Five Fetching Bank Stocks

Huntington's adjusted ratio of nonperforming assets to total assets was 0.75%, increasing from 0.47% in June 2006. While this was a large increase, attributed mainly to problems with large credits to home builders in Michigan, Huntington continued to maintain loan-loss reserves exceeding the problem-loan balances. While it is difficult to see how bad Huntington's asset quality could get, the company has been pretty conservative in its reserving.

Even with the large increase in loan loss provisions, the company's dividend does not seem in danger, as its payout ratio is 71%.

Huntington completed its acquisition of Sky Financial Group on June 30, for $3.5 billion in cash and stock. This brought Huntington's total assets up to $50 billion, and added 65 branches in Pennsylvania, Indiana, Michigan and West Virginia. Sky's numbers were not included in Huntington's June 2007 figures.

FirstMerit(FMER Quote) has been punished less severely than Huntington, with a total return of -12.5% over the past year. FirstMerit's dividend has held steady at 29 cents per quarter for a year, and the dividend yield is a tantalizing 6.15%. More importantly, the company's asset quality has actually improved over the past year, with a ratio of nonperforming assets to total assets of 0.45%, compared with 0.72% a year ago.

Wachovia raised its quarterly dividend in August, to 64 cents per share from 56 cents per share. The dividend yield is now 5.33%. Wachovia's overall asset quality remains strong, with nonperformers comprising 0.33% of total assets as of June 30, well below our 1% cut-off.