10 Buy-Rated Bank Stocks With Highest Dividend Yields

NEW YORK ( TheStreet) -- It's dividend season for bank stocks.

Beginning with bank and thrift stocks rated a "buy" from TheStreet Ratings, we used data provided by Thomson Reuters Bank Insight to narrow the list down to the 10 banks paying the highest dividend yields, that also have average daily trading volume of at least 20,000 shares. This is a more aggressive approach than we have taken previously, with a lower trading volume threshold. In previous bank dividend stock lists we also limited the names to those paying out less than a certain percentage of earnings.

TheStreet Ratings takes a very conservative, long-term approach to stock ratings, placing its emphasis on total returns as well as revenue trends, capital strength and dividends. The ratings also consider short-term performance, financial stability and stock-price volatility. A rating of B-minus (Good) or above, is equivalent to a "buy" rating.

This time around, many of the names have high dividend payout ratios, however, all had decent operating returns on average assets of close to 1.00% or higher during 2012. Several of these banks have pending deals to acquire local competitors.

Stress Tests Mean Higher Dividends


For the largest U.S. Banks, the Federal Reserve will announce the results of its annual stress tests on March 7. A more important date for investors is March 14, when the Fed will announce the results of the Comprehensive Analysis and Review (CCAR), which incorporates the big banks' capital plans into the stress tests.

Most of the big banks subject to CCAR are expected to announce dividend increases and/or stock buybacks on March 14. Last year, three of the stress-tested banks had their capital plans rejected, including Citigroup ( C), SunTrust ( STI), and Fifth Third ( FITB). Those banks had to wait until August for approval of their revised 2012 capital plans, with only Fifth Third Bancorp receiving approval for a dividend increase.

Citigroup and Bank of America ( BAC) are each paying a nominal quarterly dividend of just $0.01 a share, and didn't buy back any shares during 2012. With both companies continuing to go through major transitions, opinion is mixed on the level of capital returns investors can expect this year.

JPMorgan Chase analyst Vivek Juneja in a report Jan. 15 estimated that Citigroup would be approved to increase its quarterly dividend to $0.20 and that Bank of America would raise its quarterly dividend to $0.04. Juneja also estimated that Citigroup would be approved to repurchase $4.425 billion in common shares through the first quarter of 2014, with Bank of America being approved to buy back $3.950 billion worth of shares.

Oppenheimer analyst Chris Kotowski in a Feb. 4 report said he "would counsel investors to have guarded expectations" for the two companies' capital returns, as "the industry's recent history suggests that the banks get let out of the penalty box only very slowly." Kotowski estimates that Citigroup will be approved to raise its quarterly dividend to $0.10 and that Bank of America will raise its dividend to $0.03, with neither company being approved for any buybacks through the first quarter of 2014.

The Highest Dividend Payers


The big banks get most of the headlines and several are expected to see their dividend yields approaching or exceeding 3.00% this year. But their yields aren't likely to go that much higher because the Federal Reserve -- at least for the time being -- prefers that the big boys don't pay dividends amounting to more than roughly 30% of their earnings.

Among smaller banks not subject to the Fed's scrutiny and limits, there are many players that have managed to maintain much higher dividend yields for years.

Investors and analysts at times will question the ability of some of these banks to maintain high dividend payouts, but all of these companies are steady earners, which is reflected in the "buy" ratings from TheStreet Ratings.

Here are the TheStreet's 10 buy-rated banks with the highest dividend yields, ordered by ascending yield:

10. F.N.B Corp.


Shares of F.N.B. Corp. ( FNB) of Hermitage, Pa., closed at $11.36 Thursday, returning 8% this year, following a 2% decline during 2011. The shares trade for 2.3 times tangible book value, according to Thomson Reuters Bank Insight, and for 12.5 times the consensus 2014 earnings estimate of $0.91 a share, according to Thomson Reuters Bank Insight.

Based on a quarterly payout of $0.12, the shares have a dividend yield of 4.23%.

F.N.B. Corp is rated an A-minus (Excellent) by TheStreet Ratings.

The company had $12.0 billion in total assets as of Dec. 31 and earned $110.4 million, or $0.79 a share in 2012, increasing from $87.0 million, or 70 cents a share, in 2011. F.N.B. Corp.'s 2012 operating return on average assets (ROA) was 0.95%, improving from 0.88% the previous year, according to Thomson Reuters Bank Insight.

F.N.B on Feb. 19 announced an agreement to acquire PVF Capital Corp. ( PVFC) of Solon, Ohio, in an all-stock deal valued at $106.4 million. PVF is the holding company for Park View Federal Savings Bank, with $782 million in total assets and 16 branches in the Cleveland area. F.N.B. said that the acquisition would be "accretive to tangible book value per share," and would have no effect on the combined company's ratio of tangible common equity to total assets.

F.N.C. Corp. reported a Dec. 31 ratio of tangible equity to tangible assets of 6.09%, and a strong regulatory Tier 1 leverage ratio of 8.29%.

Guggenheim Securities analyst David Darst has a neutral rating on F.N.B. Corp. and said in a report on Feb. 19 after the PVF Capital deal was announced that "initially, the transaction likely will be only modestly accretive to EPS; however, we believe FNB will drive much greater value in one to two years."

"Expansion into Cleveland is a better fit than moving further east at this time and is likely to be an important market for FNB and future growth," Darst wrote, adding that the company already "has several branches in the market and recently hired several commercial lenders in the market."

Darst estimates that F.N.B. Corp. will earn $0.86 a share this year, with EPS rising to $0.90 in 2014.

FNB Chart FNB data by YCharts

Interested in more on F.N.B. Corp.? See TheStreet Ratings' report card for this stock.

9. FirstMerit


Shares of FirstMerit ( FMER) of Akron, Ohio, closed at $15.13 Thursday, returning 8% year-to-date, after a decline of 2% during 2012. The shares trade for 1.4 times tangible book value and for 10.6 times the consensus 2014 EPS estimate of $1.42. The consensus 2013 EPS estimate is $1.28.

Based on a quarterly payout of $0.16, the shares have a dividend yield of 4.23%.

FirstMerit is rated a B-minus (Good) by TheStreet Ratings.

The company had $14.9 billion in total assets as of Dec. 31 and reported 2012 net income applicable to common shares of $134.1 million, or $1.22 a share, increasing from $119.6 million, or $1.10 a share, in 2011. FirstMerit's 2012 ROA was 0.91%, improving from 0.82% the previous year.

The company in September agreed to acquire Citizens Republic Bancorp ( CRBC) of Flint, Mich., in an all-stock deal valued at $912 million. Citizens Republic has $9.6 billion in total assets and owes $300 million in federal bailout funds received through the Troubled Assets Relief Program, or TARP.

FirstMerit said in its annual 10-K filing on Thursday that upon completion of the merger, it would purchase Citizens Republic's TARP preferred shares without itself becoming subject to TARP's restrictions, while also paying the government deferred dividends totaling $48.5 million. The merger is expected to be completed in the second quarter.

Oppenheimer analyst Terry McEvoy rates FirstMerit "outperform," with a 12-18 month price target of $18. The analyst said in a report on Jan. 22 that the Citizens Republic deal was "looking better by the quarter," because of improved credit quality.

McEvoy said that nonperforming assets at Citizens Republic declined by 21% in the fourth quarter from the third quarter, and that net loan charge-offs were down 50% from a year earlier. The analyst said that FirstMerit's original estimate of a $378 credit mark against loans to be acquired from Citizens Republic was "conservative," and that "given the decline in nonperforming assets and stable delinquency trends over the last two quarters, we see the final loan mark coming in below the original figure or higher levels of purchase accounting accretion (positive to net interest income and EPS) after the deal closes."

"In either case, this reduces the tangible book value dilution earn-back time, which was a large contributor to the stock's underperformance following the deal announcement," McEvoy wrote.

The analyst estimates that FirstMerit will earn $1.35 a share in 2013 and 2014, while maintaining the quarterly dividend of $0.16.

FMER Chart FMER data by YCharts

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

8. Washington Banking Co.


Shares of Washington Banking Co. ( WBCO) of Oak Harbor, Wash., closed at 13.74 Thursday, returning 2% year-to-date, following a 19% return during 2012. The shares trade for 1.2 times tangible book value and for 12.0 times the consensus 2014 EPS estimate of $1.15. The consensus 2013 EPS estimate is $1.13.

Based on a quarterly payout of $0.15, the shares have a dividend yield of 4.37%.

Washington Banking Co. is rated an A-minus (Excellent) by TheStreet Ratings.

The company had $1.7 billion in total assets as of Dec. 31 and reported 2012 net income available to common shareholders of $16.8 million, or $1.09 a share, increasing from $14.9 million, or $0.97 a share, in 2011. The 2012 ROA was 1.00%, improving from 0.95% the previous year.

KBW analyst Jacquelynne Chimera rates Washington Banking Co. "outperform," with a $17 price target, estimating the company will earn $1.10 a share this year, with EPS increasing to $1.15 in 2014.

Chimera said in a report on Feb. 1 that she expected "continued loan growth and expense management to help combat net interest margin pressure in the current low-rate environment."

"Management is engaged in M&A discussions," Chimera wrote, "and to the extent the company is able to complete a deal, we believe this would prove accretive to earnings and beneficial to the franchise as a whole."

Washington Banking Co.'s net interest margin narrowed sharply to 5.23% from 5.48% the previous quarter. But Chimera expects the decline in net interest income to be partially offset by strong loan growth of 6.5% this year and 6.9% in 2014.

Interested in more on Washington Banking Co.? See TheStreet Ratings' report card for this stock.

7. United Bankshares


United Bankshares ( UBSI) of Charleston W.V., closed at $26.00 Thursday, returning 7% year-to-date, after a 10% decline during 2012. The shares trade for 2.2 times tangible book value and for 14.1 times the consensus 2014 EPS estimate of $1.85. The consensus 2013 EPS estimate is $1.74.

Based on a quarterly payout of $0.31, the shares have a dividend yield of 4.77%.

United Bankshares is rated an A-minus (Excellent) by TheStreet Ratings.

The company had $8.4 billion in total assets as of Dec. 31 and reported 2012 net income of $83.6 million, or $1.64 a share, increasing from $$75.6 million, or $1.61 a share, in 2011. The 2012 ROA was 0.98%, improving slightly from 0.97% the previous year.

United Bankshares on Jan. 30 announced an agreement to acquire Virginia Commerce Bancorp ( VCBI) of Arlington, in an all-stock deal valued at $490.6 million. Virginia Commerce has roughly $2.8 billion in assets, with 28 branches. The merger is expected to be completed in the third quarter.

Guggenheim analyst David Darst has a neutral rating for United Bankshares, and said in a report on Jan. 31 that the price being paid for Virginia Commerce -- a premium of 15% over the target company's closing share price of $12.21 on Jan. 29 and roughly 1.8 times tangible book value -- was "rich," because VCBI was really being sold for 2.2 times tangible book value, after "adjusting for the credit mark."

On the other hand, "UBSI is an experienced acquirer and has historically exceeded accretion targets," Darst wrote, adding that "the transaction is strategically important as it builds UBSI's Virginia and DC franchise and limits opportunities for competition to gain share."

Darst has a neutral rating on United Bankshares, with a price target of $26.00, estimating the company will earn $1.72 a share this year, with EPS rising to $1.80 in 2014.

UBSI Chart UBSI data by YCharts

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

6. Univest Corp. of Pennsylvania


Shares of Univest Corp of Pennsylvania ( UVSP), which is headquartered in Souderton, closed at $16.59 Thursday, declining 3% this year, following a positive return of 23% during 2012. The shares trade just below tangible book value, and for 11.9 times the consensus 2014 EPS estimate of $1.40. The consensus 2013 EPS estimate is $1.30.

Based on a quarterly payout of $0.20, the shares have a dividend yield of 4.82%.

Univest Corp. of Pennsylvania is rated a B-plus (Good) by TheStreet Ratings.

The company had $2.3 billion in total assets as of Dec. 31 and reported 2012 net income of $20.9 million, or $1.24 a share, increasing from $18.9 million, or $1.13 a share, in 2011. The 2012 ROA was 0.94%, improving from 0.89% the previous year.

Univest's net interest income for 2012 was $72.5 million, declining slightly from a year earlier, portfolio loan growth of 2%. The net interest margin narrowed to 3.80% in the fourth quarter from 3.96% a year earlier.

The overall earnings improvement reflected a decline in provisions for loan losses to $10.0 million in 2012 from $17.5 million in 2011. Total noninterest income grew to $40.3 million in 2012 from $34.4 million a year earlier, mainly reflecting an increase in gains on mortgage sales, to $6.1 million from $1.9 million.

Univest was very strongly capitalized as of Dec. 31, reporting a Tangible common equity ratio of 9.88% and a regulatory Tier 1 leverage ratio of 11.47%.

Interested in more on Univest Corp. of Pennsylvania? See TheStreet Ratings' report card for this stock.

5. Peoples United Financial


Shares of Peoples United Financial ( PBCT) of Bridgeport, Conn., closed at $13.10 Thursday, returning 10% this year, following a 1% decline during 2012. The shares trade for 1.5 times tangible book value and for 14.7 times the consensus 2014 EPS estimate of $0.89. The consensus 2013 EPS estimate is $0.80.

Based on a quarterly payout of $0.16, the shares have a dividend yield of 4.89%.

Peoples United is rated an A-minus (Excellent) by TheStreet Ratings.

The company had $30.3 billion in total assets as of Dec. 31 and reported 2012 net income of $245.3 million, or $0.72 a share, increasing from $192.4 million, or $0.55 a share, during 2011. People's United also reported operating earnings, because the company incurred $12.7 million in merger-related expenses and one-time charges during 2012, and $56.8 million in similar items during 2011.

2012 operating earnings were $253.9 million, or $0.75 a share, increasing from $230.7 million, or $0.66 share, the previous year. Peoples United reported a 2012 operating ROA of 0.90%, up slightly from 0.89% in 2011.

During 2012, Peoples United purchased 57 branches from RBS Citizens, NA (a unit of Royal Bank of Scotland Group PLC ( RBS)). The company consolidated 15 branches and also opened three new branches, including one in New York City.

The company's net interest income in 2012 increased to $927.8 million from $913.4 million the previous year, despite a narrowing of the operating net interest margin to 3.82% from 4.03%. Peoples United at the KBW Banking Conference on Feb. 27 outlined some pretty ambitious goals for 2013, including loan growth in the "high single digits to mid-teens," along with net interest income in a range of $900 million to $940. The company expects the 2013 net interest margin to fall to the "3.30% to 3.40% range."

KBW analyst Collyn Gilbert rates Peoples United "outperform," with a price target of $14.00, estimating the company will earn $0.80 a share this year, with EPS rising to $0.92 in 2014. Following the conference on Feb. 27, the analyst said in a report that investors "renewed 'risk off' trade could disproportionately benefit PBCT shares given the bank's credit strength, capital protection, and attractive dividend yield."

While KBW's price target "provides limited upside from current levels, the stock's total return is supported by an attractive 5% dividend yield," Gilbert wrote. PBCT Chart PBCT data by YCharts

Interested in more on Peoples United Financial? See TheStreet Ratings' report card for this stock.

4. Trustco Bank


Shares of Trustco Bank ( TRST) of Glenville, N.Y., closed at $5.20 Thursday, declining slightly this year, following a 1% decline during 2012. The shares trade for 1.4 times tangible book value and for 11.8 times the consensus 2014 EPS estimate of $0.44. The consensus 2013 EPS estimate is $0.41.

Based on a quarterly payout of $0.065625 (or $0.2625 on an annual basis), the shares have a dividend yield of 5.05%.

Trustco Bank is rated a B-minus (Good) by TheStreet Ratings.

The company had $4.3 billion in total assets as of Dec. 31 and reported 2012 net income of $37.5 million, or $0.40 a share, increasing from $33.1 million, or $0.39 a share, in 2011. The 2012 ROA was 0.86%, improving from 0.81% the previous year.

The main factor in the earnings improvement was a decline in provisions for loan losses to $12 million in 2012 from $18.8 million the previous year. Noninterest income increased 12% year-over-year to $21.0 million during 2012, with increased customer service fees and trust department income.

Following KBW's acquisition by Stifel Nicolaus, KBW on Feb. 15 initiated coverage of Trustco Bank, with a "market perform" rating and a price target of $5.50. KBW analyst Travis Lan estimates Trustco will earn $0.39 a share this year, and also in 2014.

Lan said in a report that historically, Trustco's "management has been successful in navigating through various economic and interest rate environments. However, as a mono-line residential lender, the current challenges associated with TrustCo's long-term, fixed-rate lending model continue to outweigh the opportunities in our view."

"While levers exist to offset most margin compression in 2013, we anticipate that those should be worn out by 2014 leaving the bank susceptible to significant pressure at that point," Lan wrote. The analyst added that "with negligible price upside given our operating outlook, return in TRST shares remains dependent on the 5.0% dividend yield." But Lan also said he expected Trustco's dividend payout ratio to remain in its "historical range" of less than 70% over the next two years.

"Dividend sustainability is a key part of the story, though future capital accretion may become additionally important as growth accelerates, which may at some point require meaningful earnings leverage, or a more rational payout," Lan wrote.

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

3. Park National Corp.


Shares of Park National Corp. ( PRK) of Newark, Ohio, closed at $65.98 Thursday, returning 3.5% this year, following a 5% return during 2012. The shares trade for 1.9 times tangible book value and for 12.6 times the consensus 2014 EPS estimate of $5.23. The consensus 2013 EPS estimate is $4.97.

Based on a quarterly payout of $0.94, the shares have a dividend yield of 5.70%.

Park National is rated a B-plus (Good) by TheStreet Ratings.

The company had $6.6 billion in total assets as of Dec. 31 and reported 2012 net income of $78.6 million, or $4.88 a share, declining from $82.1 million, or $4.95 a share, during 2011. The 2012 ROA was 1.16%, rising slightly from 1.14% the previous year.

The ROA increased, despite the decline in earnings, because the company in February of last year sold its troubled Florida subsidiary, Vision Bank, to Home Bancshares ( HOMB) of Conway, Ark. The selling price was $27.9 million, and Park Natinoal retained Vision Bank's nonperforming loans. Park National also restated its 2010 and 2011 results, to recognize "loan loss provisions and other real estate owned devaluations at Vision Bank in 2010 instead of 2011."

Park National's nonperforming loans declined to $221.1 million as of Dec, 31, from $266.0 million a year earlier.

The company's major transition in 2012 also included the full repayment in April of $100 million in TARP money.

KBW analyst John Barber rates Park National "market perform," with a $64.00 price target, saying in a report on Jan. 28 that "the company still needs to work down" $76 million in nonperforming assets inherited from Vision Bank. The analyst estimates the company will earn $4.95 a share this year, with EPS increasing to $5.15 in 2014.

PRK Chart PRK data by YCharts

Interested in more on Park National Corp? See TheStreet Ratings' report card for this stock.

2. Valley National Bancorp


Shares of Valley National Bancorp ( VLY) of Wayne, N.J., closed at $10.03 Thursday, returning 8% year-to-date, following a decline of 16% during 2012. The shares trade for 1.9 times tangible book value and for 15.4 times the consensus 2014 EPS estimate of $0.65. The consensus 2013 EPS estimate is $0.70.

Based on a quarterly payout of $0.1625, the shares have a dividend yield of 6.48%.

Valley National is rated a B-minus (Good) by TheStreet Ratings.

The company had $16.0 billion in total assets as of Dec. 31 and reported 2012 net income of $143.6 million, or $0.73 a share, compared to $132.5 million, or $0.74 a share in 2011. Valley's earnings-per-share declined because the company issued 17 million shares as part of its acquisition of State Bancorp of Jericho, N.Y., in January 2012.

The company's 2012 ROA was 0.91%, declining slightly from 0.94% in 2011.

Guggenheim analyst David Darst has a neutral rating on Valley National Bancorp, estimating the company will earn $0.70 a share this year and also in 2014. Darst said in a report on Jan. 30 that the company's fourth-quarter results reflected "strong mortgage banking activity, which appears to be a much broader effort relative to peers." Darst also said he was still "modeling a slight decline in revenues in 2013."

Valley's net interest margin narrowed to 3.41% in the fourth quarter, from 3.74% a year earlier. Darst wrote that "both NIM pressure and balance sheet declines are creating headwinds relative to mortgage income growth. Additionally, while mortgage banking is an area of expansion, we are not certain VLY's production growth will counter expected cyclical volume decline in 2013."

Still, the analyst expects that a decline in credit costs and some strength in Valley's mortgage business "should provide an opportunity for earnings stability and allow VLY to maintain the dividend and build regulatory capital."

VLY Chart VLY data by YCharts

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

1. New York Community Bancorp


Shares of New York Community Bancorp ( NYCB) of Westbury closed at $13.50 Thursday, returning 5% this year, following a 14% return during 2012. The shares trade for 1.9 times tangible book value and for 13.5 times the consensus 2014 EPS estimate of $1.00. The consensus 2013 EPS estimate is $1.03.

Based on a quarterly payout of $0.25, the shares have a dividend yield of 7.41%.

New York Community Bancorp is rated a B (Good) by TheStreet Ratings.

The company had $44.1 billion in total assets as of Dec. 3 and reported 2012 net income of $501.1 million, or $1.13 a share, increasing from $480.0 million, or $1.09 a share in 2011. The 2012 operating ROA was 1.18%, according to Thomson Reuters Bank Insight, improving slightly from 1.17% in 2011.

The main factor in New York Community's earnings improvement was an increase in mortgage banking income to $178.6 million in 2012 from $80.7 million the previous year. Net interest income in 2012 declined to $631.1 million, from $666.2 million in 2011, as the net interest margin contracted to 3.21% in 2012 from 3.46% the previous year.

New York Community Bancorp's main loan business for decades has been multifamily lending in the New York City area, focusing on rent-controlled or rent-stabilized apartment buildings, with below-market rents. This has led to a remarkable track record of strong asset quality and very low levels of loan charge-offs. The company greatly expanded its single-family mortgage business by purchasing the failed AmTrust Bank of Cleveland from the Federal Deposit Insurance Corp. in December 2009.

The company has maintained the quarterly dividend of $0.25 a share for 36 consecutive quarters, but from time to time over the past several years, some analysts have questioned New York Community's ability to maintain such a high dividend payout ratio.

Guggenheim analyst David Darst in a report on Jan. 30 said "while we feel the dividend is secure for today, we are concerned that the dividend may be at risk later in the year or early next year given our earnings outlook." The analyst has a neutral rating on New York Community, estimating the company will earn $1.06 a share this year, with EPS declining to $1.03 in 2014.

Darst said he expected the company "to grow core earnings over the next two years by deploying liquidity into loans with improving market conditions for core loan growth."

While mortgage banking will typically add earnings volatility, it provides additional revenue diversification, which has been beneficial," he wrote.

NYCB Chart NYCB data by YCharts

Interested in more on New York Community Bancorp? See TheStreet Ratings' report card for this stock.

-- 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.

More from Stocks

Did Trump Just Torpedo the Stock Market Again?

Did Trump Just Torpedo the Stock Market Again?

Trump, China Trade, Target and Las Vegas Casinos - 5 Things You Must Know

Trump, China Trade, Target and Las Vegas Casinos - 5 Things You Must Know

9 Stocks Goldman Sachs Thinks Will Blow Wall Street's Performance Away in 2019

9 Stocks Goldman Sachs Thinks Will Blow Wall Street's Performance Away in 2019

Quick Read: 3 Things for Investors to Know Before Wednesday's Trading Session

Quick Read: 3 Things for Investors to Know Before Wednesday's Trading Session

Replay: Jim Cramer on the Markets, Oil, General Electric, Zillow and Micron

Replay: Jim Cramer on the Markets, Oil, General Electric, Zillow and Micron