U.S. Treasury yields surged to new highs last Friday, rising to as high as 1.8%, marking the highest in the past two years. U.S. Treasury yields grew swiftly in the first week of the year after closing at 1.51% on Dec.31, 2021. The rise in Treasury yields should drive banks’ interest margins.
Furthermore, in its December meeting, the Federal Reserve announced that it would reduce its bond holdings. It also plans to accelerate the reduction of its monthly bond purchases in January and will then begin raising interest rates. Higher interest rates help banks increase their revenues.
Therefore, we think it could be wise to bet on regional bank stocks BOK Financial Corporation (BOKF), Hancock Whitney Corporation (HWC), and Atlantic Union Bankshares Corporation (AUB), which are well-positioned to benefit from the industry tailwinds.
BOK Financial Corporation (BOKF)
BOKF is a Tulsa, Okla.-based financial holding company that provides various financial products and services. The company operates through commercial banking, consumer banking, and wealth management segments.
BOKF’s net income for its fiscal third quarter increased 13.1% sequentially to $188.30 million. The company’s EPS increased 25.1% year-over-year to $2.74. And its net interest revenue increased 3.1% year-over-year to $280.27 million.
Analysts expect BOKF’s EPS and revenue for its fiscal 2021 to increase 46.4% and 7.7%, respectively, year-over-year to $9.06 and $1.86 billion. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 43.8% in price to close Friday’s trading session at $111.48.
BOKF’s POWR Ratings reflect its solid prospects. The company has an overall B rating, which translates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
It has a B grade for Momentum and Stability. It is ranked #6 of 26 stocks in the Southwest Regional Banks industry. Click here to see the other ratings of BOKF for Growth, Value, Sentiment, and Quality.
Hancock Whitney Corporation (HWC)
HWC is a bank holding company for Hancock Whitney Bank, which provides a range of traditional and online banking products and services to commercial, small business, and retail customers. The Gulfport, Miss., company offers treasury management services, transaction and savings deposit products, unsecured loan products, and letters of credit. It also provides trust and investment management services to retirement plans, corporates, and individuals.
For its fiscal third quarter, ended Sept. 30, 2021, HWC’s net income came in at $129.58 million, up 63.2% year-over-year. Its EPS increased 46% sequentially to $1.46. Also, its non-interest income increased 11.4% year-over-year to $93.36 million.
For fiscal 2021, HWC’s EPS and revenues are expected to increase 1,029.6% and 2.9%, respectively, year-over-year to $5.02 and $1.30 billion. It surpassed consensus EPS estimates in three of the trailing four quarters. The stock has gained 39.7% in price over the past year to close Friday’s trading session at $54.29.
HWC’s POWR Ratings reflect strong prospects. The company has an overall B rating, which translates to a Buy in our proprietary rating system.
It has a B grade for Momentum, Stability, and Sentiment. Within the Southeast Regional Banks industry, it is ranked #3 of 25 stocks. To see the other ratings of HWC for Growth, Value, and Quality, click here.
Atlantic Union Bankshares Corporation (AUB)
AUB provides banking and related financial services to consumers and businesses. The Richmond, Va.-based concern accepts various deposit products, including savings, time deposits, money market accounts, and certificates of deposit. The company also offers commercial, residential mortgage, industrial, and consumer loans.
AUB’s net income increased 22.2% year-over-year to $74.56 million. The company’s EPS came in at $0.94, representing a 27% increase year-over-year. Its non-interest income came in at $29.93 million, up 5.1% sequentially.
For its fiscal 2021, AUB’s EPS is expected to increase 71.5% year-over-year to $3.31. It surpassed the Street’s EPS estimates in three of the trailing four quarters. Over the past month, the stock has gained 18.4%in price to close Friday’s trading session at $41.19.
AUB’s strong fundamentals are reflected in its POWR ratings. It has a B grade for Momentum, Stability, and Sentiment. It is ranked #8 in the same industry. Click here to see the other ratings of AUB for Growth, Value, and Quality.
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OMF shares were trading at $54.49 per share on Monday afternoon, up $1.36 (+2.56%). Year-to-date, OMF has gained 8.89%, versus a -3.53% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets. More...
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