US 10-year bond yield converges close to three-year bond yield, indicating a possibility of a recession. US 10-year bond yield stands at 2.472%, whereas its 3-year bond yield stands at 2.265%. The major reason being long started a trade war, which reduced the global growth rate. This can be attributed to the ever growing import prices increasing the operating expenses across the industries, leading to a reduction in demand. It would not be wrong to say that the inverted yield curve is one of the things which the market players hate to experience as this might lead to a recession. Therefore, the broader equity markets witnessed a downtrend.
Over the past one year, NASDAQ Bank Index decreased by ~9.3% from $3,984.7 (April 02, 2018) to $3,613.8 (April 01, 2019). It proffers an attractive opportunity for the banking stocks as it is trading at decent price levels. Let’s have a look on some the banking stocks such as CapStar Financial Holdings Inc. (NASDAQ: CSTR), Zions Bancorporation (NASDAQ: ZION), and Westamerica Bancorp (NASDAQ: WABC).
CapStar Financial Holdings Inc. (NASDAQ: CSTR)
CapStar Financial Holdings Inc. (NASDAQ: CSTR) provides banking services to consumers and corporate clients, mainly in Tennessee, USA. Its product includes deposits, services, demand deposits, interest-bearing transaction accounts, money market accounts, time and saving deposits, certificate of deposits, and CDARS reciprocal products. It also offers private banking and wealth management services to its HNI clients. As of December 31, 2018, the bank had total assets of US$1,963.88 Mn, deposits of US$1,570.01 Mn, and net loans of US$1,417.68 Mn. The bank’s net interest income grew by ~31.6% Y-o-Y to US$67.78 million in FY18. Its net interest income after loan loss provision increased by 68.5% to $48.85 million in FY18 as compared to the prior year. The bank has well managed its Total risk-based capital of 12.8% with Common equity tier 1 capital ratio of 11.6% during FY18.
On stock information, at the market close on 1st April 2019, the stock of CSTR was trading at $15.70, up by 8.73%, with a market capitalization of ~$277.61 million. The stock has fallen 12.5% over the past one year.
Zions Bancorporation (NASDAQ: ZION)
Financial holding company, Zions Bancorporation (NASDAQ: ZION) conducts its banking operations through branded segments, including Zions Bank, Amegy Bank, California Bank & Trust, National Bank of Arizona, etc. Its services include community banking services, trade finance, personal banking services, such as financial advisory and corporate trust services, etc. It operates in multiple locations of the United States, such as Arizona, California, Colorado, Idaho, Nevada, Oregon, Texas, Washington, etc. As of December 31, 2018, the bank had total assets of US$68.74 Mn, deposits of US$54.10 Mn, and net loans & leases of US$46.71 Mn. The bank’s net interest income grew by ~13% Y-o-Y to US$2.48 billion in FY18. Its net interest income after loan loss provision increased by 11% to 2.27 billion. It includes an increase in Amegy segment by 30% to $594 million. Common equity tier 1 capital ratio stood at 11.7% in FY18.
On the stock information, at market close on 1st April 2019, the stock of ZION was trading at $46.72, up by 2.88%, with a market capitalization of ~$8.70 billion. It has declined by 9.1% from $51.37 in April 02, 2018 to $46.72 in April 1, 2019.
Westamerica Bancorporation (NASDAQ: WABC)
Westamerica Bancorporation (NASDAQ: WABC) is a bank holding company, provides a range of banking services to its customers via its subsidiary, Westamerica Bank, mainly in Northern and Central California. It’s primarily focused on the banking needs of small businesses. Its loan portfolio includes commercial loans, construction loans, consumer instalment loans, commercial real estate loans, etc. As of December 31, 2018, the company had total assets of US$5,568.52 Mn, deposits of US$4,866.83 Mn, and Return on common equity of 11.35%.
For the financial year ending December 31, 2018, WABC interest income increased by 13% to $151.7 million. Its net interest income after loan loss provision was reported at $149.7 million. Its Common Equity Tier I Capital stood at 16.30% in FY18.
On stock information, at the market close on 1st April 2019, the stock of WABC was trading at $62.81, up 1.63%, with a market capitalization of ~$1.69 billion.
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