Off the Lows ...
Taking a long view of Regional & Money Center Banks
Picture yourself on May 8th, 2023. CNBC's screens everywhere scream "BANKING CRISIS" in that alarming red they reserve for particularly awful days. Jim Cramer is gesticulating wildly about contagion risks. Regional bank stocks are in free fall. Silicon Valley Bank? Gone. First Republic? Vanished. Signature Bank? Adios. Silvergate? They didn't even wait for the regulators - they just handed back their charter and shuffled off into the night.
The financial media, those merchants of chaos, had found their latest catastrophe. "Systematic risk" became the phrase du jour. Every armchair economist suddenly had a Ph.D. in bank balance sheet analysis. Twitter (sorry, "X" - though that rebranding disaster was still a few months away) was awash with charts showing deposit outflows that looked like ski slopes with some version of “we’re all going to die”.
And now? Well, well, well. Look who's making 52-week highs. The same banks that were supposedly heading for the morgue are now the darlings of Wall Street. The only crisis these days is finding a bearish analyst note on the sector.
Here's the kicker - and you know exactly where this is going - all you had to do was buy when everyone else was panic-selling. When deposit flight was all anyone could talk about, when KRE looked like it was auditioning for a bungee jumping competition, that was your moment. Your "be greedy when others are fearful" moment, as a certain Omaha-based investor might say.
Did you do that, or no? Because I did.
Today, I'm going to show you exactly what happened to those who kept their heads while others were losing theirs. I've compiled a detailed analysis of regional and money center banks, tracking their remarkable journey from those May lows to today. And below you’ll see a comprehensive analysis that reveals the extraordinary magnitude of this reversal: returns that exceeded 100% in mere months, price-to-tangible book values that shifted from severe distress to premium territory, and earnings multiples that expanded at a pace rarely witnessed in banking sector history.
I think you’ll find this valuable for two reasons.
#1 - it’ll remind you to buy when others are sounding the alarm. Especially when Cramer is up there yelling.
#2 - it’ll show you who may have come too far and who hasn’t come far enough. It’ll uncover pockets of bank value for us to take advantage of.
Hopefully you enjoy.
Notes: I picked May 8th of 2023 because that was pretty close to the Index (KRX) low even though some of these had lows on different dates. The Off the Lows columns try to orient you the magnitudes of change. Green means the bank was in the top 25th percentile in that metric and red means they were in the bottom 25th percentile.
The best is ahead,
Victaurs