Academic journal article ABA Banking Journal

In a Down Year, Some Stocks Did Well

Academic journal article ABA Banking Journal

In a Down Year, Some Stocks Did Well

Article excerpt

The 2005 calender year was a down year for bank and thrift stocks. The SNL Bank and Thrift Index dipped 1.80% for the year while the S&P boasted gains of 3.00%. The loss for the year can be largely attributed to an unfavorable banking economy. The yield curve continued to flatten, and at year-end the spread between the 10 and 2 year Treasuries was actually negative by two basis points. Because of this, banks faced compressed interest margins and decreased profitability. They also prepared for a deterioration in credit quality. Comparing loan loss provisions for the 423 major exchange banks and thrifts for which SNL has 2005 year-end data, in aggregate, provisions have increased nearly 27% from 2004. This furthers the negative impact on earnings.

One common factor among big gainers is geography. Six of the 20 are in California; another seven are in Virginia, North Carolina, Georgia, Florida, and South Carolina. Each of these states, at least in part, is an attractive banking market based higher population or household income growth.

Geography was also a defining characteristic of banks in the price-loser category. Five of the six losers were Puerto Rican based. The Puerto Rican banks' stocks faced pressure all year long as the companies dealt with accounting errors, and the necessary restatements. Also, banks based in Michigan and Ohio felt pressure from the deteriorating domestic auto industry.

--Travis Geiser, Analyst, FIG Research, SNL Financial LC

                                                            Price ($)
                                                              As of
Gainers                           Ticker   State            12/31/04

Preferred Bank                    PFBC     CA      Bank       22.00
Access National Corporation       ANCX     VA      Bank        7.07
BWC Financial Corp.               BWCF     CA      Bank       22.50
Bank of South Carolina
  Corporation                     BKSC     SC      Bank       12.17
Heritage Oaks Bancorp             HEOP     CA      Bank       13.21
National Mercantile Bancorp       MBLA     CA      Bank       12.70
First Indiana Corporation         FINB     IN      Bank       22.51
FirstFed Bancorp, Inc.            FFDB *   AL      Bank        7.29
Matrix Bancorp, Inc.              MTXC     CO      Thrift     12.51
Eagle Bancorp, Inc.               EGBN     MD      Bank       15.77
Plumas Bancorp                    PLBC     CA      Bank       14.33
Union Community Bancorp           UCBC     IN      Thrift     18.35
Commonwealth Bankshares,
  Incorporated                    CWBS     VA      Bank       18.85
Westcorp                          WES      CA      Thrift     45.93
Carolina Trust Bank               CART     NC      Bank       11.36
Integrity Financial Corporation   IFCB     NC      Bank       14.21
Cass Information Systems, Inc.    CASS     MO      Bank       23.30
Bancshares of Florida, Inc.       BOFL     FL      Bank       16.11
American Bancorp of New Jersey,
  Inc.                            ABNJ     NJ      Thrift      7.06
PAB Bankshares, Inc.              PABK     GA      Bank       13.11

                                  Price ($)
                                    As of      One year
Gainers                           12/31/05    change (%)

Preferred Bank                      44.50       102.27
Access National Corporation         14.25       101.56
BWC Financial Corp.                 35.58        58.13
Bank of South Carolina
  Corporation                       19.05        56.50
Heritage Oaks Bancorp               20.50        55.23
National Mercantile Bancorp         19.49        53.46
First Indiana Corporation           34.38        52.73
FirstFed Bancorp, Inc.              11.00        50.89
Matrix Bancorp, Inc. … 
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