In a Down Year, Some Stocks Did Well
Geiser, Travis, ABA Banking Journal
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. …