There are 461 publicly-traded banks that are overexposed to commercial real estate CRE loans and another 10 overexposed to the construction and development C&D portion of CRE. Overexposures occur when the size of a bank's CRE loans reaches 300% of risk-based capital or higher, or when the size of C&D loans reaches 100% of risk-based capital or higher.
Do to tradability I have narrowed my study to 90 publicly-traded banks and I have prepared two spreadsheets for these bank stocks. The first presents the key data from the FDIC and the second covers ValuEngine data and my value levels, pivots and risky levels.
The number of banks on the FDIC non-list of problem banks declined to a still elevated 553 from 612 in the second quarter. The number of problem banks is down nearly 40% from the high of 888 at the end of first quarter 2011. In the second quarter the FDIC closed 12 banks.
The 90 publicly-traded banks on the two lists I present today are not likely to fail, but they should take action to raise capital, trim noncurrent loans or consider merger opportunities.
Reading the TableOV/UN Valued: Only six of 90 are undervalued, Brookline (BRKL), Cascade (CACB), Preferred Bank (PFBC), Riverview (RVSB), Sun Bancorp (SNBC) and Sterling (STSA). All others are overvalued according to ValuEngine. VE Rating: There are four banks with a "4-Engine" buy rating; Cascasde (CACB), Riverview (RVSB), Old Second Bancorp (OSBC) and Sterling (STSA). The only bank with a "2-Engine" sell rating is United Community (UCBI). . All others have "3-Engine" hold ratings. Last 12-Month Return (%): Only four banks stocks declined over the last 12 months; First Financial (FFBC), Great Southen (GSBC), Texas Capital and ValuLine (VLI). Three had triple-digit gains over the last 12 months; Bofi (BOFI), Old Second Bancorp and Riverview. Forecast 1-Year Return: The performance percentages are not exciting over the next 12 months between; from a loss of 6.0% for United Community Banks to a gain of 9.9% Old Second Bancorp. 12 Month Trailing P/E Ratios: Four banks have single-digit P/E ratios; Access National (ANCX), Cascade (CACB), Enterprise (EFSC) and Monarch. And 20 have P/E ratios over 20.0. There are 89 of 90 are trading above their 200-day simple moving averages reflecting the risk of reversion to the mean. Value Level: 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: Price at which to enter a GTC limit order to sell on strength. Follow @Suttmeier This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
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