This article was originally published March 5.Investing in financial stocks right now is not for the squeamish, but there are some potential bargains for investors willing to do extra homework on capital strength, asset quality, prospects for securities writedowns during 2009 and dividend yields. An analysis of the 20 largest U.S. bank and thrift holding companies by market capitalization shows how far the mighty -- like Citigroup ( C) and Bank of America ( BAC) -- have fallen, but also uncovers some lesser-known players -- like Hudson City Bancorp ( HCBK) and Capitol Federal Financial ( CFFN) -- who have weathered the storm relatively well. It might be a surprise to see some of these names among the 20 largest publicly traded U.S. bank and thrift holding companies by market capitalization. But the weight of the credit crisis has rearranged the list by eliminating large companies through failures like Washington Mutual, and acquisitions like National City and Wachovia. Many of the companies that have moved up the rankings exhibit similar qualities: Attractive, safe yields, low ratios of nonperforming loans and debit securities to core capital and loan loss reserves and limited loan losses during 2008. Before the financial crisis began, many investors were of the opinion that, for a healthy bank or thrift holding company, a price-to-book ratio below 2 was attractive. The events of the past year and a half have put book values under suspicion, but the ratio can still come in handy when considering investing in some of the healthier companies on the list. Below is a list of the 20 largest U.S. holding companies by market capitalization:
- For People's United Financial (PBCT), the data is for People's United Bank of Bridgeport, Conn, although People's United holds several other thrifts, which are much smaller.
- For Hudson City Bancorp, we used data for Hudson City Savings Bank.
- For TFS Financial Corp (TFSL), the data is for Third Federal Savings and Loan of Cleveland, Ohio.
- For Capitol Federal Financial, the data is for Capitol Federal Savings Bank of Topeka, Kan.