The SVB crisis has opened up a window to buy 'great banks at a severe discount' after a panic-induced sell-off, CFRA says
"[We] see an enhanced opportunity to pick up several resilient regional banks that have fallen 15%-25% over the last three weeks," wrote equity analyst Alexander Yokum after this month's collapse of tech startups lender SVB and crypto-friendly Signature Bank.
The banks after facing separate and crippling stressors were seized by regulators to stave off a broader run on deposits at small and mid-sized banks. underperformed the S&P 500 by a"stunning" 35% since March 6, Yokum said."However, we view some banks as well positioned in the current environment and see this as an opportunity to pick up great banks at a severe discount." Regional banks with stable deposit balances should outperform, he said. Even though SVB and Signature Bank collapsed suddenly, signs of trouble had been brewing for months.
Signature Bank had a 19% drop in deposits in the final three quarters of 2022 as crypto prices sank. Silicon Valley Bank's deposits fell 13% during that same period as the bank's primary venture capital customers struggled with rising interest rates. led the way in deposit momentum during that same timeframe as its deposits grew 2%, said Yokum, who has a"strong buy" rating on the lender.
"Additionally, unlike most other regional banks, EWBC had the courage to give a deposit update following the collapse of SIVB, stating that year-to-date consumer deposits were up 3% and commercial deposits were relatively stable," said Yokum. East West Bancorp shares have declined about 14% during 2023.
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