Financial Institutions: The Picture Looks Better Now (Rating Upgrade)

(10min)

Summary

  • I initially downgraded Financial Institutions due to mixed financial performance and valuation concerns, but recent improvements justify upgrading it to a soft 'buy'.
  • The company's balance sheet has strengthened, with increases in loans and deposits, and improved asset quality, despite reliance on brokered deposits.
  • Mixed income statement results show a drop in net interest income, but net profits surged due to the absence of last year's significant deposit-related charge-off.
  • Financial Institutions is attractively priced relative to peers, with improved return on assets and equity, making it a compelling investment despite not being extremely cheap.
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Savings concept - Piggy banks on stacks of coins

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In early February of this year, I made the unpleasant move to downgrade an institution that I had previously been bullish on. The firm in question was none other than the appropriately named

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This article was written by

34.16K Followers

Daniel is an avid and active professional investor.

He runs Crude Value Insights, a value-oriented newsletter aimed at analyzing the cash flows and assessing the value of companies in the oil and gas space. His primary focus is on finding businesses that are trading at a significant discount to their intrinsic value by employing a combination of Benjamin Graham's investment philosophy and a contrarian approach to the market and the securities therein. Learn more.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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