FR: Is This the Best Bank in the Pacific?

Article: Is This the Best Bank in the Pacific?

The next “regional bank” article in my “Fool Revisited” series is going to cover the Pacific region, which is a bit of a misnomer because it covers bank that move a little inland as well. All banks were screened based on the region they fell under using, my screener of choice back when I was writing for the Fool (it still is pretty cool, though a lot of the things I used it for in the past are no longer free and I don’t have the resources at present to pay for them).

As with the other articles within this mini “series within a series,” instead of writing about all 20+ banks in the region, I screened them down to a much more manageable list. First, I eliminated all banks with a market cap below $300 million. Then I used four other factors to get to my final list: only profitable banks (over the prior 12 months), a low P/B (looks like I only featured banks under 2, though lower is better), a positive dividend, and quality net income margin.

I know that you want to see it, so here is the old tweet of the article from back in the day:

Had this article been written a little later in my tenure at the Fool, my list probably would have been much smaller, if only because of the “tickering” rules in place at the time. I ended up with a list of 7 banks from the region, and selected Bank of Hawaii (NYSE: BOH) as the best bank in the region.

And while its performance was impressive, as you can see from the chart below, three other banks would have been better choices – Glacier Bancorp (Nasdaq: GBCI), First Interstate BankSystem (Nasdaq: FIBK) and CVB Financial (Nasdaq: CVBF). Using the compound annual growth rate (CAGR) and total growth, since article publication on October 11, 2011 through January 26, 2018 (or acquisition):

Stock Start Price End Price CAGR Total Growth Value of $10,000
Bank of Hawaii $31.49 $85.33 17.15% 170.97% $27,097
Glacier Bancorp $8.81 $39.80 27.05% 351.76% $45,176
CVB Financial $7.23 $23.72 20.76% 228.08% $32,808
Westamerica Bancorporation (Nasdaq: WABC) $33.67 $61.62 10.16% 83.90% $18,390
First Interstate BankSystem $9.57 $42.05 26.49% 339.39% $43,939
City National Corp (acq 11/2/15) $41.16 $89.60 21.10% 117.69% $21,769
Umpqua Holdings (Nasdaq: UMPQ) $8.06 $21.58 16.92% 167.74% $26,774
S&P 500 $1,195.54 $2,872.87 14.93% 140.30% $24,030

Source: Yahoo! Finance & author calculation; Stock prices include dividends & stock splits

Of the remaining banks, there are a couple of solid options that could be worth examining. Only two banks from this list remain under the screening criteria of the original article: First Interstate BankSystem and Umpqua Holdings. Of the tow, I would lean towards Umpqua Holdings, if only because its yield has increased despite its growth over the past 6+ years and because its P/B ratio is still relatively low at 1.18.

I’d have to do further research before buying, however, but this screening criteria has at least made the work a little easier. Nevertheless, Umpqua Holdings does have the lowest P/B of any of the banks currently in the region, which potentially gives it a little more “room to run” if you want to put some money in the region.

Until next time…

Disclaimer: I do not personally own shares of the companies mentioned here, and I have no plans to purchase shares of any company mentioned within the next 60 days in any account in which I manage investment funds. You can read a little about my personal investment philosophy here.

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