Throughout stock market history there have been few occasions when the words ‘hot’ and ‘banks’ go together, but this is one of those times. With the Dow Jones Regional Banks Index up around 25% year-to-date, regional bank stocks have been among the hottest groups this year.
As the consumer and commercial lending environments improve and interest rates creep higher, investors are suddenly taking an interest in regional banks. There are about a dozen regional bank stocks that have soared at least 50% in 2021. Here we highlight a few of the names that are well-positioned to keep trending higher.
After advancing 28% in both 2019 and 2020, Dallas-based Triumph Bancorp (NASDAQ:TBK) has surged 87% in 2021 outpacing every single member of the S&P 500 index. The stock’s 10-month winning streak has picked up steam in recent weeks after the company announced plans to acquire HubTran, a provider of cloud-based solutions that automate repetitive back office functions for the transportation industry.
The move was atypical of a regional bank but Truimph Bancorp is not your ordinary bank. In addition to offering traditional community banking, lending, and commercial finance products through its 60 Midwestern and Southwestern branches, Triumph is heavily involved in the transportation sector. It is one of the country’s top providers of factoring services and payment solutions to transportation companies.
The Triumph Business Capital division specializes in invoice factoring, a financial transaction that occurs when a company sells its account receivables to address near-term cash needs. Customers in transportation, energy, manufacturing, and other industries often engage in this practice. Then there is TriumphPay, the company’s billing and payments platform that shippers and freight brokers use to process and settle payments for both ground and air transportation sales.
It is Triumph Bank’s unique exposure to the transportation industry that has helped it stand out from regional banking peers. Its technology solutions hold strong potential for growth as business activity rebounds in oil-centric Texas and its surrounding states. The Business Capital and TriumphPay brands are a nice complement to the slow-growth nature of the traditional banking and insurance sides of the business. In a way, Triumph Bank is as much of a fintech play as a regional bank play. Both are good places to be these days.