10 More Bank Stocks for Bottom-Fishing Investors

NEW YORK ( TheStreet) -- The continued uncertainty in financial markets means that long-term investors are staring at a large number of bargain-priced bank stocks, and TheStreet is here to help.

Following an overwhelming response to our 10 Bank Stock Picks for Bottom-Fishing Investors and an outcry for more, TheStreet has identified another 10 actively traded bank stocks trading below book value, and this time we've been even more selective.

The first list featured some of the most familiar banking names trading below tangible book value, which excludes intangible balance sheet items such as goodwill. The most familiar name on that list was Citigroup ( C), which has continued to slide, to $26.06 as of Monday's close, or just 0.5 times its tangible book value of $49.64 a share, according to SNL Financial.

It's also worth noting that JPMorgan Chase ( JPM) remains a fantastic bargain, trading just above tangible book value at Monday's closing price of $33.41. This means the market places no premium above liquidation value, for a bank holding company that has remained profitable through the credit crisis while improving its competitive position.

In coming up with our new list of 10 bank stocks trading below tangible book value, we have been even more selective than last time. Beginning with 584 publicly traded U.S. bank and thrift holding companies -- excluding those traded on the Pink Sheets -- trading below tangible book as of Monday's market close according to SNL Financial, we pared down the list by removing the 10 included on the previous list, and then paring the new list down to the 10 cheapest names that also had three-month average daily trading volume above 100,000 shares, and "buy" ratings from at least three analysts.

Once again, the list runs the gamut, including some very familiar names, a few still owing federal bailout funds received through the Troubled Assets Relief Program, or TARP, two still losing money and one company posting solid earnings for the past four quarters.

Zions Bancorporation of Salt Lake City just missed the cut, simply because the shares were trading for 0.8 times tangible book value according to SNL Financial, when they closed at $15.04 Monday.

The following are the newly selected 10 more bank stocks for bottom-fishing investors, in ascending order by price-to-tangible-book:

10. Synovus Financial

Shares of Synovus Financial ( SNV) of Columbus, Ga., closed at $1.35 Monday, down 48% year-to-date. The shares trade for 0.6 times their tangible book value of $2.39, according to SNL Financial.

Based on a token payout of a penny per quarter, the shares have a dividend yield of 2.96%.

The company owes $967.9 million in federal bailout funds received in December 2008 through the Troubled Assets Relief Program, or TARP.

Synovus had $28.3 billion in total assets as of June 30 and reported a second-quarter net loss attributable to common shareholders of $53.5 million, or seven cents a share, compared to a loss of $93.7 million, or 12 cents a share, in the second quarter of 2010.

The company is still working through a high level of problem assets, although its provision for loan losses declined to $120.2 million in the second quarter, from $298.9 million a year earlier. Expenses on foreclosed real estate totaled $39.9 million in the second quarter, although this was a decline from $46.4 million a year earlier.

Nonperforming assets totaled $1.2 billion as of June 30, or 4.30% of total assets, improving from a nonperforming assets ratio of 4.86% a year earlier.

Investors discount the shares with good reason, as the company was still losing money during the second quarter and TARP also represents a significant overhang. Synovus's Tier 1 common equity ratio was 8.41% as of June 30, which would be considered a rather strong level for a profitable bank.

FIG Partners analyst Christopher Marinac rates Synovus "outperform" or a "buy," with a $2.15 price target, saying in an August 10 report that "investors should treat SNV as a financial institution capable of surviving without additional capital and with capacity to repay TARP in 2013," adding that a potential acquirer could benefit from the company's $809 million deferred tax asset valuation allowance.

The shares trade for 11 times the consensus 2012 earnings estimate of 12 cents a share, among analysts polled by FactSet.

Out of 22 analysts covering Synovus, five rate the shares a buy, 15 have neutral ratings and one analyst recommends investors sell the shares.

9. Banner Corp.

Shares of Banner Corp. ( BANR) of Walla Walla, Wash., closed at $13.32 Monday, down 17% year-to-date. The shares trade for 0.6 times their tangible book value of $23.02, according to SNL Financial.

Based on a quarterly payout of seven cents, the shares have a dividend yield of 2.10%.

The company owes $124 million in TARP money.

Factoring-in $1.55 million in dividends on the preferred shares held by the government and $425 thousand in discount accretion on the preferred shares, Banner swung to a first-quarter profit of $224 thousand, or a penny a share, compared to a year-earlier loss of $6.9 million, or $1.97 a share. The provision for loan losses declined to $8 million in the second quarter, from $16 million a year earlier. Second-quarter earnings were also boosted by a $1.9 million adjustment in the valuation of assets carried at fair value.

The company had $4.2 billion in total assets as of June 30. Nonperforming assets totaled $188.4 million as of June 30, or 4.48% of total assets, improving from 6.02% a year earlier.

FIG partners analyst Timothy Coffey has an "outperform" rating for Banner, with a $21 target, saying on July 22 that "once consistent profitability is sustained, management can think about reversing the $39 million DTA-Deferred Tax Asset valuation allowance," which he estimated "was unlikely until 2013 based on recent results."

The consensus estimate among analysts polled by FactSet is for Banner to earn eight cents a share in 2012.

Five out of six analysts covering Banner Corp. rate the shares a buy, while the remaining analyst has a neutral rating.

8. Park Sterling Corp.

Shares of Park Sterling Corp. ( PSTB) of Charlotte, N.C., closed at $3.80 Monday, down 39% year-to-date. The shares trade for 0.6 times their tangible book value of $6.19, according to SNL Financial.

Park Sterling was formed on October 6, 2010 to serve as the holding company for Park Sterling Bank, which was chartered in September 2008. The company is rapidly expanding, and -- as is typical for a "de novo" bank -- has not yet achieved consistent profits.

During the second quarter, the company opened a loan production office in North Carolina and one in South Carolina, also receiving approval to open a new branch in Charleston, S.C.

Park Sterling Bank has four branches. The holding company had $610.7 million in total assets as of June 30.

The company on July 13 announced it had received approval from the Federal Reserve and state regulators for its acquisition of Community Capital Corp. ( CPBK) of Greenwood, S.C., which is expected to be completed this quarter. Park Sterling will pay about $32.4 million in cash and stock for Community Capital, bringing on roughly $637 million in assets and 18 branches spread across South Carolina.

Park Sterling posted a second-quarter net loss of $3.1 million or 11 cents a share, following a first-quarter net loss of $2.9 million, or 10 cents a share. The second-quarter results included $632 thousand in merger expenses. The second-quarter provision for loan losses was $3.2 million, declining from $4.5 million in the first quarter. The second-quarter net interest margin -- the difference between a bank's average yield on loans and investments and its average cost of funds -- was a tax-adjusted 2.60%, contracting from 2.76% the previous quarter, reflecting declining loan balances and a decline in swap hedge income.

The company's ratio of nonperforming assets to total assets was 5.34% as of June 30, improving from 5.85% the previous quarter. The annualized ratio of net charge-offs to average loans during the second quarter was 3.93%, and reserves covered 2.96% of total loans as of June 30.

Park Sterling is obviously a work in progress, with a high level of nonperforming assets and loan losses, especially for a relatively new bank. Then again, the bank was chartered at a less than ideal moment, leading into the real estate collapse.

The company is very strongly capitalized, with a tangible common equity ratio of 28.43%, according to SNL Financial, so it is well-positioned to double in size from the Community Capital transaction, fund continued expansion plans and continue working through its nonperforming loans.

The consensus estimate among analysts polled by FactSet is for Park Sterling to post a net loss of eight cents a share in 2012.

All three analysts covering Park Sterling rate the shares a buy.

Park Sterling is a pure growth play for investors who can commit for several years, as the bank seeks to continue its growth and hit "critical mass" to achieve consistent profitability.

7. PrivateBancorp

Shares of PrivateBancorp ( PVTB) of Chicago closed at $7.86 Monday, down 45% year-to-date. The shares trade for 0.6 times their tangible book value of $12.67, according to SNL Financial.

The company owes $243.8 million in TARP money.

PrivateBancorp had $12.1 billion in total assets of June 30 and reported second-quarter net income available to common shareholders of $5.5 million, or eight cents a share, compared to a net loss of $818 thousand, or a penny a share, during the second quarter of 2010. The second-quarter provision for loan losses declined to $31.1 million from $45.4 million a year earlier. The second-quarter net interest margin was a 3.36%, declining slightly from a year earlier. The second-quarter return on average assets (ROA) was 0.29%, reflecting the continued drag on earnings from credit expenses.

The second-quarter net charge-off ratio was 1.95%, declining from 2.24% a year earlier. Loan loss reserves covered 2.38% of total loans as of June 30.

Following PrivateBancorp's second-quarter earnings announcement in July, Peyton Green of Sterne Agee reiterated his neutral rating for PrivateBancorp and lowered his 2012 earnings estimate by 15 cents to 80 cents a share, saying the credit cycle remained "very sticky" for the company. Green also took note that the company's $120 million in deferred taxes -- representing 14% of its tangible common equity - didn't "carry any sort of valuation allowance," meaning a write-down could be in store.

The shares trade for 10 times the 2012 consensus earnings estimate of 77 cents a share, among analysts polled by FactSet.

Three out of 14 analysts covering PrivateBancorp rate the shares a buy. The remaining analysts all have neutral ratings, which isn't surprising, considering the TARP overhang and skittishness over the deferred tax assets.

6. Comerica

Shares of Comerica ( CMA) of Dallas closed at $22.56 Monday, down 46% year-to-date. The shares trade for 0.7 times their tangible book value of $33.31, according to SNL Financial.

Based on a quarterly payout of ten cents, the shares have a dividend yield of 1.77%.

The company acquired Sterling Bancshares of Houston on July 28 for about $803 million, bringing on about $4.7 billion in assets and more than 50 branches in the metropolitan areas of Houston, San Antonio, Dallas and Fort Worth, in Texas.

Comerica had $54.2 billion in assets as of June 30. Second-quarter net income attributable to common shares was $95 million, or 53 cents a share, increasing from $70 million, or 39 cents a share, in the second quarter of 2010. The provision for loan losses declined to $47 million in the second quarter, from $126 million a year earlier Meanwhile, the net interest margin declined to 3.14% from 3.28%, as strong deposit growth led to excess liquidity.

The second-quarter ROA was 0.70% according to SNL, which was the second-highest among the 10 bank holding companies listed here.

Guggenheim Securities analyst Jeff Davis rates Comerica a "buy," with a price target of $35, saying on August 19 that he expects the company to repurchase 3.5 million to 4 million shares this year, "with all but 400,000 occurring since July 28 when the Sterling deal closed."

The shares trade for nine times the consensus 2012 EPS estimate of $2.47, among analysts polled by FactSet.

Out of 26 analysts covering Comerica, 12 rate the shares a buy, 11 have neutral ratings and three analysts recommend selling the shares.

5. KeyCorp

Shares of KeyCorp ( KEY) of Cleveland closed at $6.05 Monday, down 31% year-to-date. The shares trade for 0.7 times their tangible book value of $8.90, according to SNL Financial.

Based on a quarterly payout of three cents, the shares have a dividend yield of 1.98%.

KeyCorp reported second-quarter net income attributable to common shareholders of $234 million, or 25 cents a share, increasing from $29 million, or three cents a share, in the second quarter of 2010. During the second quarter, the company transferred $8 million from loan loss reserves A year earlier, KeyCorp recorded a provision for loan losses of $228 million.

A $142 million decline in loan loss reserves during the second quarter directly boosted KeyCorp's earnings performance.

The second-quarter net charge-off ratio was 1.11% and reserves covered 2.57% of total loans as of June 30, suggesting that the reserve releases will continue.

The second-quarter net interest margin was a tax-adjusted 3.19%, compared to 3.17% a year earlier.

KeyCorp's second-quarter ROA of 1.15% was the highest among the 10 bank holding companies listed here.

Guggenheim Securities analyst Jeff Davis on August 3 reiterated his "buy" rating for KeyCorp, after the company redeemed $322 million in trust preferred securities, saying the company was "over-capitalized given a tier one common-only ratio of 11.0% and total risk-based capital ratio of 17.7% at June 30."

On August 15, Davis lowered his price target for KeyCorp to $9.50 from $11, "to reflect the lower valuation environment." The lower target implies 57% upside for the shares.

The shares trade for eight times the consensus 2012 earnings estimate of 78 cents a share, among analysts polled by FactSet.

Out of 22 analysts covering KeyCorp, four rate the shares a buy, 16 have neutral ratings and two analysts recommend investors sell the shares.

Despite the lack of analyst love and the sluggish economy, the profitable KeyCorp's valuation of only 0.7 times the company's liquidation value seems ridiculous.

4. First Commonwealth Financial

Shares of First Commonwealth Financial ( FCF) of Indiana, Pa., closed at $3.94 Monday, down 44% year-to-date. The shares trade for 0.7 times their tangible book value of $5.70, according to SNL Financial.

Based on a quarterly payout of three cents, the shares have a dividend yield of 3.05%.

The company had $5.7 million in total assets as of June 30, and reported second-quarter net income of $7.4 million, or seven cents a share, declining from $13.5 million, or 15 cents a share, in the second quarter of 2010. The second-quarter provision for loan losses was $9.1 million, increasing from $4 million a year earlier, but declining from $13.8 million in the first quarter.

First Commonwealth's second-quarter net interest margin was a tax-adjusted 3.76%, declining from 3.88% a year earlier. The second-quarter ROA was 0.52%, according to SNL.

Nonperforming assets increased to 3.24% of total assets as of June 30, from 2.66% a year earlier.

Despite the increase in problem assets, Sterne Agee analyst Mike Shafir rates First Commonwealth a buy, as the company's "tangible book value continued to grow," and that "the company has sufficient capital (TCE/TA =10.8%) and pre-tax net revenue to handle problem asset resolution during this credit cycle." Shafir's price target for the stock is $6.50.

The shares trade for nine times the consensus 2012 earnings estimate of 42 cents a share, among analysts polled by FactSet.

Five of the nine analysts covering First Commonwealth Financial rate the shares a buy, while the remaining analysts all have neutral ratings.

3. SunTrust

Shares of SunTrust ( STI) of Atlanta closed at $17.18 Monday, down 42% year-to-date. The shares trade for 0.7 times their tangible book value of $24.02, according to SNL Financial.

Based on a quarterly payout of five cents, the shares have a dividend yield of 1.16%.

SunTrust was featured among TheStreet's 10 Banks Growing Business Loans, as the company grew its commercial and industrial loan portfolio 2% during the second quarter and 15% year-over-year to $26.2 billion, as of June 30.

SunTrust reported second-quarter net income available to common shareholders of $174 million, or 33 cents a share, improving from a net loss to common shareholders of $56 million, or 11 cents a share, in the second quarter of 2010. The second-quarter provision for credit losses was $392 million, declining from $662 million a year earlier.

The second-quarter net interest margin was 3.53%, expanding from 3.33% a year earlier, mainly reflecting declining funding costs and an improved liability mix. The second-quarter ROA was 0.42%, according to SNL Financial.

FIG Partners analyst Christopher Marinac rates SunTrust "Outperform," with a price target of $32, saying after the company released its second-quarter results in July that he expects the company "can sustain quarterly EPS in the mid-thirty cent range the next few quarters even though some revenue adjustments are necessary given new interchange fee rules (i.e., the Durbin Amendment impact on debit card fee income)."

The shares trade for eight times the consensus 2012 EPS estimate of $2.20, among analysts polled by FactSet.

Out of 26 analysts covering SunTrust, eight rate the shares a buy, 16 have neutral ratings and two analysts recommend selling the shares

2. First Horizon National Corp.

Shares of First Horizon National Corp. ( FHN) of Memphis, Tenn., closed at $6.35 Monday, down 46% year-to-date. The shares trade for 0.8 times their tangible book value of $8.43, according to SNL Financial.

First Horizon had $25.1 billion in total assets as of June 30. The company reported second-quarter net income of $43 million, or 16 cents a share, improving from $2.7 million, or a penny a share, in the second quarter of 2010. The second-quarter provision for loan losses was just $1 million, declining from $70 million a year earlier. During the second quarter, the company made a $24.6 million provision for mortgage repurchases and foreclosures, declining from $56.2 million a year earlier, but still placing a major drag on earnings.

A $ 65 million release of loan loss reserves directly boosted second-quarter earnings.

The second-quarter net interest margin was 3.20%, expanding slightly from 3.19% a year earlier.

Nonperforming assets made up 4.09% of total assets as of June 30, improving from 4.92% a year earlier. The second-quarter net charge-off ratio was 1.67%, and loan loss reserves covered 3.26% of total loans as of June 30.

Guggenheim Securities analyst Marty Mosby has a neutral rating on First Horizon, saying after the company announced its second-quarter results that "it is becoming evident that the mortgage repurchase overhang is becoming less of an issue for FHN and that any further losses should be covered by earnings power and excess capital without pressuring the company any further."

The shares trade for eight times the consensus 2012 earnings estimate of 77 cents a share, among analysts polled by FactSet.

Out of 23 analysts covering First Horizon, nine rate the shares a buy, while the remaining analysts all have neutral ratings.

The discount to book value reflects in part the company's reliance on the reserve release for a positive bottom line during the second quarter, but with strong reserve coverage, we are likely to see additional major releases of reserves over coming quarters, and investors can take comfort in a strong Tier 1 common equity ratio, which SNL says was 11.86% as of June 30.

1. Susquehanna Bancshares

Susquehanna Bancshares ( SUSQ) of Lititz, Pa., has seen its stock fall 40% year-to-date, closing at $5.81 Monday. The shares trade for 0.8 times their tangible book value of $7.50, according to SNL Financial.

Based on a quarterly payout of two cents, the shares have a dividend yield of 1.38%.

The company reported second-quarter net income applicable to common shareholders of $11.1 million, or nine cents a share, compared to a net loss of $1.4 million, or a penny a share, in the second quarter of 2010. The provision for loan losses declined to $28 million in the second quarter, from $43 million a year earlier

The second-quarter net interest margin was 3.62%, declining slightly from 3.69% a year earlier. The second-quarter ROA was 0.32%, according to SNL.

David Darst of Guggenheim securities on August 12 reiterated his buy rating for Susquehanna, while lowering his price target by 50 cents to $10, "to reflect expectations for the sector to trade at a lower valuation." The analyst said he expects the company to achieve an ROA of roughly 0.8% in late 2012 or in 2013.

The shares trade for 10 times the consensus 2012 earnings estimate of 59 cents a share, among analysts polled by FactSet.

Nine out of 14 analysts covering Susquehanna rate the shares a buy, while the remaining analysts all have neutral ratings.

-- Written by Philip van Doorn in Jupiter, Fla.

To contact the writer, click here: Philip van Doorn.

To follow the writer on Twitter, go to http://twitter.com/PhilipvanDoorn.

To submit a news tip, send an email to: tips@thestreet.com.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

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