Assessing 68 Community Banks that Report Quarterly Results
OV/UN Valued -- Community banks with a Red reading is undervalued while those with a Black reading is overvalued according to ValuEngine.
VE Rating -- A 1-Engine rating is a Strong Sell, a 2-Engine rating is a Sell, a 3-Engine rating is a Hold, a 4-Engine rating is a Buy and a 5-Engine rating is a Strong Buy.
Last 12-Month Return (%) -- Banks with a red number declined by that percentage. Those with a black number increased by that percentage. The performance has been mostly positive.
Forecast 1-Year Return -- Banks with a red number is projected to decline by that percentage, while those with a black number are projected to move higher over the next 12 months.P/E Ratios - Community banks have some P/E ratios that are elevated but most are favorable versus forward 12-month estimates.
I highlighted in red the banks with overexposures in C&D or CRE loans or elevated pipelines. Last Friday was the return of "Bank Failure Friday" as the FDIC closed five small community banks. Four of these banks had significant overexposures to C&D loans and CRE loans with pipeline risks between 87.1% and 100%. This is why I advise investors to avoid the publicly traded banks with these overexposures. Since the "Great Credit Crunch" began at the end of 2007, the FDIC closed 25 banks in 2008, 140 in 2009, 157 in 2010, 92 in 2011 and 38 so far in 2012 for a total of 452. My longstanding prediction is that more than 500 will be closed before the "Great Credit Crunch" comes to an end. The FDIC's still has more than 700 names on their list of problem banks.
At the time of publications the author did not have any positions or conflicts in these banks.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
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