This Day On The Street
Continue to site
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

3 Overlooked but High-Quality Bank Stocks

NEW YORK ( TheStreet) -- Analysts from Sterne Agee on Monday identified three defensive bank stock plays that are strongly capitalized and have repurchased shares.

Saying that there were "opportunities in high quality, small-cap financials that may have been missed," Sterne Agee analyst Peyton Greene listed three buy-rated names with tangible common equity ratios exceeding 10% and nonperforming asset ratios below 3%, that "have been actively repurchasing shares over the past twelve months."

These defensive names trade much higher to forward earnings than shares of the largest U.S. banks, including JPMorgan Chase (JPM - Get Report), Bank of America (BAC - Get Report), Citigroup (C - Get Report), and Wells Fargo (WFC - Get Report), but their ability to repurchase shares is unfettered by the regulatory stress tests being faced by the largest industry players.

These smaller picks, of course, are also free of the daily headline risk faced by the largest banks, including mortgage putback demands, ever-increasing threats to revenue as new rules clamp down on fees and the ongoing agony of exposure to troubled economies in Europe.

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

Meridian Interstate Bancorp

Meridian Interstate Bancorp (EBSB - Get Report) of East Boston, Mass., has a mutual thrift holding company structure, with Meridian Financial Services -- the mutual holding company -- controlling 59.5% of common shares as of Sept. 30. Meridian had $1.9 billion in total assets as of Sept. 30.

The shares closed at $12.70 Friday, increasing 8% year-to-date. The company repurchased 360,801 share during the first three quarters of 2011. In August, Meridian's board of directors adopted a new "stock repurchase program of up to 10% of its outstanding common stock not held by its mutual holding company parent, or 904,224 shares of its common stock," according to the company's quarterly filing with the Securities and Exchange commission.

Meridian Interstate Bancorp's shares traded on Friday for 28 times the consensus 2012 earnings estimate of 45 cents a share among analysts polled by FactSet, and 1.4 times tangible book value, according to SNL Financial.

Sterne Agee analyst Matthew Kelly believes that a "second step conversion [to full stock ownership] is likely over the next 12 months," and in the meantime, Meridian Interstate Bancorp "can grow minority tangible book value by ~7% a year through increased retained earnings and continued share repurchases." Kelly's price target for the shares is $15.00.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BAC $17.44 -0.17%
C $54.08 -0.18%
EBSB $14.73 -0.14%
FXCB $18.05 -0.11%
JPM $66.86 0.12%


Chart of I:DJI
DOW 17,813.39 +1.20 0.01%
S&P 500 2,088.87 -0.27 -0.01%
NASDAQ 5,116.1430 +13.3350 0.26%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs