Two Banking Stocks Worth Considering in the Southwest Sector: First Horizon National (FHN) or Cullen/Frost Bankers (CFR)
Investing in the banking sector can be an excellent way to diversify your portfolio and potentially earn steady returns. For those with an interest in the Southwest region, two stocks that might catch your eye are First Horizon National Corporation (FHN) and Cullen/Frost Bankers, Inc. (CFR). But which of these two financial institutions offers the better value opportunity for investors right now? Let’s delve deeper into their financials, growth prospects, and other important factors.
First Horizon National Corporation (FHN)
Background: First Horizon National Corporation is a financial services company based in Memphis, Tennessee. The company operates through its subsidiary, First Horizon Bank, and offers a range of banking, mortgage, and wealth management services.
Financials: As of Q3 2021, First Horizon National reported net income of $136.1 million, up 23% from the previous year. The company’s total assets amounted to $47.4 billion, with a tangible book value of $19.42 per share. Its return on assets (ROA) was 0.95%, while its return on equity (ROE) was 8.64%.
Growth Prospects: First Horizon National has been expanding its footprint in the South and has announced plans to merge with Iberiabank Corporation, which will significantly increase its market presence and asset base. The merger is expected to be completed by the end of 2021.
Cullen/Frost Bankers, Inc. (CFR)
Background: Cullen/Frost Bankers, Inc., also known as “Frost Bank,” is a financial holding company headquartered in San Antonio, Texas. The company offers commercial and consumer banking, mortgage banking, and wealth management services.
Financials: In Q3 2021, Cullen/Frost Bankers reported net income of $148.5 million, a 12% increase from the previous year. The company’s total assets stood at $41.2 billion, with a tangible book value of $25.11 per share. Its ROA was 1.05%, while its ROE was 10.68%.
Growth Prospects: Cullen/Frost Bankers has been focusing on organic growth, with a strategy to expand its presence in existing markets and enter new ones. The company has also been investing in technology to improve its digital offerings and enhance the customer experience.
Comparing the Two: Which Offers a Better Value Opportunity?
Both First Horizon National and Cullen/Frost Bankers have solid financials and growth prospects. However, the merger of First Horizon National with Iberiabank could provide significant upside potential for investors, as the combined entity will have a larger market presence and asset base. Additionally, Cullen/Frost Bankers has a slightly higher ROE than First Horizon National, indicating a more efficient use of shareholders’ equity.
Personal Impact: For individual investors, the choice between FHN and CFR might depend on their investment goals and risk tolerance. Those seeking higher growth potential may prefer FHN due to the merger with Iberiabank. On the other hand, investors looking for a more stable and consistent return might lean towards CFR’s higher ROE.
Global Implications:
Economic Impact: The performance of these two banks, as well as the broader banking sector in the Southwest, can have ripple effects on the regional and national economy. Strong earnings from banks can indicate a healthy economy, while weak performance could signal economic challenges. Additionally, the merger of First Horizon National and Iberiabank could lead to increased competition and potential consolidation within the banking industry.
Social Impact: The success of these banks can impact their customers and communities, particularly in the Southwest region. Strong financial performance can lead to improved services, better customer experiences, and increased community investment. Conversely, weak performance could result in reduced services or even branch closures, potentially impacting local economies and residents.
Conclusion
Investors looking for banking stocks in the Southwest sector have two solid options in First Horizon National and Cullen/Frost Bankers. Both companies have strong financials and growth prospects, but the merger of First Horizon National with Iberiabank could provide significant upside potential for investors. Ultimately, the choice between FHN and CFR will depend on individual investment goals and risk tolerance. For the broader economy and society, the performance of these banks can have significant implications, including economic and social impacts.
As always, it’s essential to conduct thorough research and consider seeking advice from financial advisors before making investment decisions. Happy investing!
