Potential Loan Growth, M&A Pickup and Stronger Regional Performance Place Western Banks in Good Position for 2013

Wall Street Transcript

67 WALL STREET, New York - March 5, 2013 - The Wall Street Transcript has just published its Pacific and Southwest Banks Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Heightened M&A Activity - Regulatory Obstacles and Fee Income Replacement - Interest Rates and Loan-Growth Strategies - Pockets of Growth in Western Banking - Regulatory Outlook Gains Clarity

Companies include: SVB Financial Group (SIVB), Flagstar Bancorp Inc. (FBC), Western Alliance Bancorporatio (WAL), Sterling Financial Corp. (STSA), Hilltop Holdings Inc. (HTH), Texas Capital BancShares Inc. (TCBI), East West Bancorp Inc. (EWBC), City National Corp. (CYN), Cullen/Frost Bankers, Inc. (CFR), Comerica Incorporated (CMA) and many more.

In the following excerpt from the Pacific and Southwest Banks Report, an expert analyst discusses the outlook for the sector for investors:

TWST: What are your current recommendations?

Mr. Rabatin: Some of the names that I've liked have done exceedingly well, so I still like them thematically, but the stocks might not have quite as much upside as they did maybe a quarter ago. I continue to like Western Alliance (WAL). It's a bank headquartered in Phoenix that has exposure to Vegas and California, and they have what I consider two catalysts of continued strong growth in their loan portfolio, so they should have topline revenue improvement.

They're also getting their Vegas operation cleaned up, and so as credit quality continues to improve, profitability should actually be stable to improving over the next two years, which is going to be somewhat unique in the environment, so I still think that's a name where people are underestimating the earning power of the franchise a year or two from now.

I also like Sterling Financial (STSA) in the Pacific Northwest. It's a name that got recapped after having very meaningful credit losses through the cycle. I like the management team there, and I think they're going to be able to mitigate margin pressure to a better degree than peers. They have some growth potential. They have a lot of excess capital to deploy. And they have private equity ownership that I think over time could potentially look to see if management can pair up with a larger company. I like their prospects for improvement in efficiency and credit, resulting in profitability moving higher.

I also like a couple of names in Texas. One of them is fairly unique and underfollowed and underknown, Hilltop Holdings (HTH). They just did a bank acquisition, and they're not covered much by the Street. It's a very profitable company that has a nice commercial operation. Mortgage is a high percentage of their pretax income currently. I think people are a little overly concerned about where mortgage might normalize, but I think as they become more well-known and it becomes obvious...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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