10 Bank Stock Picks for Bottom-Fishing Investors

NEW YORK ( TheStreet) -- The shocking decline in financial stocks over the past week highlights another opportunity for long-term investors to back up the truck and load up on bank stocks that are trading below their liquidation value.

TheStreet has identified 10 actively traded banking names -- large and small - trading below tangible book value, that investors should consider. Most are profitable. All trade at low multiples to consensus 2012 earnings estimates among analysts polled by FactSet.

While there are plenty of headlines screaming about the largest banking names trading below book value, you really need to look at tangible book value to have a realistic picture and avoid exaggerating the situation.

JPMorgan Chase ( JPM), for example, closed at $34.37 Wednesday, which was below its book value of $44.77 a share according to SNL, but was above the company's tangible book value of 31.52, according to SNL Financial. Of course, while the shares are trading slightly above tangible book, JPMorgan seems to be a fantastic bargain right here, as the company is profitable and the shares trade for a historically cheap six times the consensus 2012 earnings estimate of $5.68 a share.

Tangible book value per share excludes intangible balance sheet items such as goodwill, which is an asset carried by a bank to represent the market premium paid for acquisitions. Banks periodically review their goodwill and will write it down if they determine that the market value of previous acquisitions has declined. This leads to losses that don't eat into a bank's tangible equity, but there's no question that goodwill accounting confuses investors.

To come up with a more "solid list" of banks trading below tangible book, we isolated the cheapest names by that measure, excluding those traded on the Pink Sheets, those with three-month average daily trading value below 50,000 shares, and those for which there are fewer than two "buy" recommendations among sell-side analysts.

Here are the 10 banks trading below tangible book value, counting down from the ones trading closed to book value. All saw double-digit declines for the week ended Wednesday. All except one were down year-to-date. All are also cheaply priced to forward earnings estimates. Based on analysts' consensus 12-month price targets, three have over 100% upside.

Happy bottom fishing!

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