Stockpickr: Buy Banks the 'Mad Money' Way

In Jim Cramer's latest book, Mad Money: Watch TV, Get Rich, he describes his technique for valuing banks: "I know that banks tend to get acquired when they sell at less than two-and-a-half times their book value. ... That's the best way to evaluate banks."

And even in his book Confessions of a Street Addict, published in 2003, Jim mentions that he always owned a collection of regional banks because they paid steady dividends and were stable performers for his hedge fund.

So I did a screen for banks with market caps under $2 billion that are trading for less than 1.5 times book value. I also looked for things such as decreases in nonperforming loans (meaning there isn't much default risk) and increases in deposits and branches (meaning they are probably increasing their future book value). ...