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
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

Book Profits in Community Bank Stocks

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.

2 of 4

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!

Markets

DOW 17,827.75 +12.81 0.07%
S&P 500 2,072.83 +5.80 0.28%
NASDAQ 4,787.3170 +29.0650 0.61%

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