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3 Regional Bank Stock Best Bets From KBW

Citizens Republic Bancorp
Shares of Citizens Republic Bancorp of Flint Mich., closed at $15.87 Tuesday, returning a whopping 39% year-to-date, following a whopping 85% return during 2011.

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The shares underwent a 1-for-10 reverse split on July 5, 2011.

The company had $9.5 billion in total assets as of Dec. 30.

Citizens Republic owes $300 million in federal bailout funds received through the Troubled Assets Relief Program, or TARP, and has deferred its last eight quarterly dividends to the government. CEO Cathleen Nash said in a letter to shareholders on Feb. 29 that "we expect to pay the accrued dividends on our trust preferred and TARP obligations. We also continue to explore options to repay TARP in the most shareholder friendly way possible, though no firm timetable has been established to do so."

A big hope for the company's shareholders is its "deferred tax asset, which was valued at $311 million at year end," according to Nash. Now that the company has been profitable for three quarters, it is looking to "reverse the valuation allowance in 2012," with Nash estimating that "our current valuation allowance would have the effect of increasing our tangible common equity by over 76% as of December 31, 2011."

The shares trade for 1.6 times tangible book value, according to HighlineFI, and for 12.5 times the consensus 2013 earnings estimate of $1.27, among analysts polled by Thomson Reuters.

KBW on Wednesday raised its price target for Citizens Republic by a dollar to $16, while leaving its first-quarter EPS estimate of 30 cents, and its 2012 estimate of $1.15 unchanged. KBW raised its 2013 EPS estimate by a nickel to $1.40, "primarily due to our expectation for the company to raise common equity at a more attractive price when it exits TARP."

KBW's earnings estimates "assume the company raises $100 million of common equity at $16 per share (versus our previous estimate of $14), which represents approximately 85% of expected [tangible book value].

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