10 Bank Stock Buys From a Deep Data Dive

NEW YORK ( TheStreet) -- Jefferies analyst Emlen Harmon on Monday said that banks with "Midwest footprints have the greatest probability of economic improvement over the next six months, closely followed by the Northeast."

Using a large "stacked" set of Federal Reserve data, Jefferies found that the "conventional wisdom that economies in the Northeast, Midwest, and Texas have held up better than other broad regions, while the Southeast and West Coast face more difficulties."

Harmon said that the footprints of Cullen Frost Bankers ( CFR) of San Antonio, Texas, Signature Bank ( SBNY) of New York and Boston Private Financial Holdings ( BPFH) "have held up the best through the cycle, while those of" Western Alliance BanCorp ( WAL) of Phoenix, Bank of Hawaii ( BOH) and SunTrust ( STI) of Atlanta, "appear to have fared the worst."

Then again, "there are names that appear to buck the regional trend," and a quick look at the firm's stock ratings shows that two of those that "fared the worst" have low enough valuations for Jefferies to recommend the shares to investors.

Here are the 10 regional banks with "Buy" ratings from Jefferies, moving by region east to west:

Signature Bank
Shares of Signature Bank of New York, N.Y., closed at $64.19 Friday, returning 7% year-to-date, following a 20% return during 2011.

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The shares trade for twice their tangible book value, according to Thomson Reuters Bank Insight, and for 15 times the consensus 2013 earnings estimate of $4.21, among analysts polled by Thomson Reuters. The consensus 2012 EPS estimate is $3.67.

Jefferies analyst Casey Haire has a $73 price target for Signature Bank.

Harmon said on Monday that "despite mixed footprint macro indicators, SBNY has been able to generate double digit loan growth by taking share away from larger bank competition with its high touch service model delivered by its team model," adding that the "growth has largely been driven by commercial real estate (multifamily and office building), while commercial and industrial, or C&I lending has lagged."

Interested in more on Signature Bank? See TheStreet Ratings' report card for this stock.

First Niagara Financial Group
Shares of First Niagara Financial Group ( FNFG) of Buffalo, N.Y., closed at $8.58 Friday, returning 1% year-to-date, after falling 35% during 2011. Based on a quarterly payout of eight cents, the shares have a dividend yield of 3.73%.

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The shares trade for 1.1 times tangible book value and for eight times the consensus 2013 EPS estimate of $1.03. The consensus 2012 EPS estimate is 89 cents.

First Niagara expects to complete its HSBC ( HBC) branch acquisition on May 18, after which the company will double in size, with roughly 200 branches and 1,200 employees.

Jefferies analyst Casey Haire's price target for First Niagara is $11.50.

Harmon said on Monday that "overall, housing markets across FNFG's footprint in Upstate New York, Pennsylvania, Connecticut and Western Massachusetts appear to have stabilized, with New York looking strongest."

Harmon added that "as a market share takeaway story, FNFG relies more on gaining traction in its new markets rather than help from a robust economic recovery, and that the bank's "double-digit C&I loan growth is more a function of market share takeaway, than it is economic recovery, which is a trend we expect will continue going forward."

Interested in more on First Niagara Financial Group? See TheStreet Ratings' report card for this stock.

Susquehanna Bancshares
Susquehanna Bancshares ( SUSQ) of Lititz, Penn., closed at $10.09 Friday, returning 21% year-to-date, after last year's 13% decline. The company in April raised its quarterly dividend by two cents to five cents a share, for a dividend yield of 1.98%.

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The shares trade for 16 times tangible book value and for 11 times the consensus 2013 EPS estimate of 95 cents. The consensus 2012 EPS estimate is 80 cents.

Casey Haire has a $12 price target for Susquehanna Bancshares.

Harmon said on Monday that in Susquehanna's Southwest Pennsylvania footprint, "residential real estate and construction has seen some turnaround, although no clear trend of growth has emerged as pickup remains scattered geographically, and that "manufacturing data continues to show improvement, but the pace appears to be decelerating, offsetting any trend that may have been developing in average worked hours."

Harmon added that Susquehanna's acquisition of Tower Bancorp in February "should lead to stronger commercial loan growth given the strength of pipelines at the acquired entity, but prospects for organic commercial loan growth remain minimal until activity picks up more."

Interested in more on Susquehanna Bancshares? See TheStreet Ratings' report card for this stock.

PNC Financial Services Group
Shares of PNC Financial Services Group ( PNC) of Pittsburgh closed at $65.26 Friday, returning 15% year-to-date, after pulling back 3% during 2011. Based on a quarterly payout of 40 cents, the shares have a dividend yield of 2.45%.

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The shares trade for 1.4 times tangible book value and for 9.5 times the consensus 2013 EPS estimate of $$6.89. The consensus 2012 EPS estimate is $6.17.

Jefferies analyst Ken Usdin's price target for PNC is $72.00.

Harmon said that "economic data within PNC's footprint in the Mid-Atlantic, Midwest, along with a growing presence, though acquisitions in the Southeast has held up pretty well and its overall economic ranking has stayed within the top half of banks for the past four years."

Looking ahead, Harmon said that "much of the story has to do with how it can operate in new markets. PNC cites successes in Chicago and St. Louis (legacy National City markets) as the power of its brand, but anecdotes from competitors suggest that victories are a result of aggressive pricing."

Interested in more on PNC Financial Services Group? See TheStreet Ratings' report card for this stock.

Huntington Bancshares
Huntington Bancshares ( HBAN) of Columbus, Ohio, has seen its stock return 19% year-to-date, closing Friday at $6.49. During 2011, the shares declined 19%. Based on a quarterly payout of four cents, the shares have a dividend yield of 2.47%.

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The shares trade for 1.3 times tangible book value, and for 10 times the consensus 2013 EPS estimate of 67 cents. The consensus 2012 EPS estimate is 63 cents.

Ken Usdin's price target for Huntington Bancshares is $7.50.

Harmon said that Huntington's Midwest markets were "earlier to dip into recession, but have been quicker to rebound than most parts of the country. As a result, unemployment levels now compare favorably to other regions (OH, PA, and WV all below the national average), and housing prices have been more stable in recent quarters."

Harmon added that "the resurgence in manufacturing has been a tailwind to loan growth, and we look for strong demand to continue in the near-term, and that along with new manufacturing investments by several blue chip companies, "the prospects for the shale oil/gas industry are bright, and HBAN is well-positioned to benefit," although competition is fierce.

Interested in more on Huntington Bancshares? See TheStreet Ratings' report card for this stock.

Fifth Third Bancorp
Shares of Fifth Third Bancorp ( FITB) of Cincinnati closed at $13.99 Friday, returning 11% year-to-date, following an 11% decline during 2011. Based on an eight-cent quarterly payout, the shares have a dividend yield of 2.29%.

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The shares trade for 1.3 times tangible book value and for nine times the consensus 2013 EPS estimate of $1.51. The consensus 2012 EPS estimate is $1.48.

Ken Usdin's price target for Fifth Third is $16.00.

Harmon said that "with the bulk of its footprint in the Midwest, FITB has benefitted from the resurgence of the manufacturing sector," and that "while unemployment is still higher-than-average, future improvement looks promising as average hours are showing signs of picking up after a deceleration in the back half of last year."

Looking ahead, Harmon said that Fifth Third is "particularly vulnerable" to loan pricing competition, "as it has less funding levers given that its last big slugs of deposit repricing were last year."

Interested in more on Fifth Third Bancorp? See TheStreet Ratings' report card for this stock.

Associated Banc-Corp
Shares of Associated Banc-Corp ( ASBC) of Green Bay, Wis., closed at $12.93 Friday, returning 16% year-to-date, following a 16% decline during 2011. Based on a five-cent quarterly payout, the shares have a dividend yield of 1.55%.

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The shares trade for 1.2 times tangible book value and for 13 times the consensus 2013 EPS estimate of $1.02. The consensus 2012 EPS estimate is 95 cents.

Harmon's price target for Associated Banc-Corp is $16, and the analyst said on Monday that the bank "appears well situated from an economic perspective, with the majority of its footprint showing positive economic signs." About 70% of Associated's deposits are concentrated in Wisconsin, "though the company is pushing concentrated lending operations into other Midwest markets," said Harmon, who added that "positive manufacturing reports from the Minneapolis and Chicago Fed districts are encouraging."

Interested in more on Associated Banc-Corp? See TheStreet Ratings' report card for this stock.

First Midwest Bancorp
Shares of First Midwest Bancorp ( FMBI) of Itasca, Ill., closed at $12.15 Friday, returning 19% year-to-date, after falling 29% during 2011.

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The shares trade for 1.1 times tangible book value and for 13 times the consensus 2013 EPS estimate of 92 cents. The consensus 2012 EPS estimate is 54 cents.

Harmon's price target for First Midwest Bancorp is $13, and the analyst said on Monday that "the recent surge in manufacturing activity in the Chicago area appears to weakening, as growth in average hours worked growth turned negative for the first time since 2Q09."

Looking ahead, Harmon said that "while loan growth in Chicago seemed to be picking up in 1Q, the company should also benefit from roll-out of an asset-based lending platform and a more aggressive commercial lending push into downtown Chicago."

Interested in more on First Midwest Bancorp? See TheStreet Ratings' report card for this stock.

SunTrust
Shares of SunTrust of Atlanta closed at $23.75 Friday, returning 34% year-to-date, following a 40% decline during 2011.

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The shares trade just above tangible book value and for nine times the consensus 2013 EPS estimate of $2.66. The consensus 2012 EPS estimate is $1.90.

Ken Usdin's price target for SunTrust is $27.00.

Harmon said that economic trends in the Atlanta area "appear to be improving, however, as home prices are showing signs of flattening after years of declines," and that "manufacturing and employment data is improving as well, further strengthening the cause for a bottom in housing."

Harmon added that "a potential bottom in housing is very important for SunTrust given its exposure to residential real estate," and that "through charge-offs, mortgage repurchase expense, and other environmental costs, SunTrust has potential earnings leverage of $1.00+."

Interested in more on SunTrust? See TheStreet Ratings' report card for this stock.

Western Alliance BanCorp
Shares of Western Alliance BanCorp of Phoenix closed at $8.66 Friday, returning 39% year-to-date, following a 15% decline last year.

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The shares trade for 11 times the consensus 2013 EPS estimate of 80 cents. The consensus 2012 EPS estimate is 59 cents.

Casey Haire's price target for Western Alliance BanCorp is $11.00.

Harmon said that "weakness in the local NV economy (58% deposit base), in particular Las Vegas, continues to disproportionately affect WAL's footprint, which has ranked in the bottom quartile of our coverage universe since 2010," but that "recent readings from Las Vegas indicate increased tourism, conventions and air traffic, all positives for WAL, especially on the credit front."

Looking forward, Jefferies expects "WAL to continue producing positive loan growth, driven by C&I and non-owner occupied commercial real estate , as it remixes out of NV into stronger economies in CA and AZ." Harmon added that "WAL's market share takeaway story remains intact, with small banks still playing defense and larger competitors unable to match WAL's level of client service."

Interested in more on Western Alliance BanCorp? See TheStreet Ratings' report card for this stock.

>>To see these stocks in action, visit the 10 Bank Stock Buys From a Deep Data Dive portfolio on Stockpickr.

-- 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.
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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