12 Best Performing Bank Stocks in 2022

Published on December 29, 2022 at 12:26 pm by Hamna Asim in Hedge Funds, News

In this article, we discuss 12 best performing bank stocks in 2022. If you want to see more stocks in this selection, check out 5 Best Performing Bank Stocks in 2022.

2022 has brought high inflation which has not been seen in 40 years, leading the Federal Reserve to tighten monetary policy at the fastest pace in three decades. The Fed’s aggressive policies have resulted in skyrocketing interest rates, which has significantly increased earning-asset yields and margins for many financial institutions. However, the recession fears have put a damper on economic growth forecasts and banks are concerned about payment defaults and higher loan losses.

Banks will need to transform their business models to navigate the presently volatile macro environment and ensure long-term growth and profitability. 2022 was a year ripe with uncertainties, including inflation, war, rising interest rates, and supply chain disruption, and it put an end to more than a decade of relative stability in the banking sector. Banks continue to trade at a large discount to other sectors, which suggests that over half of the banks in the world earn less than their cost of equity.

As per McKinsey, bank profitability was at a 14-year high in 2022, with expected return on equity between 11.5% and 12.5%. Global banking revenue increased by $345 billion. This growth was driven by a significant boost in net margins, as interest rates climbed after remaining stagnant for years. For now, the banking system globally is exhibiting Tier 1 capital ratios between 14% and 15% – the highest on record. The improvement in margins accounted for 60% of the revenue gains.

To benefit from the boom in the banking industry, investors can look into regional banks which are outperforming benchmarks. (see Top 25 Regional Bank Stocks) Those investors who want to diversify their equity portfolios can also seek out European bank stocks. (see 9 Best European Bank Stocks To Invest In) While the likes of JPMorgan Chase & Co. (NYSE:JPM), Bank of America Corporation (NYSE:BAC), and Citigroup Inc. (NYSE:C) are typically the go-to choices for investors who want exposure to the banking sector, we discuss the best performing bank stocks this year in this article.

Our Methodology

We selected the bank stocks that offer positive year-to-date share price gains as of December 28. We have assessed the hedge fund sentiment from Insider Monkey’s database of 920 elite hedge funds tracked as of the end of the third quarter of 2022. The list is arranged according to the number of hedge fund holders in each firm. This means our list demonstrates the best performing bank stocks to buy according to hedge funds. We also discussed analyst coverage, business fundamentals, and the future share catalysts associated with these firms.

Photo by Mikel Parera on Unsplash

Best Performing Bank Stocks in 2022

12. ACNB Corporation (NASDAQ:ACNB)

Number of Hedge Fund Holders: 2

YTD Share Price Gain as of December 28: 27.48%

ACNB Corporation (NASDAQ:ACNB) was founded in 1857 and is headquartered in Gettysburg, Pennsylvania. The financial holding company provides banking, insurance, and financial services to individual, business, and government customers in the United States. On October 27, ACNB Corporation (NASDAQ:ACNB) reported Q3 GAAP earnings per share of $1.20 and a revenue of $28.37 million, up on a 21.9% year-over-year basis. On October 24, ACNB Corporation (NASDAQ:ACNB) declared a $0.28 per share quarterly dividend, a 7.7% increase from its prior dividend of $0.26. The dividend was distributed to shareholders December 15. It is one of the best performing bank stocks this year, with shares up more than 27% year-to-date as of December 28.

According to Insider Monkey’s data, John Overdeck and David Siegel’s Two Sigma Advisors and Jim Simons’ Renaissance Technologies held 17,100 and 15,556 shares in ACNB Corporation (NASDAQ:ACNB) at the end of Q3 2022, worth $514,000 and $467,000, respectively.

Like JPMorgan Chase & Co. (NYSE:JPM), Bank of America Corporation (NYSE:BAC), and Citigroup Inc. (NYSE:C), ACNB Corporation (NASDAQ:ACNB) is one of the top bank stocks to consider.

11. Greene County Bancorp, Inc. (NASDAQ:GCBC)

Number of Hedge Fund Holders: 2

YTD Share Price Gain as of December 28: 60.25%

Greene County Bancorp, Inc. (NASDAQ:GCBC) is a New York-based holding company for The Bank of Greene County that provides various financial services in the United States. Its deposit products include savings, NOW accounts, money market accounts, certificates of deposit, non-interest bearing checking accounts, and individual retirement accounts. Greene County Bancorp, Inc. (NASDAQ:GCBC) stock has climbed over 60% year-to-date as of December 28, making it one of the best performing bank stocks this year.

On October 21, Greene County Bancorp, Inc. (NASDAQ:GCBC) posted GAAP earnings per share of $1.06 for the quarter ended September 30, 2022 and a revenue of $18.93 million, up 9.3% year-over-year. The company also paid a $0.14 per share quarterly dividend to shareholders on November 30.

According to Insider Monkey’s third quarter database, Jim Simons’ Renaissance Technologies and Cliff Asness’ AQR Capital Management held 6,500 and 3,598 shares in Greene County Bancorp, Inc. (NASDAQ:GCBC), worth $372,000 and $206,000, respectively.

10. Northeast Community Bancorp, Inc. (NASDAQ:NECB)

Number of Hedge Fund Holders: 3

YTD Share Price Gain as of December 28: 34.94%

Northeast Community Bancorp, Inc. (NASDAQ:NECB) is a New York-based holding company for NorthEast Community Bank that offers financial services for individuals and businesses. It accepts various deposit instruments, including checking accounts, money market accounts, regular savings accounts, and non-interest bearing demand accounts. On October 28, Northeast Community Bancorp, Inc. (NASDAQ:NECB) reported a Q3 GAAP EPS of $0.49 and a revenue of $17.77 million, outperforming Wall Street estimates $0.12 and $2.61 million, respectively. Revenue over the period climbed 55.3% from the prior-year quarter.

On December 15, Northeast Community Bancorp, Inc. (NASDAQ:NECB) declared a quarterly per share dividend of $0.06, in line with previous. The dividend is payable on February 6, 2023 to shareholders of record on January 3.

According to Insider Monkey’s data, Northeast Community Bancorp, Inc. (NASDAQ:NECB) was part of 3 hedge fund portfolios at the end of September 2022, with collective stakes worth $1.8 million, compared to the same number of funds in the last quarter worth $1.2 million.

9. Bank First Corporation (NASDAQ:BFC)

Number of Hedge Fund Holders: 4

YTD Share Price Gain as of December 28: 28.38%

Bank First Corporation (NASDAQ:BFC) is a Wisconsin-based holding company for Bank First N.A. that provides consumer and commercial financial services to businesses, professionals, consumers, associations, individuals, and governmental authorities in Wisconsin. Bank First Corporation (NASDAQ:BFC)’s latest quarterly dividend of $0.25 per share was paid to shareholders on October 5, which was a 13.6% increase from its prior dividend of $0.22. Bank First Corporation (NASDAQ:BFC) is one of the best performing bank stocks in 2022.

On April 21, Piper Sandler analyst Brendan Nosal upgraded Bank First Corporation (NASDAQ:BFC) to Overweight from Neutral with a price target of $84, up from $76. The analyst called Bank First a “premium franchise” and cited the company’s “strong” Q1 and outlook for the upgrade.

According to Insider Monkey’s data, 4 hedge funds were bullish on Bank First Corporation (NASDAQ:BFC) at the end of the third quarter of 2022, compared to 3 funds in the prior quarter. Ken Griffin’s Citadel Investment Group is a prominent stakeholder of the company, with 3,209 shares worth $245,000.

8. Esquire Financial Holdings, Inc. (NASDAQ:ESQ)

Number of Hedge Fund Holders: 6

YTD Share Price Gain as of December 28: 34.48%

Esquire Financial Holdings, Inc. (NASDAQ:ESQ) was founded in 2006 and is headquartered in Jericho, New York. It operates as the bank holding company for Esquire Bank, National Association that offers commercial banking products and services to the legal industry, small businesses, and commercial and retail customers in the United States. With shares up nearly 35% year-to-date as of December 28, Esquire Financial Holdings, Inc. (NASDAQ:ESQ) is one of the best performing bank stocks this year.

On October 25, Esquire Financial Holdings, Inc. (NASDAQ:ESQ) reported Q3 GAAP earnings per share of $0.94 and a revenue of $21.98 million, up 35.7% year-over-year. On October 27, Esquire Financial Holdings, Inc. (NASDAQ:ESQ) declared a $0.10 per share quarterly dividend, an 11.1% increase from its prior dividend of $0.09. The dividend was distributed to shareholders of record on December 1.

Keefe Bruyette analyst Michael Perito on October 17 initiated coverage of Esquire Financial Holdings, Inc. (NASDAQ:ESQ) with an Outperform rating and a $53 price target, indicating 38% potential upside. Esquire Financial Holdings, Inc. (NASDAQ:ESQ) is a “high-growth, niche-focused digital bank operating with a fairly straightforward business model focused on its litigation banking practice and payment processing unit,” the analyst told investors. The analyst noted that the company offers small-cap bank and growth investors an “interesting combination of investment characteristics that provide some insulation to the macro uncertainty currently paralyzing the markets.”

According to Insider Monkey’s data, 6 hedge funds were long Esquire Financial Holdings, Inc. (NASDAQ:ESQ) at the end of Q3 2022, with collective stakes worth nearly $35 million. Matthew Lindenbaum’s Basswood Capital is the largest position holder in the company, with 839,081 shares worth $31.50 million.

Here is what Gator Capital Management has to say about Esquire Financial Holdings, Inc. (NASDAQ:ESQ) in its Q2 2021 investor letter:

“One of the new small bank positions that we purchased for the Fund is in Esquire Financial Holdings (“Esquire” or “ESQ”). Esquire is a bank headquartered on Long Island, focused on serving the banking market for attorneys. By the nature of their business, attorneys often have control of money in escrow accounts for the benefit of their clients. These escrow deposits are attractive to banks because they tend to be sticky and not rate sensitive. Attorneys also have borrowing needs that haven’t been well served by traditional banks. In addition, Esquire has an attractive merchant acquiring business. Esquire has developed a good track record of earnings growth in the few years since its 2017 IPO.

We believe there is a disconnect between Esquire’s growth and its valuation. It trades at 8.4x 2022 consensus Wall Street estimated earnings, but the bank’s earnings per share (“EPS”) is growing at 20%. We believe the major reason for this disconnect stems from Esquire’s removal from the Russell 2000 index this past June. Index funds that track the Russell 2000 had to sell their Esquire shares. We believe prospective buyers of Esquire’s stock waited to buy until the Russell deletion date had passed. We think Esquire should trade at 15x or greater, which is in line with other high-growth banks. (Click here to read full text)

7. Old Second Bancorp, Inc. (NASDAQ:OSBC)

Number of Hedge Fund Holders: 8

YTD Share Price Gain as of December 28: 29.37%

Old Second Bancorp, Inc. (NASDAQ:OSBC) is an Illinois-based bank holding company for Old Second National Bank that provides community banking services. It is one of the best performing bank plays in 2022, with shares up over 29% year-to-date as of December 28. On October 26, Old Second Bancorp, Inc. (NASDAQ:OSBC) reported Q3 non-GAAP earnings per share of $0.43 and a revenue of $67.07 million, exceeding Wall Street consensus by $0.04 and $15.78 million, respectively. Revenue over the period climbed 110.3% on a year-over-year basis.

On March 21, DA Davidson analyst Manual Navas upgraded Old Second Bancorp, Inc. (NASDAQ:OSBC) to Buy from Neutral with a price target of $22, up from $15, following interest rate hikes and the Fed signaling more tightening in the future. The analyst sees the company as the “most asset sensitive name” in his “Mids coverage”, noting that the stock’s YTD outperformance understates that extreme asset sensitivity and also discounts Old Second Bancorp, Inc. (NASDAQ:OSBC)’s meaningful progress in growing its lending team to support above-peer loan growth. The analyst also raised his FY22 EPS view on the stock by 25c to $1.30 and FY23 view by 50c to $2.00.

According to Insider Monkey’s data, 8 hedge funds were long Old Second Bancorp, Inc. (NASDAQ:OSBC) at the end of Q3 2022, with combined stakes worth $31.6 million, compared to the same number of funds in the prior quarter worth $28 million. Emanuel J. Friedman’s EJF Capital is the largest stakeholder of the company, with 771,682 shares worth $10 million.

6. Northrim BanCorp, Inc. (NASDAQ:NRIM)

Number of Hedge Fund Holders: 10

YTD Share Price Gain as of December 28: 24.42%

Northrim BanCorp, Inc. (NASDAQ:NRIM) is an Alaska-based bank holding company for Northrim Bank that provides commercial banking products and services to businesses and professional individuals. It operates in two segments, Community Banking and Home Mortgage Lending. On October 26, Northrim BanCorp, Inc. (NASDAQ:NRIM) reported a Q3 GAAP EPS of $1.76, beating Wall Street estimates by $0.41. The revenue climbed 5.7% year-over-year to $34.98 million. The company also paid a $0.50 per share quarterly dividend to shareholders on December 23.

On February 25, investment advisory Janney Montgomery Scott upgraded Northrim BanCorp, Inc. (NASDAQ:NRIM) to Buy from Neutral. Analyst Brian Martin issued the ratings update.

According to Insider Monkey’s data, 10 hedge funds were bullish on Northrim BanCorp, Inc. (NASDAQ:NRIM) at the end of the third quarter of 2022, and Touk Sinantha’s AltraVue Capital held the biggest stake in the company, with 354,559 shares worth $14.7 million.

In addition to JPMorgan Chase & Co. (NYSE:JPM), Bank of America Corporation (NYSE:BAC), and Citigroup Inc. (NYSE:C), Northrim BanCorp, Inc. (NASDAQ:NRIM) is one of the best bank stocks to invest in.

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