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5 Small-Cap Bank Stock Plays for 2013 From Credit Suisse

1. Columbia Banking System

Shares of Columbia Banking System (COLB) of Tacoma, Wash., closed at $17.65 Wednesday, down 4% year-to-date, following a 7% decline during 2011.

The shares trade for 1.1 times tangible book value, and for 13.07 times the consensus 2013 EPS estimate of $1.35. The consensus 2014 EPS estimate is $1.70.

Based on a regular quarterly payout of nine cents, the shares have a dividend yield of 2.04%.

The company in September 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 $2.5 billion in total assets as of Sept. 30. The deal is expected to be completed during the first quarter of 2013. Prior to the merger announcement, the company paid additional special dividends for four quarters, in order to avoid building additional excess capital.

Columbia Banking System had $4.9 billion in total assets as of Sept. 30 and reported third-quarter earnings of $11.9 million, or 30 cents a share, matching the second-quarter bottom line, but declining from $18.9 million, or, 48 cents a share, during the third quarter of 2011. The year-over-year earnings decline "was due to the enhanced benefits realized in the third quarter of 2011 from Columbia's FDIC-assisted transactions," according to the company.

The company's third-quarter net interest margin, "incremental accretion income," was an impressive $4.40% in the third quarter, although it narrowed from 4.44% the previous quarter, and 4.59% a year earlier. Clark on Wednesday lowered his 2013 EPS estimate for the company to $1.53 from $1.75 and lowered his 2014 estimate to $1.61 from $1.80, "cash position for its pending WCBO deal that is likely to put 20-25 bps of pressure on the margin, only part of which it may recapture after the deal closes."

The analyst's price target for Columbia Banking System is $22.00.

COLB Chart COLB data by YCharts

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

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

>Contact by Email.

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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