Magazine article American Banker

Umpqua Gets a Thumbs-Up as Bet for When Rates Rise

Magazine article American Banker

Umpqua Gets a Thumbs-Up as Bet for When Rates Rise

Article excerpt

As investors fret about what rising rates will do to banking companies, analysts continue to point out what they consider bargains in the group.

Umpqua Holdings Corp. of Portland, Ore., is one of those bargains, says Brian Conn of Royal Bank of Canada's RBC Capital Markets. He upgraded it Wednesday to "outperform" from "sector perform," citing earnings potential and its cheap stock.

"With a focus on commercial loans and an asset-sensitive balance sheet, Umpqua appears well positioned for higher rates and a stronger economy," he wrote.

Bank of America Corp. of Charlotte, Zions Bancorp. of Salt Lake City, and Columbia Bancorp. of The Dalles, Ore., also stand to benefit from rising rates, wrote Mr. Conn. Their shares remain affordable, he wrote.

But Mr. Conn, who mostly follows banks in the West, downgraded CVB Financial Corp. of Ontario, Calif., to "underperform" from "sector perform." CVB trades at a premium to other western banks and would benefit less from stronger economic growth, he wrote. Indeed, the company could suffer from rising rates, he added.

Nashville analyst Brett D. Rabatin shares many of Mr. Conn's views. He does not follow Umpqua, but Columbia is among his top picks; he upgraded it to "buy" from "neutral" on June 2.

Columbia's shares have fallen because the company is about to drop out of the Russell 3,000 index.

Mr. Rabatin, of First Horizon National Corp.'s FTN Midwest Research Securities Corp., and Mr. Conn also agreed that earnings should improve next year at City National Corp. …

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