Q1美国中型银行业预览

1、Global Research10 April 2019US Mid-Cap BanksQ119 Preview: Whiplash of Rate and Yield Curve Outlooks Makes a Compelling Set Up to Q1 PrintsQ1 solid but NIM erosion ahead should slow spread income growthQ1 offered a volatile interest rate backdrop which partially obscures fundamental earnings setups c

2、reating a greater uncertainty than normal. Tactically this volatility has lowered the bar in terms of bank earnings performance and created more interest among some investors. Fundamentally, the most important development this quarter was a lower NIM trajectory in our forward forecasts. While previo

3、usly flat, we now expect NIM to drift lower from 3.64% in Q1 to 3.58% in Q419, implying more spread income deceleration than previously forecast. Beyond this quarter the road ahead is challengingwe see no material offsets to backstop a lower NII trend. While not new this is more serious given our fo

4、recast for eroding NIMs.The threat of a flatter yield curve may add a new vector of pressureWhile rapidly rising deposit costs, the defining performance factor of 2018 are fading, taking their place is curve flattening which could further pressure NII performance. This is a newer risk factor but not

5、 relevant for Q1 as the extreme flattening in Q1 was transitory occurring immediately following the March Fed statement.The new playbookbaring a Fed cut, flat is the new upThe second half of March showed how the sector would perform given a pancaked curve and Fed Funds discounting future cutsnot wel

6、l. By now we have stepped back from that point with stronger economic data. Barring Fed cuts which would further pressure NIM, a flat-NIM is the new best case for banks. Outperformers will be those banks that can hold NIM flat while still growing loans and offset the top line pressure with expense r

7、eduction or another idiosyncratic factor.Single stock setupsWe believe liability sensitive stocks remain long term winners: SBNY and NYCB. Given their longer duration loan books, they are vulnerable to curve flattening. Beyond the liability sensitive theme, we favor EWBC for its ability to defend NI

8、M while growing loans 10-11% annually. Investors are less engaged there given the overhang of the trade negotiations and it trades at a nearly 1.5 turns below the sector. Other stocks we are watching carefully this quarter include PNFP, WAL, SIVB and WTFC.BanksAmericasEquitiesBrock VandervlietAnalys

9、t HYPERLINK mailto:brock.vandervliet brock.vandervliet+1-212-713 2382Vilas AbrahamAnalyst HYPERLINK mailto:vilas.abraham vilas.abraham+1-212-713 3241 HYPERLINK /investmentresearch /investmentresearchThis report has been prepared by UBS Securities LLC. ANALYST CERTIFICATION AND REQUIRED DISCLOSURES B

10、EGIN ON PAGE 34. UBS does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in m

11、aking their investment decision.Table of Contents HYPERLINK l _bookmark0 UBS Estimates vs. Consensus4 HYPERLINK l _bookmark1 Stock Performance and the Fed Announcement5 HYPERLINK l _bookmark2 Curve Flattening / UST Lower Yields6 HYPERLINK l _bookmark3 1M LIBOR is a Tailwind but 3M LIBOR Flattens Out

12、7 HYPERLINK l _bookmark4 Can banks improve asset yield through the securities portfolio?8 HYPERLINK l _bookmark5 Deposit Tail Drives Rates Higher9 HYPERLINK l _bookmark6 What it Means for NIM?10 HYPERLINK l _bookmark7 Loan Trends Flat to Softer11 HYPERLINK l _bookmark8 Model Revisions12 HYPERLINK l

13、_bookmark9 Company Previews13 HYPERLINK l _bookmark10 Buys13 HYPERLINK l _bookmark11 Comerica Incorporated (CMA) - Buy, $10013 HYPERLINK l _bookmark12 East West Bancorp (EWBC) - Buy, $6414 HYPERLINK l _bookmark13 Huntington Banchares Inc. (HBAN) - Buy, $1715 HYPERLINK l _bookmark14 New York Communit

14、y Bancorp (NYCB) - Buy, $1516 HYPERLINK l _bookmark15 Signature Bank (SBNY) - Buy, $15517 HYPERLINK l _bookmark16 Western Alliance Bancorporation (WAL) - Buy, $5518 HYPERLINK l _bookmark17 Neutrals19 HYPERLINK l _bookmark18 BankUnited (BKU) - Neutral, $3719 HYPERLINK l _bookmark19 FB Financial Corpo

15、ration (FBK) - Neutral, $3520 HYPERLINK l _bookmark20 First Hawaiian (FHB) - Neutral, $2721 HYPERLINK l _bookmark21 First Horizon National Corporation (FHN) - Neutral, $1522 HYPERLINK l _bookmark22 First Republic Bank (FRC) - Neutral, $10323 HYPERLINK l _bookmark23 Bank OZK (OZK) - Neutral, $3324 HY

16、PERLINK l _bookmark24 Peoples United Financial (PBCT) Neutral, $1725 HYPERLINK l _bookmark25 Pinnacle Financial Partners (PNFP) - Neutral, $5826 HYPERLINK l _bookmark26 SVB Financial Group (SIVB) - Neutral, $24027 HYPERLINK l _bookmark27 Texas Capital Bancshares (TCBI) - Neutral, $6228 HYPERLINK l _

17、bookmark28 TCF Financial Corporation (TCF) - Neutral, $2429 HYPERLINK l _bookmark29 Webster Financial Corporation (WBS) - Neutral, $6030 HYPERLINK l _bookmark30 Wintrust Financial Corporation (WTFC) - Neutral, $7831 HYPERLINK l _bookmark31 Zions Bancorporation (ZION) - Neutral, $5232Spread Income Un

18、der Pressure as Banks Play DefenseFor Mid-Cap banks, due to their dependence on spread banking revenue, fundamental performance pivots sharply based on changes in interest rates. Investors saw plenty of change in both Fed action and market interest rates which affected both our outlook and investor

19、sentiment on the sector. It was an exhausting start to the year.The two graphs below capture the implications of our collective single company forecast changes we describe in this report. We now expect a more pronounced NIM decline extending through year end. This is due to a combination of assumpti

20、ons including no further Fed action (either way), a “tail” of deposit rate increases and incremental pressure from a flattening UST yield curve. The fundamental backdrop is more challenging now with a forecast of greater NIM compression ahead and no offsetting factorespecially loan growth which also

21、 drifts lower. The result is lower spread income growth (NII). Few banks are positioned to buck that trend, but those that can, should outperform.Figure 1: (Post Q4) Not great, NII and loan growth decline but NIM holds14%12%Loan & NII Growth10%8%6%4%2%0%4Q171Q182Q183Q184Q18 1Q19E 2Q19E 3Q19E 4Q19EY/

22、Y Loan Growth*Y/Y NII Growth*NIM*3.69%3.66%Net Interest Margin3.63%3.60%3.57%3.54%3.51%3.48%Source: Company disclosures, UBS estimates; *Excludes banks with material acquisitions; * Excludes BKUFigure 2: Now NII growth falls as NIM drifts lower14%12%Loan & NII Growth10%8%6%4%2%0%4Q171Q182Q183Q184Q18

23、 1Q19E 2Q19E 3Q19E 4Q19EY/Y Loan Growth*Y/Y NII Growth*NIM*3.69%3.66%Net Interest Margin3.63%3.60%3.57%3.54%3.51%3.48%Source: Company disclosures, UBS estimates; *Excludes banks with material acquisitions; * Excludes BKUUBS Estimates vs. ConsensusFigure 3: UBS Estimates vs. ConsensusCompanyTickerPri

24、ceRatingMarketCap ($MM)PriceTarget1Q19 Earnings EstimateUBS Consensus % Diff2019 Earnings EstimateUBS Consensus % Diff2020 Earnings EstimateUBS Consensus % DiffUBS P/E2019 2020Comerica IncorporatedCMA$77.14B$13,638$100$1.95$1.940.5%$8.14$8.120.2%$9.03$8.624.8%9.5x8.5xEast West BancorpEWBC$50.24B$7,3

25、64$64$1.23$1.220.8%$5.08$5.08-$5.53$5.382.8%9.9x9.1xHuntington Bancshares Incorporate HBAN$13.17B$14,536$17$0.32$0.32-$1.34$1.35(0.7%)$1.45$1.440.7%9.8x9.1xNew York Community Bancorp Inc NYCB$11.74B$5,784$15$0.19$0.19-$0.81$0.81-$0.95$0.888.0%14.5x12.4xSignature BankSBNY$128.78B$7,132$155$2.77$2.760

26、.4%$11.49$11.470.2%$12.81$12.363.6%11.2x10.1xWestern Alliance BancorporationWAL$43.12B$4,625$55$1.09$1.09-$4.52$4.61(2.0%)$4.95$5.00(1.0%)9.5x8.7xBankUnited IncBKU$34.87N$3,551$37$0.68$0.646.3%$2.85$2.763.3%$3.21$3.064.9%12.2x10.9xFB Financial CorporationFBK$33.17N$1,033$35$0.57$0.59(3.4%)$2.73$2.76

27、(1.1%)$3.14$3.101.3%12.2x10.6xFirst Hawaiian IncFHB$26.10N$3,719$27$0.54$0.531.9%$2.22$2.200.9%$2.36$2.321.7%11.8x11.1xFirst Horizon National Corporation FHN$14.42N$4,803$15$0.34$0.34-$1.42$1.50(5.3%)$1.53$1.61(5.0%)10.2x9.4xFirst Republic BankFRC$102.69N$17,184$103$1.23$1.220.8%$5.21$5.33(2.3%)$5.9

28、1$5.99(1.3%)19.7x17.4xBank OZKOZK$29.67N$3,939$33$0.85$0.841.2%$3.46$3.48(0.6%)$3.57$3.59(0.6%)8.6x8.3xPeoples United Financial IncPBCT$16.69N$5,802$17$0.34$0.333.0%$1.41$1.41-$1.53$1.511.3%11.8x10.9xPinnacle Financial Partners IncPNFP$55.46N$4,422$58$1.22$1.210.8%$5.07$5.09(0.4%)$5.46$5.450.2%10.9x

29、10.2xSVB Financial GroupSIVB$234.54N$12,510$240$4.72$4.74(0.4%)$20.42$20.400.1%$22.55$22.420.6%11.5x10.4xTexas Capital Bancshares, IncTCBI$57.43N$2,924$62$1.36$1.41(3.5%)$6.23$6.29(1.0%)$6.50$6.58(1.2%)9.2x8.8xTCF Financial CorporationTCF$21.57N$3,606$24$0.44$0.45(2.2%)$1.96$1.97(0.5%)$2.05$2.05-11.

30、0 x10.5xWebster Financial CorporationWBS$52.93N$4,939$60$1.02$1.011.0%$4.12$4.14(0.5%)$4.35$4.320.7%12.8x12.2xWintrust Financial CorporationWTFC$72.00N$4,065$78$1.55$1.522.0%$6.56$6.530.5%$7.03$7.03-11.0 x10.2xZions BancorporationZION$46.90N$9,512$52$1.06$1.051.0%$4.44$4.45(0.2%)$4.87$4.791.7%10.6x9

31、.6xAverage11.4x10.4xSource: UBS estimates, FactSetIn terms of our forecasts versus consensus, we have the following call outs. Perhaps not surprisingly, we have the most daylight above consensus for our BUY- rated stocks, particularly on a full year basis. Two exceptions are TCBI and BKU.For TCBI ou

32、r provision assumption drives our estimate well below consensus. This is somewhat surprising as credit pressure was well flagged by management and credit pressure concentrated in the first half.BKUs above consensus result is driven by uncertainty surrounding its pending restructuring. BKU consistent

33、ly has the greatest dispersion of EPS forecasts across our coverage. We consider our estimate an operating figure with Q1 reflecting some benefit from the restructuringwhich may be presumptuous. We expect management to be more expansive with respect to financial guidance which should narrow forecast

34、 ranges going forward.Of our BUY-rated stocks, WAL is one where we do not show a material difference to consensus. We look for more color on the residential loan strategy and NIM implications from the conference call. We would like to see a dividend here but we do not expect one.At FHN, although in

35、line for Q1, our full year estimates are well below consensus. This model reflected both incremental pressure from a weak Q1 for FTN Securities and a lower NIM trajectory given the absence of further hikes.Stock Performance and the Fed AnnouncementMid-Cap bank stock performance was strong to start t

36、he New Year, but after the March Fed announcement, gains evaporated (see Figure 4). The regional bank specific KRE ETF was up 19% in Q1, outperforming the broader market +13%, until the time of the Fed announcement.FOMCAnnouncementKRE / S&P 500 Indexed at 12/31/18Figure 4: KRE vs. S&P 500 Quarter Pe

37、rformance It was all about the Fed.12512011511010510095Jan-19Feb-19Mar-19Apr-19KRES&P 500Source: FactSet, UBS research, Data as of 3/29/19 After Market CloseMid-Cap bank valuations include a NTM P/E of 11x, 5 turns below the 5 year average. Although we do not expect a recession near term, a few of o

38、ur Buy-rated stocks, particularly CMA, overshot to the downside and are surprisingly defensive based on an earnings stress test we administered in January HYPERLINK /shared/d23RjWbMkWbp (link).Figure 5: KRE at its biggest relative discount in 3 yearsFigure 6: 35% discount vs. 18% avg since Jan 16Pri

39、ce-to-Earnings (NTM)20 x 18x 16x 14x 12x 10 x 8x5%KRE multiple relative to S&P 5000%-5%-10%-15%-20%-25%-30%-35%-40%Jan-16Apr-16Jul-16Oct-16Jan-17Apr-17Jul-17Oct-17Jan-18Apr-18Jul-18Oct-18Jan-19Apr-19-45%Jan-16Apr-16Jul-16Oct-16Jan-17Apr-17Jul-17Oct-17Jan-18Apr-18Jul-18Oct-18Jan-19Apr-19KRES&P500Sour

40、ce: UBS, FactSetSource: UBS, FactSetPremiumAverageWithin our coverage, stock performance was widely varied from a (9%) decline QTD at FBK to 25-27% increases among the liability sensitive stocks (SBNY, NYCB) shown in Figure 7.27% 25%23%19% 17% 16% 16%14% 13% 12% 11% 11%10% 10% 8%7%7% 6% 6% 6%4%3%1%(

41、9%)Figure 7: Q1 Stock Performance30%25%20%15%10%5%0%(5%)(10%)OZKSBNYNYCBPNFPSIVBFHBFRCPBCTS&P 500BKUZIONCoverageEWBCKREXLFTCBICMAHBANFHNTCFWALWBSWTFCFBK(15%)Source: FactSet, UBS research, Data as of 3/29/19 After Market CloseCurve Flattening / UST Lower YieldsOne of several headwinds was a flatter T

42、reasury yield curve at all intervals. As net interest income (spread income) is roughly 75% of total earnings, this is a key sentiment and fundamental driver. After starting Q418 at 25 bps the 2s10s spread hit a low of 13 bps in Q1. However, shorter duration portions of the curve are more relevant f

43、or bank earnings and the news even more troubling. Shown below, recent inversion of the Fed Funds to 2-Yr UST (-19 bps) and the Fed Funds to 5-Yr (-24 bps). The conclusion, banks must widen loan spreads to preserve lending economics or suffer declines in spread revenue. However, widening loan margin

44、s is particularly challenging as banks fight for volume. It is due to this factor that our NIM forecast for NYCB is below management guidance.Figure 8: Fed Funds to 2-Yr UST Spread (bps)Figure 9: Fed Funds to 5-Yr UST Spread (bps)120100806040200-20Mar-19 Sep-18 Mar-18 Sep-17 Mar-17 Sep-16 Mar-16 Sep

45、-15 Mar-15 Sep-14 Mar-14 Sep-13 Mar-13 Sep-12Mar-12-40250200150100500Mar-19 Sep-18 Mar-18 Sep-17 Mar-17 Sep-16 Mar-16 Sep-15 Mar-15 Sep-14 Mar-14 Sep-13 Mar-13 Sep-12Mar-12-50FF / 2-Yr UST Spread7-Yr AvgFF / 5-Yr UST Spread7-Yr AvgSource: UBS, FactSet, Data as of 3/29/19 After Market CloseSource: UB

46、S, FactSet, Data as of 3/29/19 After Market CloseFor banks with heavy mortgage/MSR exposure like FBK or WTFC, we could see further pressure on MSR values given the decline in EOP rate levels.1M LIBOR is a Tailwind but 3M LIBOR Flattens OutThroughout early 2018, LIBOR rates rose quickly, pacing FF hi

47、kes. Although the LIBOR to FF spread varied, it generally widened in 1H18 helping to boost NIM performance. However, with the Fed sidelined, LIBOR represents less of a tailwind and LIBOR spreads have come in as well as shown in Figure 10. The average 1M and 3M LIBOR is up +15 bps and +6 bps Q/Q, sup

48、portive of asset yield expansion in Q1. However, flat performance on an EOP basis points to this tailwind finally fading.+2 bps(3 bps)(6 bps)(3 bps)1013192022Figure 10: Quarter Avg 1M LIBOR to Fed Funds Spread (bps)25201510501Q182Q183Q184Q181Q19Source: UBS research, Bloomberg,Figure 11: Average 1M L

49、IBOR continues higher, + for Q1Figure 12: but tailwind ends as EOP levels off.2.75%2.50%2.25%2.00%2.75%(1 bp)+24 bps2.50%2.49%+17 bps2.26%+21bps2.09%1.88%2.50%2.25%2.00%+15 bps2.50%+24 bps2.35%+14 bps+32 bps1.97%1.65%2.11%1.75%1.75%1.50%1.50%1.25%1.25%1.00%1Q182Q183Q184Q181Q191.00%1Q182Q183Q184Q181Q

50、19Source: UBS, BloombergSource: UBS, BloombergTranslating the curve flattening and low LIBOR performance to asset yields, we see the stage set for peak asset yield performance shown in Figure 13.Figure 13: Earning Asset Yields PeakingCompany1Q182Q183Q184Q181Q19UBSe2Q193Q194Q19Comerica Incorporated3.

51、67%3.98%4.05%4.23%4.33%4.33%4.33%4.33%East West Bancorp4.25%4.49%4.55%4.69%4.81%4.85%4.87%4.89%Huntington Bancshares Incorporated3.91%4.07%4.16%4.32%4.35%4.35%4.35%4.35%New York Community Bancorp Inc3.63%3.69%3.67%3.73%3.77%3.82%3.87%3.91%Signature Bank3.76%3.82%3.85%3.99%3.99%4.06%4.13%4.22%Western

52、 Alliance Bancorporation5.03%5.26%5.34%5.44%5.48%5.48%5.48%5.48%BankUnited Inc*4.68%4.90%4.96%5.59%4.25%4.25%4.23%4.21%FB Financial Corporation5.25%5.51%5.58%5.52%5.55%5.55%5.55%5.55%First Hawaiian Inc3.47%3.58%3.61%3.76%3.87%3.91%3.96%3.98%First Horizon National Corporation4.13%4.39%4.43%4.47%4.55%

53、4.57%4.57%4.57%First Republic Bank3.46%3.52%3.59%3.68%3.70%3.70%3.70%3.70%Bank OZK5.54%5.67%5.62%5.82%5.86%5.90%5.90%5.90%Peoples United Financial Inc3.69%3.85%3.99%4.10%4.20%4.23%4.27%4.32%Pinnacle Financial Partners Inc4.56%4.66%4.76%4.85%4.94%4.94%4.94%4.94%SVB Financial Group3.48%3.70%3.77%3.89%

54、3.97%4.00%4.05%4.08%Texas Capital Bancshares, Inc4.47%4.86%4.80%5.04%5.19%5.26%5.36%5.42%TCF Financial Corporation5.19%5.33%5.36%5.42%5.48%5.55%5.55%5.53%Webster Financial Corporation3.94%4.13%4.20%4.32%4.41%4.43%4.45%4.46%Wintrust Financial Corporation4.12%4.32%4.45%4.58%4.68%4.77%4.83%4.85%Zions B

55、ancorporation3.87%3.92%4.06%4.17%4.25%4.26%4.27%4.27%Average4.18%4.36%4.41%4.53%4.60%4.61%4.63%4.65%Median3.94%4.13%4.20%4.32%4.41%4.39%4.40%4.41%Median Q/Q Change10 bps19 bps7 bps12 bps9 bps(2 bps)1 bps1 bps*BKU excluded from average and medianSource: UBS estimatesCan banks improve asset yield thro

56、ugh the securities portfolio?One area of bank balance sheets now receiving more attention is investment securities yields. Ironically, lower is better now as it offers more of a fulcrum with which to improve performance. Both FHB & SIVB have identified strategies for improving yields. A year ago, th

57、is would not have mattered, now it does.Figure 14: Investment Securities YieldCompany4Q18First Hawaiian Inc2.24%Texas Capital Bancshares, Inc2.25%Comerica Incorporated2.35%East West Bancorp2.40%Zions Bancorporation2.46%SVB Financial Group2.46%Bank OZK2.73%TCF Financial Corporation2.80%First Horizon

58、National Corporation2.83%Peoples United Financial Inc2.83%Huntington Bancshares Incorporated2.84%Webster Financial Corporation2.98%FB Financial Corporation3.05%Wintrust Financial Corporation3.23%Western Alliance Bancorporation3.23%Pinnacle Financial Partners Inc3.24%Signature Bank3.25%BankUnited Inc

59、3.59%First Republic Bank3.74%New York Community Bancorp Inc3.88%Average2.92%Median2.83%Source: UBS, Company disclosuresDeposit Tail Drives Rates HigherWe believe the sector is beyond the peak pain point with respect to sequential deposit cost increases. Thats a clear positive. Our Q1 conference call

60、 with Novantas HYPERLINK /shared/d2SKickzJxJC (link), a consultancy specializing in deposit analytics, confirmed this. We do expect a tail of deposit pricing continuing for 2-3 quarters. As shown in Figure 15, median Q/Q change we expect to drop to 11 bps from 17 bps. This increase is the lowest inc