NEW YORK ( TheStreet) -- There are plenty of community banks in the Midwest that are posting solid loan-growth numbers.
Stocks of strong community banks tend to trade at a significant premium to the largest U.S. banks, reflecting the prospect for continued earnings growth, in line with the loan growth as the Midwest economy continues to recover, while also reflecting investors' continued discomfort with the big banks, amid a regulatory and political onslaught.
FIG Partners analyst John Rodis covers 19 smaller regional banks, nearly all of which are located in the Midwest. At Friday's market close, the 19 stocks were trading at an average of 15.5 times his 2014 earnings estimates.
That's a pretty high valuation compared to the "big four" U.S. banks:
- Shares of JPMorgan Chase (JPM) closed at $54.52 Friday and traded for 8.9 times the consensus 2014 earnings estimate of $6.10 a share, among analysts polled by Thomson Reuters.
- Citigroup (C) closed at $51.32 Friday and traded for 9.2 times the consensus 2014 EPS estimate of $5.57.
- Bank of America (JPM) closed at $14.45 Friday. The shares traded for 10.6 times the consensus 2014 EPS estimate of $1.37.
- Wells Fargo (WFC) closed at $43.23 Friday and traded for 10.8 times the consensus 20143 EPS estimate of $4.02.
Strong Loan Growth"Loan growth was relatively strong and in most cases better than expected," according to Rodis, who last week summarized in a report the second-quarter performance for the banks he covers. "The growth for most banks continues to be driven by commercial loans (C&I and CRE) and to a lesser degree by consumer loans including mortgages for some banks."
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