This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

7 Buy Rated Community Banks

NEW YORK ( TheStreet) -- A week ago I wrote, Bull Market Will End Without Big-Bank Leadership and on that day the PHLX KBW Banking Index (BKX) stayed above its 50-day simple moving average at $55.78. This week the BKX had what technicians call a breakout as the March 15 high at $57.60 was taken out to the upside. Wednesday's high at 58.85 was just above the April 2010 high at 58.81. This is a story where technical momentum has trumped overvalued fundamentals.

Traders and investors considering following the fundamentals and technicals may want to consider the more risky smaller community banks. The America's Community Bankers Index (ABAQ) is lagging the BKX and remains below its March 26 high at 190.57.

Investors need to be careful when investing in community bank stocks, as the smaller banks remain under the stress of the Great Credit Crunch, which began at the end of 2007 and continues in 2013.

The ghost of TARP continues! In a report compiled by SNL Financial 113 banks and thrifts missed their dividend payments that were due on Feb. 15. This statistic was as high as 139 FDIC-insured institutions in May 2012, with the decrease since then resulting from redemptions and auctions of related preferred stock.

If you recall TARP loans to banks were issued under the Capital Purchase Program, and under this program banks are required to pay the Treasury quarterly dividend payments. The missed payments are on just $2.44 billion of the $204.9 billion received by 707 FDIC-insured financial institutions. Many of the banks are being told by their state regulators not to make these payments unless they can raise new capital. This continues to be difficult and thus I consider this as evidence of continued stress among community banks.

The number of buy rated banks continues to decline. Among the 133 publicly-traded community banks in the northeast only one has a buy rating according to ValuEngine. Among the 159 banks in the southeast only ten have buy ratings. Among the 72 in the Midwest only five are rated buy or better. Among the 87 banks in the west only five have buy ratings. Among the 43 banks in the southwest none have buy ratings. Among the 166 savings and loans only eight have buy ratings. Difficulty maintaining a buy rating is a sign of stress in earnings related data. Only two of the seven buy rated community banks I profile today beat EPS estimates.
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BPOP $29.45 0.00%
CCBG $15.84 0.00%
CFNL $24.61 0.29%
FFKT $27.10 0.04%
OZRK $53.85 -0.15%


Chart of I:DJI
DOW 17,798.49 -14.90 -0.08%
S&P 500 2,090.11 +1.24 0.06%
NASDAQ 5,127.5250 +11.3820 0.22%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs