This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Book Profits on These Community Bank Stocks Now

NEW YORK ( TheStreet) -- There are hundreds of community banks that are publicly traded, so why take the risk of investing in banks that are overexposed to commercial real estate loans or to construction & development loans?

There are 385 regional and community banks in the ABA Community Bank Index (ABAQ). Today I am profiling 14 names that have exposure to CRE loans.

Among these 14 bank stocks, two are rated strong buy by my Web site,, and eight are rated buy.

Even so, I am recommending that investors in these community banks book profits now. My reason is that these names have too much exposure to CRE and/or C&D loans, and these data are not factored into ValuEngine's ratings or those of any other stock-screening service with which I'm familiar.

ValuEngine ratings are based upon data from filings related to quarterly earnings reports. Real estate loan exposures are submitted in separate quarterly filings to the Federal Deposit Insurance Corp.

"Bank-Failure Friday" returned last week as the FDIC closed two community banks. The 48th bank failure for 2012 was a privately held bank in Tampa Bay, Heritage Bank of Florida, which had too much exposure to CRE loans, with a risk ratio of 776% of risk-based capital. (The regulatory guideline is 300%.)

The 49th bank failure of the year was publicly traded Citizens First National Bank (PNBC) of Princeton, Ill., which had a CRE risk ratio of 881% of risk-based capital. This bank is also known as Princeton National Bancorp.

PNBC shares were trading at 17 cents at Friday's close, so a failure was priced into this community bank. PNBC did not become overexposed to CRE loans until the first quarter of 2010 when its risk ratio increased to 336%. This red flag put the bank stock on the ValuEngine list of problem banks. Subscribers to my ValuEngine FDIC Evaluation Report could have learned about this overexposure with the stock still trading at more than $7.00. Selling then would have been a much better strategy than watching the stock decline to zero.
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
PNBC $0.00 16.67%
TCBI $45.53 -0.63%
WAL $36.66 0.22%
AAPL $93.66 -0.09%
FB $118.57 0.84%


Chart of I:DJI
DOW 17,891.16 +117.52 0.66%
S&P 500 2,081.43 +16.13 0.78%
NASDAQ 4,817.5940 +42.2360 0.88%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs