8. Cardinal Financial
Shares of Cardinal Financial (CFNL) of McLean, Va. closed at $11.50 Monday, up 33% over the previous year. The company operates 31 branches and mortgage offices in the Washington, D.C. area and was also mentioned by Brett Scheiner as a possible acquisition candidate.Income Statement Cardinal reported fourth-quarter net income of $4 million, or 14 cents a share, declining from $5.9 million, or 20 cents a share the previous quarter but improving from $3.4 million, or 12 cents a share, in the fourth quarter of 2009. The linked-quarter earnings decline reflected a noncash goodwill impairment charge of $2.6 million resulting from "a review of the goodwill and other intangible assets recorded in its Wealth management and Trust Services business segment." The company also reported $1.4 million in fourth-quarter impairments on repossessed real estate, but its provision for loan losses declined to $1.9 million from $3.5 million the previous quarter and $2 million a year earlier. The net interest margin for the fourth quarter was 3.77%, down slightly from 3.82% the previous quarter but increasing from 3.32% a year earlier. The third-quarter return on average assets was 0.77%. Balance Sheet Total assets were 2.1 billion, increasing 10% year-over-year, as Cardinal Financial's organic growth also led to a 9% increase in loans held for investment. Asset quality was strong, with an NPA ratio of just 0.42% as of September 30. The net charge-off ratio was also low, at 0.37%. Cardinal Financial is not a TARP participant. The company's Tier 1 leverage ratio was 10.82% and its total risk-based capital ratio was 14.06% as of September 30. The tangible common equity ratio was 10.07%, which is a high level for a profitable bank. Stock Ratios The shares trade for 12 times the consensus 2012 earnings estimate of 97 cents a share. Analyst Ratings Four of the nine analysts covering Cardinal Financial rate the shares a buy. The remaining analysts recommend investors hold the shares. Priced relatively low to forward earnings, especially for a bank with a decent ROA - especially in the current environment - and a strong balance sheet, Cardinal Financial appears to be a pretty safe play for investors, who would profit handsomely if the company were to sell for the apparent going rate of 15 times forward earnings.