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10 Best Bank Stocks of 2010

9. F.N.B. Corporation

Company Profile

Shares of F.N.B. Corporation (FNB) of Hermitage, Pa. closed at $9.56 Wednesday, for a year-to-date return of 49%, as the company used opportunistic deals to expand its banking footprint in the East. Based on a quarterly payout of 12 cents, the shares had a dividend yield of 5.02%.

The company has an agreement in place to acquire Comm Bancorp (CCBP) of Clarks Summit, Pa. on December 31 for about $67.7 million in cash and stock, with the target company's shareholders approving the sale on December 3. As of September 30, Comm Bancorp had $653 million in total assets and 15 branches in northeastern Pennsylvania.

"The demographics in Kentucky will prove suitable for continued business growth," F.N.B. CEO Stephen Gurgovits said in a statement.

Income Statement

Third-quarter net income was $17.2 million, or 15 cents a share, improving from net income to common shareholders of $4.8 million, or 4 cents a share, when F.N.B paid $5.5 million in costs related to its full repayment of $100 million in TARP money and booked impairment charges of $3.3 million on its investments in pooled trust-preferred securities.

Earnings performance was also boosted by a provision for loan losses of $12.3 million, declining from $16.35 million during the third quarter of 2009. Loan loss reserves were still increasing, as the third-quarter provision exceeded net charge-offs of $937 million.

F.N.B.'s third-quarter net interest margin was 3.78%, improving from 3.66% a year earlier, which the company said reflected "lower deposit and borrowing costs driven by an improved funding mix in a low interest rate environment partially offset by lower yields on earning assets."

Balance Sheet

Total assets were $9 billion as of September 30, increasing 5% over the previous year. The nonperforming assets ratio was 1.96% as of September 30. The third-quarter net charge-off ratio was a relatively low 0.65% and below 1% for three consecutive quarters. Loan loss reserves covered 1.94% of total loans as of September 30, far ahead of the annualized charge-off pace.

The company's Tier 1 leverage ratio was 12.88% and its total risk-based capital ratio was 12.88% as of September 30. The tangible common equity ratio was 5.96% according to SNL Financial.

Stock Ratios

The shares trade for 2.2 times tangible book value according to SNL Financial, and 13.3 times the consensus earnings estimate for 2011 of 72 cents a share. The forward P/E drops to 11.1, based on the 2012 consensus earnings estimate of 86 cents a share.

Analyst Ratings

Out of nine analysts covering F.N.B. Corporation, only one rates the share a buy, while the rest recommend investors hold the shares.

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