My favorite financials are the regional and community banks (check out our 5 dividend-paying community banks). They're not the JP Morgans of the world and they actually still offer banking in the way that a bank should operate. They know their customer's names and take deposits and make loans. With the regional banks we don't have to worry about a London Whale or a fat finger wrecking havoc on a quarter's earnings report. These banks pay a nice steady dividend and their shareholder base is usually regionally based and stable. Regional banks are great long-term investments and also could at some point be acquisition targets. We know no one has the cash to buy a JP Morgan, but JP Morgan can buy any one of these five banks and give me a nice profit.
KeyCorp (KEY) - Dividend Yield: 2.10%
KeyCorp is the holding company for Key Community Bank with headquarters in Cleveland, Ohio. The company operates 1088 bank branches in 14 states; a telephone banking call center; and 1611 ATM machines in 15 states.
KeyCorp has a market cap of $9.27 billion and a forward P/E of 10.45. The bank's return on equity is 8.46%. Book value per share is $10.78. The dividend payout ratio is only 20%. The stock is up 20.12% in the past year. KeyCorp just announced that it would buy back up to $426 million in stock.Of the analysts that follow KeyCorp, four have it rated as Strong Buy, six Buy, 18 Hold, two Underperform, and one Sell.
Although hedge fund sentiment turned bearish on KeyCorp during the fourth quarter of 2012, it still had some of the best interest among hedge funds with a total of 30 long the stock going into 2013. The top hedge fund owner by market value was Third Avenue Management, with a $172 million position in the stock, comprising 3.7% of its 13F portfolio (check out how other hedge funds are trading KeyCorp).
Fifth Third Bancorp (FITB) - Dividend Yield: 2.70%
Fifth Third Bank has its headquarters in Cincinnati, Ohio. The bank has 1325 bank branches and 2415 ATMs in 12 states. The company has four divisions: commercial banking, branch banking, consumer lending and investment advisors.
The stock trades with a forward P/E of 9.98 and a market cap of $14.76 billion. Return on equity comes in at 11.65%. Book value per share is $15.10. The dividend payout ratio is 22% and the stock is up 20.26% in the past year.
Of the analysts that follow Fifth Third, four have it rated as a Strong Buy, nine a Buy, 16 a Hold, and one a Sell. Fifth Third also had robust hedge fund interest going into 2013, with 29 hedge funds owning the stock. However, this was a decrease of 24% from the previous quarter.The bank's top hedge fund owner was billionaire Ken Griffin's Citadel Investment Group, with a mere 0.2% of its 13F portfolio invested in the company (check out Griffin's cheap stock picks).
Huntington Bancshares Incorporated (HBAN) - Dividend Yield: 2.20%
Huntington Bancshares Incorporated is the holding company for The Huntington National Bank. The bank has approximately 700 branches and 1300 ATMs in Ohio, Michigan, Pennsylvania, Indiana, West Virginia, and Kentucky. The company's headquarters is in Columbus, Ohio.
Huntington trades with a forward P/E of 10.83 and has a market cap of $6.29 billion. Return on equity comes in at 11.44%. Book value per share is $6.41 and the stock is up 16.17% in the past year. The dividend payout ratio is 23%.
Of the analysts that track Huntington, five have it rated as a Strong Buy, three a Buy, 19 a Hold, and one Underperform. The lesser known Huntington bank did not see as much hedge fund interest as some of the other larger regionals, with only 21 hedge funds long the stock, but the sentiment was at least positive for this bank, where the 21 hedge funds was up 11% from the previous quarter (see which hedge funds were adding Huntington to their portfolio).
Fulton Financial Corporation (FULT) - Dividend Yield: 2.80%
Fulton Financial operates 267 bank branches in Pennsylvania, Maryland, Delaware, New Jersey and Virginia. The headquarters is in Lancaster, Pennsylvania. Fulton Financial trades with a forward P/E of 12.76 and has a market cap of $2.28 billion. Return on equity is 7.85% and book value per share is $10.45. The dividend payout ratio is 38% and the stock is up 12.66% in the past year.
Of the analysts that follow the stock, three have it as a Strong Buy, one a Buy, 10 a Hold, and one Underperform.
Susquehanna Bancshares, Inc. (SUSQ) - Dividend Yield: 2.30%
Susquehanna Bancshares is the holding company for Susquehanna Bank. The company has 261 branches and 47 free-standing ATMs. The bank has branches in Pennsylvania, New Jersey, Maryland, and West Virgina. The bank's headquarters is in Lititz, Pennsylvania.
Susquehanna has a forward P/E of 12.24 and a market cap of $2.26 billion. Return on equity is 5.90% and book value per share is $13.92. The payout ratio is 36% and the stock is up 26.12% in the past year. Of the analysts that cover the stock, three have it rated as a Strong Buy, four a Buy, and nine a Hold.
As you can tell from this article, these five are in the boring business of just banking. Nothing else but take deposits, make loans and maybe offer financial advice. They know their customers and stick to their regions. None of these banks is looking to buy another bank 2000 miles away. You won't get rich overnight with any of these five, but they all pay a nice dividend and you don't have to worry about a London Whale while you sleep.