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Five Bank Stock Bargains

Stocks in this article: BKMUWFDOFGNWBIFFIC

4. Northwest Bancshares (NWBI) of Warren, Pa., saw its stock price decline 8% in May to $11.48 at Tuesday's close, although shares were up 4% year to date. A quarterly dividend payout of 10 cents translates to an attractive yield of 3.48%.

The company had total assets of $8.1 billion as of March 31 and announced on May 6 that it had agreed to acquire for $20 million NexTier of Butler, Pa., a bank with $588 million in assets. NexTier's asset quality problems and need for additional capital justified the low price.

Northwest CEO William Wagner described the deal as "a good geographic fit," because the two banks had little branch overlap. He also said that Northwest was seeking other deals, and the company certainly had the capital to justify expansion, with a total risk-based capital ratio of 20.67% as of March 31

After remaining profitable through the credit crisis with minimal loan losses and raising $659 million in common equity when it completed its second-step conversion from a mutual holding company to a bank holding company in December, Northwest is well-positioned for continued expansion and a low-risk opportunity for investors who will get a decent dividend while waiting for growth.

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