelowestratiowasthe1.90xforCathayGeneralBancorp,whileEastWestBancorp,Inc.hadthehighestP/TBV at 2.50x. The average price to tangible book value for banks between $10 and $100 billion equaled2.34x, thehighest ratio of the eight asset classes studied. The2013price toTBV average ratio compared to1.55xin2012andrepresenteda59%increaseoverthe2009cyclicallowintheratio.Despitetherun‐upintheratioduring2013,theP/TBVforthisclassofbanksremained6.0%belowits2006rate.All ivebanksreportedmeaningfulprice/earningsratiosbaseduponthe last twelvemonthearningsthroughSeptember30,2013.TheP/Efortheentiregroupaveraged19.42xin2013,upfrom13.59xin2012.Thiswasthe highest ratio of the eight classes analyzed. The range in price/earnings ratios was relatively narrowbetween16.67xforFirstRepublicBankand23.10xforSVBFinancialGroup.Thisclassofbankshadsigni icantstockmarketliquidityandactivestocktrading.Thetotalannualnumberofsharestradedforthisclassequaled688.9millionshares,down4.9%fromthe724.1millionsharevolumein2012.Theper‐bankaveragesharestradedin2013was133.8millionshares,downfromthe2012averageof144.8millionshares.TheonlystockstradingabovetheclassaveragevolumewereEastWestBancorpandFirstRepublicBank.The lowesttradingvolumewas65.4millionshares forSVBFinancial.FirstRepublicreportedthelargestvolumeoftradesat236.1millionshares.Thetotalmarketcapitalizationforthe$10‐$100billionassetcategoryin2013equaled$23.0billion,comparedtothe2012marketcapitalizationof$14.0billion.Onaper‐institutionbasis,theaveragemarketcapitalizationin2013equaled$4.6billion,upfrom$2.8billion in2012.The2013growth inmarketcapitalizationequaled64%. All of the banks reported increased market capitalization for the past year. The highest marketcapitalizationwasheldbyFirstRepublicat$6.9billion.FirstRepublicheldthelargestmarketcapitalizationofallof137stocksinthetrackingreport.CathayGeneralhadthelowestmarketcapitalizationat$2.1billion.Allofthebanksinthisclass,exceptforCityNationalCorp.,reportedadditionsorconversionstocorporatestockthatexceeded$1millionfortheyearendingSeptember30,2013.
acquisitions of three commercial banks, ranked as the largest publicly‐traded thrift in California with $3.7billioninSeptember2013assets.BOFIHoldingsalsoexceeded$3.0billioninassets.Five of the six thrifts experienced YoY stock price gains in 2013. Only Provident Financial Holdings, Inc.reportedadeclineinstockpricefortheyear.Thelargestannualadvanceinstockpriceswasthe182%increaseinthestockpriceofBOFIHoldings,Inc.Othernotableincreaseswerethegainsof41%forBroadwayFinancialCorp.andthe14%riseinthestockpriceofMalagaFinancialCorp.BOFIHoldings,Inc.reportedthehighestpricetotangiblebookratioofallofthestocksanalyzedinthisreport.TheP/TBV forBOFIHoldings, Inc. climbedto3.90x in2013 from1.70x in2012.Also tradingabove tangiblebook value were Banc of California at 1.29x and Malaga Financial Corp at 1.19x. The ratios for BroadwayFinancial Corp. and Provident Financial Holdings were deemed to be not meaningful. The average price totangiblebookvalueratiofortheentireclassequaled1.83x,asteepincreasefromthe2008lowandbroughtthethriftP/TBVtoitshighestratiosince2004.Fiveofthesixthriftsreportedpro itsforthelasttwelvemonthsendingSeptember2013.TheP/EratioforBancofCaliforniaexceeded50x,causingtheratiobeconsiderednotmeaningful.BroadwayFinancialCorp.sustainedalossinLTMearnings.TheresultantfourmeaningfulP/Eratiosproduceda16.45xaverage,upfrom12.75xin2012.TheP/Eratiosrangedfrom8.72xforProvidentFinancialCorp.to25.55xforBOFIHoldings.AsaresultofthewidedifferentialintheassetsizeoftheCaliforniathrifts,therewasasigni icantvariationinthemarketcapitalizationwithinthegroup.BroadwayFinancialCorp.carriedamarketcapitalizationof$18.1million.BOFIHoldingsreportedthelargestmarketcapitalizationofanythriftat$1.1billion,whichwasa200%increaseoverits2012marketcapitalization.TotalmarketcapitalizationofCaliforniathriftsclimbedfrom$931millionin2012to$1.8billionattheendof2013.This89%increaseintotalmarketcapitalizationwasprimarilyduetothesteepincreasesinmarketcapitalizationatBOFIandBancofCalifornia.ProvidentFinancialHoldingsandSimplicityreportedreductionsinthelevelsoftheirmarketcapitalizationoverthepastyear.The total tradingvolume in2013 for thriftsequaled87.8millionshares foraper‐institutionaverageof14.6millionsharestraded.The2013tradingvolumewasup132%over2012.Thehighestannualtradingvolumewas for BOFI Holdings at 42.9 million shares, an 186% pick‐up from 2012. The lowest volumes were the276,342sharestradedforMalagaFinancial.
Industry Rankings: LTM through Sept. 2013 Returns on Average Assets and Average Equity
ABOUT THE RETURN RANKINGS Rankings of the 2013 returns on average assets and average equity are based upon data for California financial institutions, as of September 30, 2013, obtained from SNL Financial. Removed from this analysis are California non-depository trust companies. Wherever possible, the rankings were based upon earnings estimates that were adjusted for S-Corporate treatment. S-Corp returns, however, were not generally available for savings associations. The rankings were based upon the following metrics:
Returns on assets and equity for the LTM (last 12 months) ending September 30, 2013. Year-over-year change in the two measures
Note: No adjustments were make in the return data and, therefore, in the rankings for the following factors that may cause a distortion in the return ratios relative to other financial institutions:
A savings association that is a Sub-chapter S corporation. A financial institution with a high dependency on fee income. A financial institution that is owned by a holding company, especially a holding company
absorbing a portion of the operating expenses of the individual financial institution. A financial institution with a large income tax loss carry-forward or for a number of reason
does not have earnings that are not taxed at the full tax rate for California corporations.