First Horizon Now Well-Placed For The Longer Term

I’ve written before that First Horizon (FHN) has some under-appreciated counter-cyclical drivers that should help it navigate a likely-to-be tough 2020 better than its peers, but First Horizon management has since taken a major step toward shoring up its long-term future. Not only does the merger of equals with IBERIABANK (IBKC) (“Iberia”) look attractive on its own merits, but it should give First Horizon much-needed scale and an even more attractive long-term operating footprint.

I liked First Horizon before and the Iberia deal makes the outlook even better in my view. While mergers of equals are riskier from an integration perspective, I think First Horizon is going about this the right way and the long-term potential makes the risks worth taking. I’m not really big on “top picks”, but I definitely think First Horizon is a name to consider below the high teens.

Click here for more:
First Horizon Now Well-Placed For The Longer Term

Playing M&A Bingo With BB&T

When an historically acquisitive bank signals that they’re reading to start considering M&A again, I don’t think it’s much of a stretch to start speculating on the sort of target(s) the company might have in mind. In the case of BB&T (BBT), while management has certainly laid out a case for worthwhile organic growth by focusing on its core strengths in business and consumer lending, the company has also laid out a clear set of criteria for future M&A, and I believe management would like to make a significant deal (or two) to vault the company over the $250 billion asset level.

Deal or not, I believe BB&T shares are modestly undervalued today. While there are certainly other options in BB&T’s size range worth considering (including PNC (PNC)), I believe mid-single-digit growth can support an attractive return at today’s price.

Read more here:
Playing M&A Bingo With BB&T

Iberiabank In The Middle Of A Tough Balancing Act

While the share price at IBERIABANK Corp. (NASDAQ:IBKC) ("Iberiabank") has rocketed up since the election (along with many, if not most, other bank stocks), there are still a lot of areas where management has work to do. The energy portfolio has shrunk, but credit quality has worsened, and there are some legitimate concerns about how management has been managing excess liquidity in a low-rate environment.

As is often the case with most stocks, a lot of it comes down to valuation. If Iberiabank were trading around 1.5x tangible book, I'd be excited about the deposit footprint and the toeholds in multiple growth markets across the South. As it is, though, I think the Street is more than rewarding the stock for the improvements in operating efficiency, the probable loan growth trajectory, and the possibility of a more constructive regulatory environment.

Continue here:
Iberiabank In The Middle Of A Tough Balancing Act

Seeking Alpha: Hancock Holding Needs To Marry Better Performance With Its Good Footprint

While speculating on where people are going to want to live in five, 10, or 20 years' time may be enjoyable as a thought-exercise, it's not really a good thesis for investing in any particular company. That said, I believe that Hancock Holding's (HBHC) footprint across the Gulf Coast states is an attractive one on balance, and one where ongoing population trends and the dynamics of the U.S. energy industry are likely to create an attractive operating environment.

Although Hancock's location may be good enough, the recent performance hasn't been. This bank has made something of a habit lately of missing expectations, with weak internal loan growth, higher than expected margin compression, and non-interest expenses weighing down results. A cost-cutting program and sizable share buyback offer some support, but it looks like the valuation here already presupposes better results in the coming years.

Please continue here:
Hancock Holding Needs To Marry Better Performance With Its Good Footprint

Seeking Alpha: Bank Of The Ozarks Growing Gangbusters, But Not At All Cheap

For as long as I've followed Arkansas's Bank of the Ozarks (OZRK) (which is quite a few years now), I've been very impressed with this company's aggressive but extremely focused strategy. While it's true that having a loan book tilted heavily towards commercial real estate (CRE) and construction lending is risky, it's sort of like walking a high-wire - it's risky, but the risk doesn't matter if you don't fall off, and Bank of the Ozarks has a system in place that has kept the falls to a minimum.

As much as I like this bank, it rarely gets very cheap and this is not one of those times. I had hoped that investors might misread this second quarter earnings report and sell the shares, but it appears that that's not happening. In any case, while I wouldn't sell these shares if I owned them, I need at least a 10% pullback before I could be enticed to think about buying.

Please follow this link for more:
Bank Of The Ozarks Growing Gangbusters, But Not At All Cheap

Seeking Alpha: Iberiabank Paying The Price Of Growth

Growth comes with its own set of costs, and Iberiabank (IBKC) is paying some of those costs today. Not only is the bank seeing accounting changes to covered loans weigh on reported results, but overhead expenses tied to the expansion of its branch banking and fee-generating operations are also taking a toll. On the other hand, Iberibank's underlying growth prospects in loans, deposits, profits and so on look considerably better than average over the next few years.

All told, Iberiabank's stock looks like a mixed bag today. The 1.1x multiple to book value and 1.5x multiple to tangible book value seem rather appealing, but that has to be set next to below-average returns on tangible assets and equity both today and likely for the next couple of years. Given that today's valuation already seems to factor in an eventual return to low-teens returns on equity, I would say Iberiabank is fairly valued today, but a name worth watching should the shares pull back again.

Please follow this link to continue:
Iberiabank Paying The Price Of Growth