Construction and Development Loan Exposure Continues to Plague Community Banks
Among the 1,131 publicly-traded FDIC-insured financial institutions 472 banks (41.7%) have overexposures to C&D and/or CRE loans, and 317 banks (28.0%) have 80% to 100% of their CRE loans fully funded.
To compare the FDIC data of the third quarter to that of the second quarter use this link to my post of Sept. 6, Community Banks Still Under Stress. Also check out my post of Nov. 5, Book Profits on These Community Bank Stocks Now.
At www.ValuEngine.com we show the finance sector 9.1% overvalued with industry valuations that are quite divergent from region to region. Community banks in the Northeast are 19.8% overvalued, in the Midwest they are 7.7% undervalued, in the Southeast they are 13.4% overvalued, in the west they are 3.1% undervalued, and in the Southwest they are 1.1% undervalued.
Here is the daily chart for the America's Community Bankers Index
Reading the TableOV/UN Valued: The stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage 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 (%): Stocks with a red number declined by that percentage over the last 12 months. Stocks with a black number increased by that percentage. Forecast 1-Year Return: Stocks with a red number are projected to decline by that percentage over the next 12 months. Stocks with a black number in the table are projected to move higher by that percentage over the next 12 months. 12 month trailing P/E Assets: Add three zeros to get the total number. C&D Loans: Add three zeros for total exposures. Cons/RB: The C&D loan exposure versus risk-based capital. CRE/RB: The CRE loan exposure versus risk-based capital. Pipeline: The percentage of CRE loans outstanding versus loan commitments. Value Level: The price at which to enter a GTC limit order to buy on weakness. The letters mean; W-weekly, M-monthly, Q-quarterly, S-semiannual and A-annual. Pivot: A level between a value level and risky level that should be a magnet during the time frame noted. Risky Level: is the price at which to enter a GTC limit order to sell on strength. Observations:
- We have nine buy-rated bank stocks and 15 hold-rated stocks.
- Twelve banks are undervalued by double-digit percentages
- Fourteen banks have had double-digit gains over the past 12 months led by a 67.6% gain in SNV (SNV) . The only bank with a double-digit loss over the past 12 months is VLY (VLY) with a loss of 12.9%.
- All 24 banks are projected to be higher over the next twelve months, but by lower percentage gains of just 1.1% to 13.8%, led by SNV.
- We show that 22 of 24 banks have reasonable 12 month trailing P/E between 10.7 and 18.8. SNV has an elevated P/E at 25.7.
- The only bank overexposed to C&D loans is TCBI (TCBI)with a ratio of 111.7%.
- 23 of 34 banks are overexposed to CRE loans.
- Four banks have pipelines that are more than 80% funded.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV