Regional bank stocks Customers Bancorp (NYSE: CUBI), Metropolitan Bank Holdings (NYSE: MCB) and Northeast Bank (NASDAQ: NBN) are steering the northeast regional bank sub-industry to leadership.
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With inflation growing at its fastest clip in nearly four decades, investors are well-advised to review their portfolios to be sure they’re set up for proper hedging.
Historically, equities have provided a return that outpaces inflation. But even within the equity asset class, some stocks have characteristics that make them especially well-positioned for an inflationary environment.
That’s true of bank stocks.
When bond yields are higher, lenders see their net-interest margins rising. That means an increase in earnings, which in turn can drive price appreciation and total return, for banks paying a dividend.
Customers Bancorp is a holding company for Customers Bank, with locations in several states. The stock went public in 2013, so it’s still in the zone where it is likely to notch big price gains.
The stock advanced 0.86% in the past month, 52.41% in the past three months and 215.29% year-to-date. It’s posted gains in 14 of the past 15 months.
Customers cleared a flat base on December 16, when the stock gapped up 8.29%. However, it succumbed to the market choppiness and fell to a low of $54.18 on Monday before rebounding in Tuesday’s broad market rally.
Revenue grew at double-digit rates in each of the past eight quarters, and was strongest in the most recent quarter, growing 63% to $268.4 million. Earnings grew at double- or triple-digit rates in seven of the past eight quarters, showing exceptional strength during the pandemic, particularly pegged to the Paycheck Protection Program and the launch of its blockchain real-time payments platform.
The company said last week that it would rebrand itself as a “fintech-forward-focused” institution serving commercial and consumer clients.
Metropolitan Bank Holdings is a New York-based holding company with a market capitalization of $1 billion. The company offers products and services to a range of commercial and retail customers and provides lending products such as acquisition loans, lines of credit and construction loans.
The stock advanced 18.62% in the past three months and 153.32% year-to-date, although it’s down 7.57% in the past month, due to a correction that began on November 17. It pulled back from the prior session’s high of $104.92.
In Monday’s market-wide correction, Metropolitan Bank retreated 1.15%, but retraced much of that loss to end the session at the high of its trading range.
According to MarketBeat data, institutions hold 66.7% of outstanding shares. Institutional inflows totaled $200.74 million in the past 12 months, versus outflows of $37.63 million.
As the stock is currently consolidating, it’s not currently in buy range. Despite Tuesday’s strong rebound, it’s too soon to say it’s etching the right side of its base.
Small-cap Northeast Bank has a market capitalization of just $284.9 million. Even so, its beta is low, at 0.53.
Revenue grew at double- or triple-digit rates in the past six quarters. Earnings grew at double- or triple-digit rates in the past five quarters. Despite an earnings decline in 2020, Northeast’s net income climbed higher again in fiscal 2021, to $5.80 per share. For fiscal 2022, analysts expect earnings of $9.06 per share, a gain of 56%.
MarketBeat earnings data show that Northeast Bank has an erratic history when it comes to meeting analysts’ views. Nonetheless, shares are up 55.55% year-to-date and up 27.70% in the past three years.
That shows that institutional investors aren’t too upset over any quarters with missed views. In fact, Northeast Bank has topped the performance of both its regional bank category and the broader market.
The current consolidation declined 21% so far. The stock is getting support at its 50-day line, meaning selling has been limited so far. At this juncture, the next buy point would be above the stock’s October 11 high of $38.31, although an earlier point could present itself.