This Day On The Street
Continue to site
ADVERTISEMENT
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

In Year of Crash, These Bank Stocks Soared

When it comes to banking shares, smaller is better.

First Financial Bankshares (FFIN - Get Report), Tompkins Financial (TMP - Get Report), NBT Bancorp (NBTB - Get Report), SY Bancorp (SYBT - Get Report) and Arrow Financial (AROW - Get Report) have outperformed larger financial companies such as Goldman Sachs (GS - Get Report) and BlackRock (BLK - Get Report).

First Financial, which carries a "buy" recommendation from TheStreet.com Ratings, is a top performer, based not only on stock performance but also on fundamentals. Focusing on the regional market in Texas, the bank has carved out a profitable niche. Although third-quarter revenue declined 5.57%, the company managed to boost earnings per share by 8.5%, outperforming the industry average and the S&P 500. Gross margins widened to 81.39% from 71.97% a year earlier, and operating margins stretched to 46.06% from 40.71%.

Regional, national and international banks have reported massive losses as a result of exposure to subprime mortgages. First Financial, which has a market value of about $1 billion, has avoided common pitfalls by staying true to the fundamentals of sound lending, maintaining regional focus and providing outstanding customer service.

Investors have recognized the bank's potential, fueling a one-year price appreciation of 34.6%. Consequently, the stock is trading at a premium to its industry peers based on price to earnings, price to book and price to sales. However, the stock is below its 52-week high of $67.

Other regional banks demonstrated a similar resistance to the pessimism that plagued financial stocks in 2008. The aforementioned stocks aren't cheap on an absolute basis, but there may be upside potential for people looking to play a trodden sector.

Small Banks, Big Returns
Company
Ticker
MCap
(millions)
Grade
Rating
Price
P/B
P/S
ROE
Div. Yield
1-Year
TOMPKINS FINANCIAL
TMP
526
A
Buy
52.5
2.5x
2.8x
14.1
2.59
39.76%
FIRST FIN'L BANKSHARES
FFIN
1013.1
A-
Buy
49.36
2.9x
4.7x
15
2.68
34.64%
NBT BANCORP
NBTB
823.1
A-
Buy
26.12
2.0x
2.3x
12.5
2.93
31.81%
SY BANCORP
SYBT
334.8
B
Buy
24.7
2.4x
2.8x
16.4
2.6
9.00%
ARROW FINANCIAL
AROW
256.1
B
Buy
24.66
2.0x
2.4x
15.9
4.14
16.60%

There are numerous risks facing small-cap financials. Many have a high institutionally owned percentage and thin trading volume. Also, while large banks have sustained heavy losses from subprime-related investments, most have survived and will live to fight another day. However, these regional players are susceptible to immediate bankruptcy if bets turn against them. Rescuing small-cap financials doesn't top the list of Treasury priorities.
1 of 2

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
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AROW $27.68 0.00%
BLK $336.84 0.00%
FFIN $33.82 0.00%
GS $206.24 0.00%
NBTB $27.01 0.00%

Markets

Chart of I:DJI
DOW 17,630.27 +189.68 1.09%
S&P 500 2,093.25 +25.61 1.24%
NASDAQ 5,089.2060 +49.43 0.98%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs