California economy helps Asian American banks become analyst top picks
California’s immigrant-heavy economy looks strong through the lens of regional bank results, with two of Los Angeles’ many Asian American banks near the top of analysts’ national lists of bank stocks that investors should buy.
According to financial information provider SNL Financial, BBCN Bancorp recently held the No. 2 slot, with six of seven analysts, or 87%, rating Koreatown’s largest bank a “buy” or “outperform,” meaning it would do better than other banks across the nation.
Only the parent of South Carolina Bank & Trust, with 100% “buys,” had a more positive endorsement from analysts.
Cathay General Corp., the oldest Chinatown bank, held the No. 5 slot at 75%, SNL said -- six “buys” out of a possible eight. No. 6 on the list was another ethnic specialist, Banco Popular of Puerto Rico, which operates in California as Popular Community Bank.
Also in the top 20, by SNL’s tally, were PacWest Bancorp of Los Angeles, an analyst favorite because of its blockbuster acquisition this year of L.A.’s CapitalSource Bank, and jumbo mortgage and wealth management specialist First Republic Bank in San Francisco.
SNL noted that bank stocks beat the overall market in 2012 and 2013, rising 77%, as investors bet the sector would benefit from rising interest rates. With the prices up, this year’s focus is on selecting banks that stand out from the crowd.
Analysts seem to be looking for “a strong organic growth profile, the ability to serve as an opportunistic consolidator or ... exposure to faster growing niche business,” as Sterne Agee analyst Peyton Green wrote recently.
Keefe, Bruyette & Woods analyst Julianna Balicka said that describes many California regional banks, particularly those catering to Asian immigrants.
Banks reporting higher first-quarter profits and lending so far include Cathay; its rival East West Bancorp of Pasadena, the largest Chinese America bank; and Koreatown’s BBCN, which on Tuesday reported its net income had risen 27% and new loans were up 35% during the quarter.
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