This Day On The Street
Continue to site right-arrow
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
TheStreet Open House

10 Bank Stocks Trading Below Book Value

Stocks in this article: C SNV BPOP MI CRBC HCBK TSFG

Shares of CapitalSource (CSE) of Chevy Chase, Md. closed at $4.35 Thursday or 0.8 times tangible book value. Shares were up 6% year-to-date.

CapitalSource's main subsidiary is CapitalSource Bank of Los Angeles, Calif.

TARP Status: The company is not a TARP pariticpant.

Capital: CapitalSource is a specialty finance company, and doesn't report capital ratios in the same manner as most other bank holding companies. Main subsidiary CapitalSource Bank was well-capitalized as of March 31, with a Tier 1 leverage ratio of 11.78% and a total risk-based capital ratio of 17.35%. The holding company's tangible common equity ratio was 15.61% as of March 31, which was the highest by far for the companies being discussed here.

Earnings: Capital Source reported a first-quarter net loss of $211.7 million or 67 cents a share, after losing $869 million or $2.84 a share during 2009. As would be expected, elevated provisions for loan losses were the main factor in the losses.

Asset Quality: For the main bank subsidiary, the nonperforming assets ratio was 5.59% as of March 31. The net charge-off ratio was 2.05%, and reserves covered 6.45% of total loans. Loan loss reserves appeared adequate, even though the ratio of nonperforming loans to total loans was 9.24%.

Prospects: The decline in shares from a 2010 closing high of $6.23 on April 23 would appear to be a good buying opportunity for investors considering CapitalSource for a long-term play on the economic recovery. The stock is rated "Outperform" or the equivalent of a buy by Keefe Bruyette & Woods analyst Sameer Gokhale, who said the "sell-off appears excessive." KBW projects the company will return to profitability in the first quarter of 2011. While this is a risky play over the next year, the company's strong level of capital mitigates dilution risk and it will be well-positioned when interest rates rise, since nearly all of its loans feature adjustable rates.

7 of 11

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link 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

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, 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
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,387.21 -291.49 -1.65%
S&P 500 2,029.55 -27.54 -1.34%
NASDAQ 4,681.4970 -90.2660 -1.89%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs