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5 Small-Cap Bank Stock Winners Nobody's Talking About


2. Columbia Banking System
Shares of Columbia Banking System (COLB) of Tacoma, Wash., closed at $18.76 Friday, returning 2% year-to-date, following a 7% decline during 2011. Based on a regular quarterly payout of nine cents, the shares have a dividend yield of 1.92%.

The shares trade for 1.2 times tangible book value, and for 13 times the consensus 2013 EPS estimate of $1.45. The consensus 2012 EPS estimate is $1.12.

Columbia Banking System had $4.8 billion in total assets at the end of the second quarter. For the 12-month period ended June 30, the company's ROA was 1.14%, and its ROE was 8.85%.

The analyst consensus is for the company to report third-quarter EPS of 30 cents, matching its second-quarter results, but declining from 48 cents during the third quarter of 2011, when the company booked a $1.8 million gain on its FDIC-assisted acquisition of Bank of Whitman.

On Sept. 26, the company announced an agreement to acquire West Coast Bancorp (WCBO) of Lake Oswego, Ore., for about $506 million in cash and stock. West Coast Bancorp had $2.4 billion in total assets as of June 30.

Following the West Coast Bancorp deal announcement, KBW analyst Jacquelynne Chimera raised KBW's price target for Columbia Banking System by a dollar to $23, saying that "We view the deal positively given strong EPS accretion despite the issuance of additional shares, and believe the combined franchise will be a strong force in the Pacific Northwest. "

Chimera said her "revised price target is based on a justified price-to-book calculation in which we have increased our long-term tangible ROA assumption to 1.35% from 1.10% previously," and that "the longer-term franchise is better served with the deal's structure despite the dilution to tangible book value that the market appeared to focus on given the decline in share price following the announcement."

COLB Chart COLB data by YCharts

Interested in more on Columbia Banking System? See TheStreet Ratings' report card for this stock.

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