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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. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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Results for FRC
24 Nov 15 13:07:16
$FRC: Stock Insights: FIRST REPUBLIC BANK (NYSE:FRC): https://t.co/0Ee1ATRW07
Syed Waqas Nabi
24 Nov 15 11:00:13
A bullish Big MAC (Bullish) has occurred at 1:30 PM Nov 24 at $68.42 on First Republic Bank (FRC) $FRC
23 Nov 15 14:57:02
$71,000 in ONE TRADE!! By Follwing Their Signals More Info Here https://t.co/n4FmW1UTLN .. $FRC-D $FRC-E $FRF
23 Nov 15 14:56:02
$71,000 in ONE TRADE!! By Follwing Their Signals More Info Here https://t.co/n4FmW1UTLN .. $FRC-A $FRC-B $FRC-C
23 Nov 15 14:55:02
$71,000 in ONE TRADE!! By Follwing Their Signals More Info Here https://t.co/n4FmW1UTLN .. $FR $FRA $FRC
23 Nov 15 14:52:39
Syed Waqas Nabi
19 Nov 15 13:00:09
A bullish Big MAC (Bullish) has occurred at 2:45 PM Nov 19 at $66.83 on First Republic Bank (FRC) $FRC
19 Nov 15 12:07:02
PIRS DD 4 investors.Read here: https://t.co/vD9rNVKE8y $NCT.B $AMRS $FXCM $XNY $LPLA $FRC $FSD $ACW
Syed Waqas Nabi
19 Nov 15 12:00:09
A bullish Big MAC (Bullish) has occurred at 2:00 PM Nov 19 at $66.65 on First Republic Bank (FRC) $FRC
19 Nov 15 00:13:03
JBEM new pick 'PIRS'.Read here: https://t.co/vD9rNW2f06 $FPXI $FR $FRA $FRAK $FRAN $FRBA $FRBK $FRC
19 Nov 15 00:12:03
JBEM new pick 'PIRS'.Read here: https://t.co/vD9rNW2f06 $FRC-A $FRC-B $FRC-C $FRC-D $FRC-E $FRC-F $FRD $FRED
18 Nov 15 13:01:13
$FRC: Stock in Focus – FIRST REPUBLIC BANK (NYSE:FRC): https://t.co/PF14FCtD4a
18 Nov 15 07:46:31
New Analyst Information for First Republic Bank (NYSE:FRC) $FRC-D #finance https://t.co/NZY8Z4mfxk
18 Nov 15 04:47:10
$FRC: First Republic Bank Receives $63.86 Average PT from Brokerages …: https://t.co/Tz760Uz7pq
Analyst Actions
17 Nov 15 09:48:02
$FRC: Bullish analyst action by Raymond James on First Republic Bank: https://t.co/pYLY54Mpa6 https://t.co/FLfwYZYaR8
Capital Market Labs
17 Nov 15 09:47:34
$FRC Best Fundamental Rating https://t.co/1ulSFCtn9s https://t.co/K6RgIiHV7E
16 Nov 15 18:49:36
Three Portfolio Managers Join First Republic In Palm Beach $FRC #investingStocks https://t.co/K0oJsv08he
Syed Waqas Nabi
16 Nov 15 11:00:06
A bullish Big MAC (Bullish) has occurred at 1:00 PM Nov 16 at $65.47 on First Republic Bank (FRC) $FRC
  +Follow August 18, 2013 11:06AM



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