Fundamentally the finance sector is 25.9% overvalued. This sector is by far the largest in terms of number of stocks, with 2,997 stocks in the finance sector. Only 2.5% have buy ratings and only 1.6% have sell ratings, so the finance sector has an equal-weight rating, with 82.2% rated hold.
At www.ValuEngine.com, we cover 16 major regional banks, which includes the four too-big-to-fail money center banks, which I profiled Tuesday morning in, Four Too Big to Fail Banks Set Multi-Year Highs.
Among community banks, ValuEngine covers 130 in the northeast, 148 in the southeast, 67 in the midwest, 77 in the west, and 37 in the southwest. In addition, we cover 135 savings and loans, including one of the 10 in todays table.
The FDIC Quarterly Banking Profile shows that 457 publicly traded community banks are still overexposed to commercial real estate loans down slightly from 461 in the second quarter. In addition, 215 have their CRE loan commitments 80% to 100% fully funded, which is another sign of financial stress.Overall community banks are slowly deleveraging but stress continues. The Great Credit Crunch is thus not over.
The top 10 stocks among the 108 stocks in the community bank index fund have total assets ranging from $11.24 billion to $26.91 billion. All 10 have minimal exposures to C&D loans with ratios to risk-based capital between just 1.8% and 29.4%, where exposures above 100% face FDIC scrutiny. The CRE to risk-based capital ranges from just 2.1% to 488.0%. Two banks have overexposures to CRE loans vs. the regulatory guidelines of 300%of risk-based capital. The CRE loan pipelines are between 42.2% and 75.3%, which is a positive as ratios of 80% and above are deemed too risky. One of the stocks in todays table has been upgraded to buy from hold this morning. All others have hold ratings. The upgraded stock is 3.7% undervalued, while six are overvalued by 20.7% to 53%. All 10 have double-digit gains of 11.2% to 81.2% over the last 12 months. Nine of 10 are trading above their 200-day simple moving averages, which reflect the risk of reversion to the mean.