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10 Bank Stock Picks for Bottom-Fishing Investors

6. MainSource Financial Group

Shares of MainSource Financial Group (MSFG) of Greensburg, Ind., closed at $7.46 Wednesday, for a seven-day decline of 19% and a year-to-date decline of 28%.

The shares traded for 0.8 times tangible book value as of Wednesday's market close, according to SNL Financial.

The company owes $57 million in TARP money.

Second-quarter net income available to common shareholders was $6.9 million, or 34 cents a share, increasing from $3.8 million, or 19 cents a share in the first quarter and $1.4 million, or seven cents a share, in the second quarter of 2010. The earnings improvement reflected a decline in the provision for loan losses to $4 million in the second quarter, from $5.6 million the previous quarter and $12.8 million a year earlier.

The company released $2 million in reserves during the second quarter. Reserves covered 2.63% of total loans as of June 30, and the second-quarter ratio net charge-off ratio was 1.20%.

The second-quarter net interest margin was a strong 4.30%, increasing from 4.09%, although CEO Archie Brown said that Virginia Commerce expected that its revenue would "be under increased pressure as loan demand remains relatively weak and total loans outstanding continue to decline." He added that the bank was "working diligently to identify prudent avenues for additional loan growth."

The shares trade for 8.3 times the consensus 2012 EPS estimate of $1.04, among analysts polled by FactSet.

Two of the five analysts covering MainSource Financial Group rate the shares a buy, while the remaining analysts all have neutral ratings.

Like MainSource, Virginia Commerce appears to be a relatively low-risk play, especially with such low multiples, however, the company is not confident about its prospects for near-term loan or revenue growth.

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