Western Banks Maintain Profitability Despite Challenging Operating Environment: Aaron James Deer, Managing Director and Equity Research Analyst at Sandler O'Neill + Partners, L.P., Interview with The Wall Street Transcript

Wall Street Transcript

67 WALL STREET, New York - July 1, 2013 - The Wall Street Transcript has just published its U.S. Banking Review 2013 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, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: U.S. Banking Review 2013

Companies include: East West Bancorp Inc. (EWBC), City National Corp. (CYN), CapitalSource Inc. (CSE), SVB Financial Group (SIVB), Bank of Hawaii Corporation (BOH) and many more.

In the following excerpt from the U.S. Banking Review 2013 Report, an expert analyst discusses the outlook for the sector for investors:

TWST: What are your favorite stocks right now and why?

Mr. Deer: There are several that I like right now. East West Bancorp (EWBC) is one that I like. It has been putting up very good loan growth, and I think that it has a very strong franchise that benefits from a position of supporting businesses that operate here in the U.S. and have a tie with China, and so it does a lot of international trade and finance lending. As you see more trade between the U.S. and China, not just the U.S. importing but also the U.S. exporting to China, that should continue to benefit East West. Additionally, it has above average profitability with a double-digit ROE, but despite the good growth and above average profitability, its stock actually trades at a discount to the group.

So that's one that I like, but there are a number of banks that are performing very strongly right now. I would also highlight City National (CYN). City National has just a terrific franchise with an extraordinary deposit base that's seen phenomenal growth. It has also seen very impressive growth on the loan side over this past year, and has been expanding into some new lending niches, and is also putting up good profitability that should be much, much better if we ever see interest rates move higher.

CapitalSource (CSE) is an interesting name that I have been talking a lot about with investors. It's a former specialty finance company that has gone through a really impressive transformation of its business model to become a bank over the past few years. It is toward the end of that transformation, and I would expect that this year it converts its existing industrial charter to a commercial bank charter, and then its holding company to a bank holding company.

Along with that, I expect...

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