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

10 Bank Stocks Trading Below Book Value

PremierWest Bancorp (PRWT) of Medford, Ore. is the smallest among the ten most actively-traded bank and thrift holding companies selling for less than tangible book value as of Thursday's close, with total assets of $1.5 billion as of March 31. Shares closed at 46 cents Thursday, or 0.8 times tangible book, and were down 67% during 2010.

TARP Status: PremierWest owes $41.4 million in TARP money and has missed two quarterly dividend payments on government-held preferred shares.

Capital: The holding company completed a $33.3 million common stock offering in April. Proceeds of the offering received through March 31 brought the company's Tier 1 leverage ratio to 8.21% and its total risk-based capital ratio to 11%. Terms of an April 6 Cease and Desist order from the FDIC require main subsidiary PremierWest Bank to achieve and maintain a Tier 1 leverage ratio of 10% within 180 days. Since the bank subsidiary's Tier 1 leverage ratio was also 8.21% as of March 31, it appears another capital raise will be needed.

Earnings: PremierWest Bancorp reported a net loss to common shareholders of $3.3 million, or 10 cents a share, for the first quarter, after losing $148.6 million or $6.01 a share during 2009. The two main factors in the 2009 loss were $88 million in provisions for loan loss reserves and a fourth-quarter non-cash goodwill impairment charge of $74.9 million.

Asset Quality: The nonperforming assets ratio was 8.31% as of March 31, down slightly from the previous quarter. PremierWest's net charge-off ratio for the first quarter was 1.93%, which was its lowest level in a year. Loan loss reserves covered 4.16% as of March 31.

There were some bright signs for asset quality, but "adversely classified loans" were still increasing. These include nonperforming loans, as well as performing loans with "a well-defined weakness or weaknesses related to the borrower's financial capacity or to pledged collateral that may jeopardize the repayment of the debt." For commercial real estate borrowers whose loans are maturing, there may not be sufficient collateral to support a loan renewal, or a new loan from a different lender. Adversely classified loans comprised 26% of total loans as of March 31.

Prospects: PremierWest completed a significant capital raise in April, however, the company will probably need to raise capital again to comply with the FDIC order. Investors considering the shares should wait until third-quarter numbers are available. At that point, the company's asset quality picture may have improved, and hopefully it will have achieved the capital ratios mandated by regulators.

6 of 11

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
Submit an article to us!
SYM TRADE IT LAST %CHG
BPOP $32.50 0.00%
C $53.76 0.00%
HCBK $9.28 0.00%
SNV $27.53 0.00%
AAPL $129.66 3.60%

Markets

DOW 18,024.06 +183.54 1.03%
S&P 500 2,108.29 +22.78 1.09%
NASDAQ 5,005.3910 +63.9670 1.29%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs