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3 Bank Stocks to Sell From JPMorgan

Shares of Trustmark (TRMK - Get Report) of Jackson, Miss., closed at $25.04 Tuesday, returning 4% year-to-date, following a 2% return during 2011.

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The shares trade for 1.9 times tangible book value, and for 15 times the consensus 2013 EPS estimate of $1.66. The consensus EPS estimate for the first quarter is 39 cents, with a full-year estimate of $1.59 a share for 2012.

Based on a quarterly payout of 23 cents, the shares have a dividend yield of 3.67%.

Trustmark had $9.7 billion in total assets as of Dec. 30.

Alexopoulos's price target for Trustmark is $23.50, and he matches the consensus with a first-quarter EPS estimate of 39 cents, estimating earnings of $1.63 a share for all of 2012, followed by 2013 EPS of $1.61.

The analyst on Wednesday said he expected the company's "organic loan growth to be flat in 1Q (excluding the impact of $117 million in loans acquired in the acquisition of Bay Bank & Trust of Panama City, FL)," and that Trustmark's net interest margin would "see continued pressure, as we forecast a 22 bps sequential decline in the margin to 4.06%, but still well ahead of peers expected to average a NIM of 3.61%."

While the company "continues to post [returns on average equity] that are much stronger than the average bank, reported at 11.3% in 4Q, we believe the ~20% premium valuation of the shares appropriately reflects above peer profitability levels," Alexopoulos said, adding that "with TRMK expected to maintain flattish profitability levels in the backdrop of peer banks seeing modest improvement, we expect the premium valuation of TRMK shares to narrow in 2012."

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

>>To see these stocks in action, visit the 3 Bank Stocks to Sell From JPMorgan portfolio on Stockpickr.

-- Written by Philip van Doorn in Jupiter, Fla.

To contact the writer, click here: Philip van Doorn.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.
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AF $16.78 1.10%
BAC $15.75 0.00%
BXS $24.23 1.00%
C $51.66 0.66%
TRMK $23.82 1.10%


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