NEW YORK (
) -- Between mid-2006 through the end of 2008, I wrote many pieces that warned investors to avoid community banks. This followed my prediction that many community banks would fall like dominoes in the failure process conducted by the FDIC.
In the December 2008 article I wrote for
magazine, I profiled 12 community banks that I thought would fail before the Great Credit Crunch came to an end. Seven failed, four survived and one is no longer publicly traded.
In 2008, the FDIC closed only 25 banks via the failure procedures. In 2009, the floodgates of failure opened with 140 bank failures. The peak year was 2010, with 157 failures. Today the total for the Great Credit Crunch is 481 bank failures, on the way to my predicted 500.
Here is a copy of the table I used for that December 2008 article:
Courtesy of FDIC and Equities.com
These community banks were on my endangered species list because they had strong sell or sell ratings according to ValuEngine, and because they had a Construction and Development Loan to Risk Based Capital ratio above 100%, which was the regulatory guideline.
Here are my buy-and-trade profiles for the four survivors:
Reading the Table
OV / 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.
Value Level: This is 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: This is the price at which to enter a GTC Limit Order to sell on strength.