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

5 Chicago Banks Poised for Long-Term Growth

NEW YORK ( TheStreet) -- Five Chicago-area commercial lenders are positioned to continue taking business from Bank of America (BAC) and JPMorgan Chase (JPM), but face stiff competition from another out-of-town player.

"We're coming off a challenging quarter for Chicago banks," said analyst John Rodis of Howe Barnes Hoeffer & Arnett, adding that a majority of the five area banks that he covers reported increases in problem loans during the third quarter. Rodis believes we'll see "a choppy couple of quarters" but over the long haul, "there should be a lot of opportunity for growth" as the group resumes its pursuit of commercial clients from Bank of America and JPMorgan chase, which have dominated the Chicago market.

Locally-based institutions have a built-in advantage in their home markets, since their lending teams are more likely to know the local business climate and they have more flexibility to work with borrowers on unique deals.

Another bank that is growing its Chicago business is FirstMerit of Akron Ohio, which has purchased two failed Chicago-area banks from the Federal Deposit Insurance Corp. this year, including Midwest Bank & Trust in May, George Washington Savings Bank in February, when it also bought 24 Chicago-area branches from First Bank of Creve Coeur, Mo. First Merit has $14.4 billion in total assets as of September 30, increasing 36% from a year earlier, and CEO Paul Greig has 28 years experience in the Chicago market.

Out of the five Chicago banks he covers, Rodis only has one buy rating, although four out of the five are cheaply-priced relative to tangible book value, according to SNL Financial. The single buy rating is on First Midwest Bancorp (FMBI) because of the company's strong capital position.

All five of the Chicago banks we're focusing on are still participating in the Troubled Assets Relief Program, or TARP. Because of the associated dilution risk and forward price-to-earnings multiples, based on consensus earnings estimates this group is only attractive when we go out to 2012 and are best considered by long-term investors with horizons of several years.

1 of 6

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
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!
DOW 17,031.14 +43.63 0.26%
S&P 500 1,984.13 -1.41 -0.07%
NASDAQ 4,518.9020 -48.6960 -1.07%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

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