2026 Revenue/Expense at Lower End; Hiring Activity Accelerates

Research evidence excerpt

2026 Revenue/Expense at Lower End; Hiring Activity Accelerates

TD Cowen Pinnacle Financial Partners

Global Research June 8, 2026

VALUATION METHODOLOGY AND RISKS

Valuation Methodology

US Banks – Mid and Small Cap

The primary methodology we utilize to value stocks within the US Mid and Small Cap Bank

sector is a forward price to earnings multiple. These multiples are broadly informed by peer

valuations, macro factors such as the interest rate environment and perceived health of the

economy, as well as company-specific factors such as risk profile, revenue and balance sheet

growth opportunities, consistency of its track record, and any other unique risk factors or

earnings growth opportunities. Broadly speaking, companies with a strong track record of

revenue and earnings growth and stronger risk profiles tend to command higher premium

multiples, while names with higher risk factors or inconsistent / more volatile earnings streams

trade at lower relative multiples.

Investment Risks

The primary risks to the banking industry include the following:

•Credit Risk. Banks use their balance sheet to extend credit to consumer and commercial

borrowers, which involves a degree of risk. Borrowers may default on these loans due to a

variety of causes, including idiosyncratic issues or weaknesses in the national or regional

economies in which the borrowers operate. This could drive elevated credit losses that

negatively impact earnings.

•Interest rate risk. The majority of bank revenues are derived from net interest income. As such,

banks are inherently impacted by the shape of the yield curve, as well as the direction of short

and long-end interest rates. Sharply unexpected interest rate movements and / or inadequate