NEW YORK ( TheStreet) -- For investors who can commit for at least two years, TheStreet has identified 10 bank stock recovery plays among Western banks... with another one that's in-play. Following on the heels of our look at 10 Midwest Bank Stocks Poised for the Recovery, we have followed the same approach to highlight the 10 actively traded banks in Western states with shares priced the lowest against projected 2012 earnings. Operating a bank in the Western U.S. has its challenges. According to the U.S. Bureau of Labor Statistics, California was tied with Michigan for the second-highest unemployment rate among all states, at 12.4%, only exceeded by Nevada, which had an unemployment rate of 14.3%. Using data supplied by SNL Financial for the publicly traded bank and thrift holding companies headquartered in 11 Western states - excluding those traded on the Pink Sheets -- we narrowed down the list to the 10 names with the lowest forward P/E based on 2012 earnings estimates with three-month average daily trading volume of at least 50,000 shares. Although it would have made the list, we have excluded Center Financial ( CLFC), which agreed in December to merge with its Los Angeles Competitor Nara Bancorp ( NARA). While the deal was announced as a merger of equals, Nara Bancorp's CEO Alvin Kang will serve as CEO for the combined company, which has yet to be named. We've excluded Center Financial from the list for two reasons: First, the shares are already trading above the effective offering price of $7.16 a share. Second, Central Financial's CEO Jae Whan Yoo was fired on Friday, with the company only saying that Yoo wouldn't be paid any severance. A call to Center Financial requesting information on Yoo's the firing was not returned. In a press release, Center Financial's chairman Jin Chul Jhun said "we wish J.W. well in his future endeavors." Richard Cupp was named to serve as Center Financials interim CEO until the completion of the merger with Nara - expected in the second half of 2011. Also on Friday, Timothy Coffey of FIG Partners downgraded Center Financial to "market perform" from "outperform," saying that his firm believed"the lowered price target will reflect the heightened level of uncertainty resulting from the turnover in CLFC's management." Four of these banks are current participants in the Troubled Assets Relief Program, and some are considerably riskier than others. With all the capital raising activity through the credit crisis, long-term investors in many of these names have borne significant dilution. For new investors, this danger may have passed, but it is important to consider profitability and a company's level of tangible common equity, which excludes TARP money. Here they are the ten banks in descending order by forward P/E based on the 2012 consensus earnings estimates among analysts polled by Thomson Reuters.
For each of the 10 banks discussed on the following pages, we'll be looking at capital strength, earnings quality and asset quality. For an explanation of those terms you can click on the box below.