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5 Community Bank Stocks for Long-Term Investors

Stocks in this article: BAC FMBI ISBC TBBK FXCB BANF

5. Investors Bancorp

Shares of Investors Bancorp (ISBC - Get Report) of Short Hills, N.J., closed at $14.53 Monday, returning 8% year-to-date, following a 3% return during 2011.

Investors Bancorp is part of a mutual thrift holding company structure, with Investors Bancorp MHC holding 58.7% the common shares as of Dec. 30. According to Sterne Agee analyst Matthew Breese, if Investors Bancorp were go through a "second-step conversion" to full stock ownership, the company's fully converted book value would be $16.50.

"The shares trade for about 0.9 times the fully converted book value, and that compares with other recently converted thrifts, trading for around 1.15 times book value."

Breese thinks that Investors Bancorp is "close to converting" to full stock ownership "over the next 12 to 15 months," as the company's capital is "getting to a level where they would need another round of capital to grow loans and do acquisitions."

The company's tangible common equity ratio was 8.71% as of Dec. 30, according to HighlineFI.

Sterne Agee rates Investors Bancorp a "Buy," with a $17 price target. Following the completion of the company's acquisition of Brooklyn Federal in early January, Sterne Agee said on Feb. 17 that "We believe the company will stick to its recent acquisition strategy focused on mutual savings banks, distressed institutions, and deposit/branch deals, and that Investors "remains one of our top Northeast bank ideas."

Investors Bancorp's quarterly returns on average assets (ROA) ranged between 0.76% and 0.79% during 2011.

The shares trade for 1.8 times tangible book value, according to HighlineFI, and for 17 times the consensus 2012 earnings estimate of 85 cents a share, among analysts polled by Thomson Reuters. The consensus 2013 EPS estimate is 99 cents.

Interested in more on Investors Bancorp? See TheStreet Ratings' report card for this stock.

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