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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

10 Bank Stocks Turning the Credit Corner

NEW YORK (TheStreet) -- TheStreet has identified 10 large banks with stubbornly high problem assets, some of which could provide outsized gains for investors over the next year.

Beginning with a list of 93 publicly traded bank and thrift holding companies -- excluding any traded on the Pink Sheets -- with total assets exceeding $5 billion as of June 30, we have isolated the 10 companies with the highest percentage of nonperforming assets as of June 30. SNL Financial supplied the data, and we used the nonperforming assets ratios derived by from Securities and Exchange Commission filings.

SNL defines nonperforming assets (NPA) as nonperforming loans (as reported by the holding companies) plus renegotiated loans and leases, plus repossessed real estate.

Of course, the NPA ratio only factors-in problem assets that are on the banks' balance sheets. For several of the largest mortgage lenders, most of the credit risk is off the balance sheet.

Bank of America (BAC), for example, had $ $384.8 billion in one-to-four family residential mortgage loans serviced for others (excluding home equity lines) as of June 30. Out of this total $148.8 billion, or 39%, were past due 90 days or more, according to the company's regulatory filing with the Federal Reserve. Another $22.6 billion, or 6%, of the loans serviced for others, were past due 30 to 89 days.

Bank of America also reported that $131 billion, or 34%, of the one-to-four family mortgage loans (again excluding home equity lines) serviced for others, were in some phase of the foreclosure process, as of June 30.

So the nation's largest bank holding company doesn't even know how much risk it is facing from institutional investors' mortgage putback demands.

The following 10 bank and thrift holding companies aren't facing the existential threat of unknown risk from ever-mounting mortgage repurchase demands, but their earnings have suffered as their on-balance-sheet nonperforming assets have remained stubbornly high.

That being said, there's plenty of upside for the shares as indicated by consensus price targets, and only two of the names have any analysts recommending selling the shares. Half of the names have five or more analysts rating the shares a buy.

Here are the 10 bank and thrift holding companies with the highest NPA ratios per SNL Financial, as of June 30, counting up to the one with the weakest asset quality:

1 of 11

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 16,456.53 -106.77 -0.64%
S&P 500 1,921.26 -9.41 -0.49%
NASDAQ 4,337.1120 -32.6610 -0.75%

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