5 Bank Stocks That Won't Bankrupt You or America (Update 1)
Many of this year's best bank stock performers have still not recovered from their 2011 losses. These five quality names have lagged the financial sector so far this year, but performed well last year, highlighting the group's lower relative risk.
Shares of Community Bank System ( CBU) of DeWitt, N.Y., closed at $27.74 Monday, down slightly year-to-date, following a 4% return in 2011. Based on a quarterly payout of 26 cents, the shares have a dividend yield of 3.60%. The company on Jan. 23 priced a public offering of 1,852,000 shares at a price of $27, looking to raise $50 million, in part to pay for the purchase of 19 Upstate New York branches and $955 million in deposits from First Niagara Financial Group ( FNFG), in connection to that company's purchase of roughly 200 branches from HSBC ( HBC). Community Bank System had $6.5 billion in total assets as of Dec. 30. The company's ROA ranged between 1.14% and 1.24% in 2011, according to HighlineFI. The shares trade for 2.5 times tangible book value, and for 13 times the consensus 2012 earnings estimate of $2.08 a share. The consensus 2013 EPS estimate is $2.20. Guggenheim analyst David Darst has a neutral rating on Community Bank System, with a $28 price target, based on the relatively high valuation of the shares, but said on Feb 1 that "the branch acquisition creates a great outcome for CBU in the FNFG divestiture given improved market conditions for the capital raise and management's ability to craft mid-single-digit EPS accretion from the acquisition given cost-saving opportunities." Interested in more on Community Bank System? See TheStreet Ratings' report card for this stock.