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4 Strong Regional Bank Stocks with Potential

  +Follow August 18, 2013 11:06AM
Tickers Mentioned:

Financials are on an upswing as of late, and have a strong chance to overtake technology and once again become the most valuable sector in the S&P 500.

The Big Four banks often get the most attention from investors and experience the most volume, but there are thousands of stocks to choose from in the financial sector, and many great banking stocks still out there. The question is, of course, which ones are worth investing in.

After the Great Recession some investors are understandably leery of investing in banks, but not all banking stocks are prone to the volatility of highly leveraged, highly complex megabanks. Regional bank stocks tend to have strong roots in basic, fundamental banking, and can be stable and quite healthy, even in economic downturns. As interest rates continue their rise that began earlier this summer, banks can expect to reap nice profits.

To find the banks trading on the American market with strongest fundamentals, we applied the following four pieces of criteria to every bank stock on the market:

1) The company has a P/C and P/B greater than 1

It is important for finance companies to have strong book value and cash in addition to validation of these assets by the market.  As a result, a P/C (profit to cash ratio) or P/B (price to book ratio) of 1 should be a minimum “floor” for investing.  

2)      The bank has an operating margin greater than 25% 

Operating margin shows how efficiently a company is operating is business after a good is sold.  Gross profit-operating costs.  The operating margin is more appropriate for banks because the costs associated with operating are much more significant for a bank than the cogs. 

3) The bank has an ROI greater than 25% 

Return on Investment, or ROI, shows how well a company is using its invested capital.  Since banks are essentially made up of all invested capital, this is a very important statistic.

4) The bank is a mid-cap or larger

Banks with a designation of “mid” market capitalization have a valuation of at least $2 billion. They tend to be slightly less volatile than small and micro-cap “penny stock” banks.

There are currently four publically-traded banks in the US that can answer “yes” to all of these questions, and thus can be considered to have strong fundamentals for a regional bank:

First Republic Bank (FRC)

This San Francisco-based bank has 59 locations, with the majority located in Northern California and a dozen located on the Eastern seabord. The bank has been buoyed by rising home prices in San Francisco, which is currently the fourth most expensive city to live in in the country.

First Republic is up 32.22 percent on the year to hit $43.83 a share.

Bank of Hawaii Corporation (BOH)

This Honolulu, Ha.-based bank is Hawaii’s second oldest bank, and has been in operation since 1897. The bank is unique in that it has locations in American unincorporated territories, with locations in Guam, Saipan, and Palau.

Bank of Hawaii is up 20.21 percent on the year to hit $54.89 a share.

First Citizens Bancshares Inc. (FCNCA)

First Citizens Bank (and its subsidiary IronStone) services the Southeastern United States, with 493 locations spread out over 17 states. The company was founded in 1898 under the name of Bank of Smithfield.

First Citizens is up 24.61 percent on the year to hit $208.73 a share.

East West Bancorp, Inc. (EWBC)

East West is a California-based bank that operates predominantly in California, with scattered branches in New York, Georgia, Massachusetts, Texas and Washington. The bank is popular with Asian immigrants in te US, and has several locations in Hong Kong and China.

East West is up 39.26 percent on the year to hit $31.04 a share. 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.

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Results for FRC
30 Sep 14 13:01:08
MidCap #Stocks Trend $NI $STRZA $AWAY $TSN $CNP $BRCD $INTU $WEN $VR $PF $PAYX $RES $EXR $MSI $FRC $MYGN @ http://t.co/tf79gD96D3
30 Sep 14 08:53:58
MidCap #Stocks Trend $NI $STRZA $AWAY $TSN $CNP $BRCD $INTU $WEN $VR $PF $PAYX $RES $EXR $MSI $FRC $MYGN @ http://t.co/tf79gD96D3
BV Financials
30 Sep 14 06:19:19
$FRC First Republic Bank Announces Third Quarter 2014 Earnings and Conference Call Date.. http://t.co/jK7ZqRRbUT
30 Sep 14 06:05:52
$FRC - First Republic Bank Announces Third Quarter 2014 Earnings and Conference Call Date http://t.co/RNKYcLV1g4
Gotham City Capital
30 Sep 14 02:39:16
RT @Camiloagu: 29/09 watchlist $RALY $AWH $CALD $CVT $FRC $PTX $GOGO $HQH $NBIX $VRS $LNKD
Ticker Report
29 Sep 14 04:55:20
First Republic Bank’s “Overweight” Rating Reaffirmed at Morgan Stanley $FRC http://t.co/dkMqo36c4e
28 Sep 14 16:52:29
28 Sep 14 10:51:49
$FRC Long over $50.00! Has a huge room to climb! Interesting chart http://t.co/2Yi0AH7bSv
Ben Silverberg
27 Sep 14 15:57:17
Bullish MACD X-over suggesting continued S/T price appreciation $PRGS $MU $THG $IDT $FRC $DMND $CVEO $VOD $OGE $VECO
27 Sep 14 07:27:11
Parabolic Sar Buy Signals 2/3 $EDU $EPZM $FL $FNF $FNHC $FRC $FSIC $GPRE $HOT $HUBG $IPG $KPTI $LM $LNKD $MNK $MONT http://t.co/tFDSHFxeVQ
27 Sep 14 07:17:45
Bullish MACD Crossovers 2/3 $CVRR $DMND $DSCO $EBAY $ECR $FF $FRC $GBX $HSNI $HUBG $JACK $KITE $LMT $MU $OGE $OPK http://t.co/puuHbr7m3P
26 Sep 14 08:52:38
MidCap #Stocks Performance $MU $LM $LNKD $UA $RES $FRC $RDC $FL $TXT $WYNN $WLL $AA $LLL $MGM $KSS $VRTX more@ http://t.co/tf79gD96D3
SMB Capital
26 Sep 14 07:41:58
Some stocks from the SMB Radar: (In-Play) $NKE, $RDC, $MU (Strong Today) $RDC $FRC (Weak Today) $MU $MAT http://t.co/WBGhIq8DZS
Adam Grimes
26 Sep 14 06:36:39
Early morning stats updated: http://t.co/h1OLauWZDz $NKE, $SHPG, $MU, $IRM, $DE, $ITW, $PM, $ACE, $FRC, $SHPG, $MBT, $PCG, $MON
Investor Wand
26 Sep 14 05:33:32
Is $FRC a BUY? Morgan Stanley thinks so:http://t.co/OPQH0xkCSd
26 Sep 14 03:27:54
4-star analyst Ken Zerbe from Morgan Stanley reiterated a BUY rating on $FRC. Ken has a +11.2% average return http://t.co/cDlJ8EkMyF
25 Sep 14 07:56:52
Canyon Services Group Inc. Declares Quarterly Dividend of C$0.15 $FRC http://t.co/03p2rAk266
US Banking News
25 Sep 14 07:45:17
Canyon Services Group Inc. Declares Quarterly Dividend of C$0.15 $FRC http://t.co/VjTkmeE0UW
25 Sep 14 07:26:24
Morgan Stanley Reaffirms Overweight Rating for First Republic Bank $FRC http://t.co/QZTLK443ej
Sleek Money
25 Sep 14 07:10:26
First Republic Bank Earns “Overweight” Rating from Morgan Stanley $FRC http://t.co/k2o6GCyiU7
US Banking News
25 Sep 14 05:42:04
Morgan Stanley Reaffirms “Overweight” Rating for First Republic Bank $FRC http://t.co/h3NPu43oD8
Analyst Ratings
25 Sep 14 05:21:00
First Republic Bank's overweight rating reiterated at Morgan Stanley. $55.00 PT. http://t.co/zqnYKVcynw $FRC #FRC
US Consumer News
25 Sep 14 05:19:46
First Republic Bank's overweight rating reiterated at Morgan Stanley. $55.00 PT. http://t.co/KkqCPC68UX $FRC #FRC
Ticker Report
24 Sep 14 03:59:38
First Republic Bank Coverage Initiated by Analysts at Wells Fargo & Co. $FRC http://t.co/kB8V3RHcL2
  +Follow August 18, 2013 11:06AM



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