This report is authored by MOI Global instructor Gwen Hofmeyr, equity research analyst at Folly Partners, based in Victoria, British Columbia.

Gwen is an instructor at Best Ideas 2024.

Since the Silicon Valley Bank crisis in March of this year, the banking industry has been dismissed as uninvestable by almost every smart person I’ve spoken to, spare for a couple weirdos that I managed to convince otherwise.

Common responses to my interest in US regional banks have gone along the lines of:

  • “There are too many regional banks in the US to analyze. There are a lot fewer in Canada.”
  • “I don’t look at banks because I don’t think that I can understand them.”
  • “I feel that the US banking sector is weak following the SVB debacle and therefore I don’t want to invest.”

A lot of the commentary builds on sentiment held since the Great Financial Crisis that banks are black boxes riddled with complexity and moral hazard, and that the work required to discern between the flowers and the weeds is not worth the effort.

My research findings disagree, as not only are there many banks run by credible underwriters with simple balance sheets, I have uncovered one that I think deserves to be in a textbook: Hingham Institution for Savings (NASDAQ:HIFS).

Through comparative analysis of 138 companies included in the SPDR S&P Regional Banking ETF (NYSEARCA:KRE), I provide context for why I believe Hingham Institution for Savings is one of the best banks in the US, with performance vastly exceeding KRE averages on the basis of efficiency, profitability, and managerial prowess.

To truly understand a business, you must understand it in relation to other companies within its industry. In total, my dataset for the report comprised nearly 3,600 data points, most of which were manually derived at the report-level. Through analysis of the data over the course of many late nights, I now have a sound understanding of what I like to see in a bank, but most importantly, I confirmed my suspicion that Hingham is an unusual one.

I feel as though I have barely scratched the surface of the US regional banking industry, yet the general apathy towards the sector, in tandem with the tremendous analytical work required for understanding, leads me to conclude that the sector is ripe for further analysis; for opportunity is most often found where people are unwilling to look.

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