2022 Bank Stock Performance Recap
We recall discussions in early 2022 with clients regarding their outlook for 2022 – three 25 basis point Fed rate increases, a “more normal” operating environment following the pandemic afflicted 2020 and 2021, and stable credit quality. The latter of those three items held true, but 2022 was anything but normal. Instead of three 25 basis point rate increases, the Fed delivered seven totaling 425 basis points. The bull market was routed for both equities and, most exceptionally, bonds.
Given this backdrop, publicly-traded banks did comparatively well. The median stock price change among the 343 banks and thrifts traded on the NASDAQ and NYSE was negative 9% in 2022, relative to negative 19% for the S&P 500 and negative 33% for the NASDAQ. Further, there was more dispersion in performance during 2022.
In 2020, only 13% of publicly traded banks reported a rising stock price during the year, whereas in 2021 only 5% of banks reported a falling stock price from year-end 2020 to 2021. That is, banks generally moved in tandem—down in 2020 and up in 2021. While not evenly balanced, 30% of banks reported a positive year-over-year stock price change in 2022. We believe this positive performance for quite a few banks in 2022 was masked by the downbeat market sentiment and warrants further investigation. ...
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Public Market Indicators
M&A Market Indicators