The numbers have been crunched, the data analyzed, and now the winners can be revealed. And the winner and returning Champion is ... BankOZK.
How We Choose
We analyze our group of 32 banks across a number of performance and market-related metrics and use a proprietary scoring algorithm to assign ratings to individual banks and defined industry segments. The derived score is based on both absolute and relative performance and is used to rank each company relative to its industry sector and to inform our valuation estimates and projections. We examine banks in three primary sectors – Super Regional, Regional and Super Community. The definitions of these sectors and a listing of the banks we follow can be found on the home page of our website. Every quarter, and for the year as a whole, we name our top-rated banks in each sector and an overall champion. And now that Third Quarter results are in and analyzed, we can report the long-anticipated results.
Our Three Sector Winners
All three of our top ranked banks are consistently high performers with Bank OZK being our returning champion in the Super Community category and overall. We also have identified the losers in each category. However, because we choose to accentuate the positive, the current rankings of all of the banks we cover (including the losers) are only available to subscribers of our in-depth reports.
These banks have several factors in common that contribute to their performance – they run traditional business models, perform extremely well on the basics, and deliver consistent and sustained results. In our view, the key attribute that connects these three companies is focus – they know what they do well and don’t get distracted or dissipate resources by chasing hobby businesses or unfamiliar markets. This is a testament to what we consider to be strong, experienced, and effective management teams in all three banks. While performance on various metrics varies, each of these companies is ranked at or above average on every metric we analyze and lead their sector in a few key categories. It is also not surprising that all three rank first in Efficiency Ratio. This shows that they rigorously manage their business mix and cost structures.
Highest Ranked Metrics
Does the Market Care?
In a perfect world and with an efficient market, we would expect our ratings and rankings to translate into higher market multiples and stronger market performance. And, often they do, but not always. We use our scoring algorithms and proprietary valuation model to set a target price for each of our companies’ stock. We don’t really expect to call the price with precision but we use it to assess whether we believe the company is overvalued, undervalued or fully valued relative to the banking sector and market as a whole. During most of the third quarter we rated the entire sector as fairly valued, indicating that the banking sector would mirror the market ant our top rated banks would outperform the sector. And, in general this call was correct and the sector moved sideways during most of the last three months. During this period all three of our top rated banks outperformed the sector, overall. However, M&T fell a little behind towards the end of October but we expect that to reverse in the foreseeable future.
Full Rankings Available
We have assigned scores and rankings for all the banks we follow, including both the winners and losers. For a comprehensive look at all of our banks and their performance just click the SUBSCRIBE button above, become a member and download our most recent quarterly report. It's fast, it's fun, but it ain't free.
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