As investors and traders began the Friday session before the Memorial Day weekend break, the news of a banking crisis in Spain certainly hit home for many of them. Only a short time ago, 2008 to be exact, U.S. markets were seeing some of the biggest drops in their history as homeowners were falling into foreclosure and the sub-prime market was on the heels of collapse.
Some of the biggest U.S. Banks, such as Bank of America (BAC) and Citigroup (C), asked the federal government to intervene-- and that they did. If we fast forward to the present day, the Spanish government is being asked by several of their own banks for assistance and, most notably, Bankia has requested $24 billion dollars ($19 billion euros) to stay afloat. That being said, these three U.S. based banks have done very well over the last year and their dividends yield over 4%.
Arrow Financial Corporation (AROW) - Founded in 1851 and headquartered in Glens Falls, New York, AROW currently trades at a P/E ratio of 12.78 and yields 4.2% ($1.00) making it pretty cheap by most investing standards. Analysts are expecting AROW to earn $0.44/share on revenue $20.91 million dollars for the second quarter and $1.76/share on revenue of $84.31 million dollars for the year.
AROW has beaten street estimates three out of the last four quarters, with the only exception being its most recent first quarter, when a slight miss happened to occur. That being said, the company's most recent cash dividend was increased 3% when compared to the payout of the same period for the year prior. For investors looking to acquire a position in AROW, I'd do so with a medium sized position, and then increase that position as the company's dividend date draws much closer.
Renasant Corp. (RNST) - Founded in 1904 and headquartered in Tupelo, Mississippi, RNST currently trades at a P/E ratio of 15.78 and yields 4.4% ($0.68), making it pretty cheap by most investing standards. Analysts are expecting RNST to earn $0.24/share on revenue $48.74 million dollars for the second quarter and $0.99/share on revenue of $197.36 million dollars for the year.
RNST has surpassed analysts' estimates by an average of 4.3% each of the last four quarters. One of the good things recently announced by RNST is the fact that not only has the company turned a $7.5 million dollar profit but the number of bad loans the company has endured has decreased. As the company continues to expand, I think RNST can be a winner for both the growth and income investor. Investors looking to acquire a position should do so moderately and add additional shares as it gets closer to earnings season.
Valley National Bancorp (VLY) - Founded in 1904 and headquartered in Wayne, New Jersey, VLY currently trades at a P/E ratio of 15.73 and yields 5.7% ($0.66) making it pretty affordable by most investing standards. Analysts are expecting VLY to earn $0.18/share on revenue $152.52 million dollars for the second quarter and $0.73/share on revenue of $613.07 million dollars for the year. If VLY can surpass analyst expectations for the second quarter by at least 10%, we could see some significant short term growth in the stock.
I strongly believe management is on the right track for a few reasons, most notably the company's recent merger with State Bank which closed in the first quarter. As we move into the latter part of 2012 and early 2013, similar types of acquisitions could happen as VLY currently has about $230 million in operating cash flow, however an increase in the company's dividend wouldn't be out of the question. Investors who are looking to establish a position in VLY should do so moderately and either increase or decrease that position as earnings announcements draw near.