This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
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
TheStreet Open House

3 Highly Rated Community Bank Takeout Targets from KBW

NEW YORK ( TheStreet) -- While the bull market for bank stocks has lifted most boats this year, there are still a few bargain stocks out there among potential bank M&A targets, according to KBW.

The U.S. banking industry has been consolidating for decades. The total number of banks and savings and loan associations declined to 6,940 as of June 30, from 8,451 in June 2008 and 9,313 in June 2003, according to the Federal Deposit Insurance Corp.

Most of the community banks being gobbled up by local rivals are privately held, but there are plenty of publicly traded potential targets out there. Since investors are looking to make a profit on a takeout premium, many of the potential targets have seen strong returns for their shares this year.

According to KBW analyst Frank Barlow, publicly traded banks on his firm's "potential sellers list" as a group saw their stocks return 42% this year through Tuesday. Banks on KBW's "potential buyers list" have also seen their shares perform quite well, with their stocks returning 30.9%.

A year-to-date return of 30.9% excellent, even for this year's bull market, but it trails the KBW Regional Banking Index, was up 35% year-to-date through Tuesday.

Here are the three "outperform" rated banks on KBW's "potential sellers list."

Shares of Flushing Financial Corp. (FFIC) of Lake Success, N.Y., closed at $20.04 Wednesday. The shares have returned 33% this year, trade for 14.7 times the consensus 2014 earnings estimate of $1.36 a share, among analysts polled by Thomson Reuters.

KBW analyst Brian Kleinhanzl's price target for the shares is $21.00. The stock trades at a discount to peers, according to Kleinhanzl, who wrote in KBW's M&A report on Wednesday that the bank has "a Long Island footprint and Asian niche which could be attractive to buyers looking for a fill-in transaction or entry into the NYC market."

OmniAmerican Bancorp (OABC)of Fort Worth, Texas, has seen its shares decline 5% this year through Wednesday's close at $22.00. The shares trade for 27.2 times the consensus 2014 EPS estimate of 81 cents.

KBW analyst Brady Gailey's price target for OmniAmerican's shares is $26.00. The analyst in a note on Oct. 28 said the price target includes a "takeout premium, which we believe happens in the short term." The analyst also cited the bank's "attractive Dallas/Fort Worth footprint."

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,974.31 -31.44 -0.18%
S&P 500 0.00 -2.75 -0.14%
NASDAQ 4,549.2260 -15.0680 -0.33%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs