NEW YORK ( TheStreet) -- Many investors are considering buying community banks in anticipation of an economic recovery on Main Street. This bet is based on the assumption that the housing market has started to recover and that the community banks are about to increase lending to homebuilders and developers. Even so, many community banks remain overexposed to commercial real estate loans, including construction and development loans. Today I profile 29 of the publicly traded community banks that are reporting second-quarter earnings results this week. A goal of investors is to focus on banks near home. Seven are in the Northeast, 10 are in the Southeast, three are in the Midwest, and nine are in the West. Last week I profiled four healthy community banks in my article "Four Healthy Community Banks Worth Watching", and Bank of the Ozarks ( OZRK) did not disappoint, trading to a new all-time high at $33.15 on Friday. Commerce Bankshares ( CBSH) also moved significantly higher after reporting earnings. My benchmark for community banks is the America's Community Bankers Index (ABAQ), which tracks more than 400 small publicly traded FDIC-insured financial institutions. Source: Thomson Reuters ABAQ (168.53) is up 38.8% since October 2011, and is up 13.9% year to date. The weekly chart above shows a rising momentum reading (12x3x3 weekly slow Stochastic) with ABAQ above its five-week modified moving average at 163.37 and above its 200-week simple moving average at 155.60. This is a positive weekly chart profile. My quarterly value level is 161.51 with an annual pivot at 166.87 and monthly risky level at 172.92.
Reading the Table
The table above shows the FDIC assets in billions, the construction and development loans in millions, the percent of C&D loans vs. risk-based capital, the percent of CRE loans vs. risk-based capital, and the pipeline, which is the total real estate loans outstanding vs. total real estate loan commitments. Back in the fall of 2005, the Federal Reserve, Treasury and FDIC realized that community banks were loaning funds to the housing and real estate markets at a pace above what these regulators thought was prudent. Guidelines were set and monitored via quarterly filings to the FDIC. These guidelines were formalized at the end of 2006.