Washington Federal (WAFD-Q)

Got nicked in the SVB banking crisis. Down, but not as much as many banks. Diverse deposit base, unlike SVB and Signature. 

Recent exciting acquisition, giving them an entry into the commercial lending space. Decent dividend is well covered with a 23% payout ratio. Good place to be with an ongoing, growing economy. Credit quality is important in any recession. Long term, will do well.

(A Top Pick March 16/17, Up 11%) Enjoyed 7.4% loan growth in 2017. A steady eddy with room to grow driven by margin expansion (high interest rates) and loan growth due to robust U.S. economy.

A western based bank. They bought a large chunk of branches from Bank of America (BAC-N) 3 or 4 years ago. A well-run bank. As the yield curve starts to steepen they will start to make more money. They’ll also be the beneficiary of a looser regulatory environment.

A regional bank in 8 states with 240 branches. They almost doubled their size a number of years ago when they bought a group of Bank of America’s (BAC-N) branches. Regional banks are going to benefit dramatically from easing of regulations. Regulation has been a really big, big problem for financial institutions. The big banks get all the air time, but the small banks, on the basis of dollars spent, are spending a ton of money trying to satisfy compliance and regulatory requirements, and a lot of that is going to go away. That will go straight to the bottom line. Also, loan growth will be a lot healthier in an improving economy and an increasingly steep yield curve, which will increase net interest margins, allowing them to make money on the interest spread. Dividend yield of 1.8%. (Analysts’ price target is $34.)

(A Top Pick Jan 29/14. Down 8.04%.) Bought about 50 branches from Bank of America and have done well with them. Loan growth and deposits have been good. Until we start to see interest rates rise, none of the banks are going to get any traction. He is content to continue holding.

These banks are in a number of the West Coast states such as Washington, Oregon, New Mexico and Nevada. Just completed the purchase of 74 of Bank of America’s (BAC-N) operations which will bring them to 250 branches. If the yield curve starts to steepen and we see a stronger economy and stronger loan growth, you are going to get a net interest margin benefit, which is good for regional banks.