When I last wrote about Prosperity Bancshares (PB), my pitch on the stock was largely that it offered some downside protection on a weaker macro recovery and upside tied to M&A activity. Management has remained on the hunt for acquisitions, but hasn’t managed to seal a deal, and meanwhile the economy has come back strong. All of that has contributed to noticeable underperformance at this conservatively-run Texas bank, with the shares underperforming its peers by close to 30% over the past year or so.
It’s quite a bit harder to maintain a positive outlook on Prosperity today, given the bank’s weaker leverage to differentiating loan growth and average (at best) asset sensitivity. The significant surplus capital on the balance sheet is a major “yes, but…”, as the company could announce a meaningful growth-driving M&A transaction at any time and has the option to buy back a meaningful amount of shares. Still, this looks like a middling idea at best without real visibility on growth.
Click here to continue:
Without Some Offense, Prosperity Bancshares' Defensive Characteristics Aren't A Big Plus Today
No comments:
Post a Comment