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Five Bank Stock Bargains

2. Westfield Financial (WFD - Get Report) of Westfield, Mass., was trading below book value Tuesday, when shares closed at $8.04 or 0.97 times tangible book. The stock declined 10% during May through Tuesday's close, and had a dividend yield of 2.49% on a quarterly payout of 5 cents a share. Shares were flat year to date.

Westfield had total assets of $1.2 billion as of March 31 and loads of excess capital, with a total risk-based capital ratio of 38.41%. Rather than increase the dividend, the company has stuck with its policy of returning capital to shareholders via buybacks, announcing on Tuesday that its board of directors had approved a 10% buyback of 2.9 million common shares. The company is close to completing a previous buyback of 3.1 million shares that began in January 2008.

The thrift holding company has remained profitable through the crisis, with minimal loan losses. Net income for the first quarter was $1.4 million, for an ROA of 0.45%. Earnings of 5 cents a share supported the dividend, with the high payout ratio not being a threat, because of Westfield's excess capital.

Keefe Bruyette & Woods analyst Damon DelMonte has a market perform or hold rating on the shares, with a $10 12-month price target, which would be a healthy 24% gain from Tuesday's close.

With the company in such solid shape, with strong asset quality and a significant buyback, Westfield is a compelling play.

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NWBI $12.05 0.00%
WFD $7.89 0.00%

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