NEW YORK (TheStreet) -- Community banks may not have household names, but the nine profiled today have positive weekly charts and thus provide investment opportunities.
When focusing on community banks, my first look is at the ABA Nasdaq Community Bank Index (ABAQ). (This sector is availabe in ETF form as the First Trust NASDAQ ABA Community Bank Index Fund (QABA) - Get First Trust NASDAQ ABA Community Bank Index Fund Report.) Before the banking crisis, this index consisted of 500 bank stocks with a waiting list of banks wanting to join the list. After many bank failures, mergers and banks simply closing, the community bank index today has just 374 publicly traded members.
I weeded through the list to find those that had an average trading volume of at least 300,000 shares and represented different areas of the country. Four are headquartered in the Northeast, one is in the Southeast (Puerto Rico), one is in the Midwest, two are out West -- and one is a savings and loan headquartered in Topeka, Kansas.
Following these profiles are three "crunching the numbers" tables to help you understand the moving averages and stochastics, the value levels and risky levels, and the data from the Federal Deposit Insurance Corporation.
All of the nine community banks are above their five key moving averages except one, which is below its 200-day simple moving average. All have positive weekly charts, above their five-week modified moving averages with rising 12x3x3 weekly slow stochastics. These profiles will focus on the FDIC data and the value and risky levels.
Associated Banc-Corp (ASBC) ($18.20) has $24.6 billion in assets. Exposures to construction and development and commercial real estate loans are well-managed. The stock traded as high as $18.70 on March 21, and weakness has held its 200-day simple moving average at $16.87 since then. Semiannual and quarterly value levels are $17.69 and $16.98, respectively, with a weekly pivot at $18.06 and monthly risky level at $18.76.
Boston Private Financial Holdings (BPFH) - Get Boston Private Financial Holdings, Inc. Report ($13.47) has $6.5 billion in assets. It has a slight overexposure to CRE loans with a ratio to risk-based capital at 310.2%. The stock traded as high as $14.64 on Jan. 17, then as low as $11.69 on May 15, holding its 200-day SMA at $12.12. Weekly and semiannual value levels are $12.73 and $12.30, respectively, with a monthly risky level at $13.92.
Popular, Inc. (BPOP) - Get Popular, Inc. Report ($32.22) has $36.2 billion in assets. Exposures to C&D and CRE loans are well-managed. The stock held its 200-day SMA at $28.58 since mid-March, and traded as high as $32.33 on Tuesday. Weekly and semiannual value levels are $30.92 and $27.78, with a monthly pivot at $31.49 and quarterly risky level at $49.01.
Capitol Federal Financial (CFFN) - Get Capitol Federal Financial, Inc. Report ($11.99) has $9.1 billion in assets. Exposures to C&D and CRE loans are well-managed. The stock has been trading back and forth around its 200-day SMA at $11.88 since April 25. A monthly value level is $11.96, with a quarterly pivot at $12.43 and annual risky levels at $16.03 and $17.60.
National Penn Bancshares (NPBC) ($10.80) has $8.5 billion in assets. Exposures to C&D and CRE loans are well-managed. The stock moved above its 200-day SMA at $10.50 on June 6. A weekly value level is $10.04, with a monthly pivot at $11.05. Quarterly and semiannual risky levels are at $11.40 and $12.45, respectively.
PacWest Bancorp (PACW) - Get PacWest Bancorp Report ($44.14) has $6.5 billion in assets. It is overexposed to CRE loans, with a ratio of 361.1% on loans vs. risk-based capital. Annual and quarterly value levels are $42.73 and $40.06, respectively, with a monthly risky level at $47.52.
Signature Bank (SBNY) - Get Signature Bank Report ($122.20) has $23.1 billion in assets. It has an overexposure to CRE loans, with a ratio to risk-based capital of 530%. Quarterly and weekly value levels are $117.25 and $116.33, respectively, with a monthly risky level at $140.60.
Don't miss our trader charts, including an FDIC data crunch, on pages 2 and 3.
Susquehanna Bancshares (SUSQ) ($10.40) has $18.4 billion in assets. Exposures to C&D and CRE loans are well-managed. A monthly value level is $9.80, with quarterly and semiannual risky levels at $13.36 and $14.93, respectively.
Umpqua Holdings Corp (UMPQ) - Get Umpqua Holdings Corporation Report ($17.83) has $11.8 billion in assets. It faces an overexposure to CRE loans, at 394.7% of risk-based capital. Weekly and semiannual value levels are $16.15 and $14.56, respectively, with a quarterly pivot at $17.28. Monthly and semiannual risky levels are at $18.82 and $18.94, respectively.
Crunching the Numbers with Richard Suttmeier: Moving Averages & Stochastics
This table provides the technical status for the stocks profiled in today's report.
There are five columns with moving average titles: Five-Week Modified Moving Average, 21-Day Simple Moving Average, 50-Day Simple Moving Average, 200-Day Simple Moving Average and the 200-Week Simple Moving Average.
The column labeled 12x3x3 Weekly Slow Stochastics shows the pattern on each weekly chart with readings from Oversold, Rising, Overbought, Declining or Flat.
Interpretations: Stocks below a moving average are listed in red.
Five-Week Modified Moving Average (MMA) is one of two indicators that define whether or not a weekly chart profile is positive, neutral or negative. The other is the status of the 12x3x3 weekly slow stochastic.
A stock with a positive technical rating is above its five-week MMA with rising or overbought stochastics.
A stock with a negative technical rating is below its five-week MMA with declining or oversold stochastics.
A stock with a neutral technical rating has a profile that is not positive or negative.
The 200-Week Simple Moving Average (SMA) is considered a long-term technical support or resistance and as a "reversion to the mean" over a rolling three to five year horizon. (even Apple declined to its 200-week SMA in June 2013)
The 21-Day Simple Moving Average is a short-term technical support or resistance used by many hedge fund traders to adjust positions. A stock above its 21-day SMA will likely move higher over a rolling three to five day horizon and vice versa.
The 50-Day Simple Moving Average is also a technical support or resistance used by many strategists and commentators in financial TV.
The 200-Day Simple Moving Average is another technical support or resistance and I consider this level as a shorter-term "reversion to the mean" over a rolling six to 12 month horizon. (even Apple tested or crossed its 200-day SMA in nine of the last 10 years)
Check out our FDIC trader data chart on page 3.
Crunching the Numbers with Richard Suttmeier: Earnings and Where to Buy & Sell
This table presents the EPS estimates including date and before or after the close, and where to buy on weakness and where to sell on strength.
Value Levels, Pivots and Risky Levels are calculated based upon the last nine weekly closes (W), nine monthly closes (M), nine quarterly closes (Q), nine semiannual closes (S) and nine annual closes (A). I have one column for pivots, which is a magnet for the period shown. The columns to the left of the pivots are first and second value levels. The columns to the right of the pivots are first and second risky levels.
Investors who wish to buy a stock should use a good-until-canceled GTC limit order to buy weakness to a value level. Investors who want to sell a stock should use a GTC limit order to sell strength to a risky level.
Crunching the Numbers with Richard Suttmeier: Data from the FDIC Quarterly Banking Profile
Total Assets add (000) so that the assets read as billions.
C&D Loans are construction & development loans to help new communities build roads and infrastructure.
C&D to Risk Based Capital - if loans for construction, land development, and other land are 100% or more of total risk capital, the institution is considered to have loans concentrations above prudent risk levels, and should have heightened risk management practices.
CRE to Risk Based Capital - if loans for construction, land development, and other land, and loans secured by multifamily and commercial property are 300% or more of total risk capital, the institution would also be considered to have a CRE concentrations above prudent levels, and should employ heightened risk management practices.
% Pipeline - is the ratio between CRE loans outstanding versus loan commitments. Ratios 80% and higher indicates stress in that bank. A healthy pipeline is considered around 60%.
At the time of publication the author held no positions in any of the stocks mentioned.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff
Richard Suttmeier is the chief market strategist at
ValuEngine.com. He has been a professional in the U.S. Capital Markets since 1972, transferring his engineering skills to the trading and investment world.
Suttmeier has an engineering degree from Georgia Tech and a Master of Science degree from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. He became the first long bond trader for Bache in 1978, and formed the Government Bond Department at LF Rothschild in 1981, helping establish that firm as a primary dealer in 1986. This experience gives him the insights to be an expert on monetary policy, which he features in his newsletters, and market commentary.
Suttmeier's industry licenses include, Series 7 and Registered Principal (Series 24). He has been the Chief Market Strategist for ValuEngine.com since 2008 and often appears on financial TV.
Click here for details on Suttmeier's "Buy and Trade" investment strategy.
Richard Suttmeier can be reached at RSuttmeier@Gmail.com