Regional Banks: Sensible Choice For Shifting Financial Landscape

With the financial landscape shifting under recent news, especially the quasi-nationalization of Freddie Mac (FRE) and Fannie May (FNM), I believe that it is time to speculate on selected regional banks for both dividend and total return over the next few quarters and beyond.

Notice that I say speculate, as investors deep down inside know that there will be a continuing fallout as worthy financial institutions survive and those fatally contaminated flop.

Here are a few regional financial choices for you to research. They shed a nice dividend that appears supported, trade at a decent volume per day and have a successful niche market, excellent management, or both, indicating hope for future prosperity.

• S&T Regional Bank (STBA) trading at $35.23/share with a yield of 3.44%.
• Sterling Bancorp (STL) trading at $16.80/share with a yield of 4.52%. 
• First Commonwealth Financial Corp. of PA (FCF) trading at $12.59/share with a yield of 5.40%.
• FirstMerit Corp. (FMER) trading at $21.82/share with a yield of 4.93%. 
• UMPQUA Holdings Corp. (UMPQ) trading at $15.49/share with a yield of 4.61%.
• First Horizon National (FHN) trading at $12.47/share with a yield of 6.42%.
• Evans Bancorp (EVBN) trading at $16.85/share with a yield of 4.87%.
• Colonial BancGroup (CNB) trading at $8.00/share with a yield of 4.75%.
• Imperial Cap Bancorp (IMP) trading at $10.25/share with a yield of 6.22%.
• PacWest Bancorp (PACW) trading at $27.27/share with a yield of 4.24%.

Regional banks make a sensible investment. As the big box banks are hampered adjusting to local markets and tastes, those above and other regional banks should, by nomenclature, be more familiar with the markets they serve and thus able to offer product and risk avoidance techniques that may prove to be more adaptable and profitable.

Studies show that people and businesses often choose banks for their accessibility and familiarity in the neighborhood. In the present financial environment, loyalty counts, and regional banks that have successful business and marketing models should shine.

Comments

[buyitcheap:]

How do you distinguish between regionals that don't own FNM, FRE and the related paper and those that do? From my research a lot of them have this nasty anchor around their necks that they haven't marked to market yet...

2008 Sep 09 09:08 PM

[Muzie:]

This author has obviously not researched any of these stocks in depth. The entirety of the research can be summed up in the sentence "shed a nice dividend that appears supported, trade at a decent volume per day and have a successful niche market, excellent management, or both, indicating hope for future prosperity."

Follow his advice at your own peril.

2008 Sep 09 10:47 PM

[jackooo:]

Not one of the dividends meet inflation for the last quarter which was 5.2%, I think. That means you are losing money unless the price of the stock advances.

2008 Sep 10 11:13 AM

[Thomas Smic...:]

The stocks have been researched and a longer term, speculative viewpoint was established. One can find dividends much higher than the stocks listed, but the risk/reward is suspect at best. Astute investors know the difference.

2008 Sep 10 02:07 PM

[contracontr...:]

There is no reason why bank-"survivors" should be good investments long term.

IMO banks are facing an ugly future...cheaper ways to reach customers,less branches,higher competition,lower margins as% of deposits,costly layoffs,stagnant or reduced dividends...not necessarily related to current troubles.
Ask newspaper execs for details...

For some reasons many investors believe the credit crunch is the ONLY reason why bank stocks got crushed.
According to my calendar it's 2008,NOT 1990.

2008 Sep 10 05:58 PM

[aldousd666:]

jackoo: there is no reason anyone should be investing in common stock just for the dividends. Go for debt if you like income. In the meantime captial gains is what the common stocks are made for.

2008 Oct 15 11:41 AM

[warriornasdaq:]

Imperial is a bank i am buying now book value is $19.50 worst is over for them impc.pk should rip north after govt approves its capital plan, i see the govt is going to help small banks now,

imperial cap bank has bottomed the chart of impc.pk has reversed the stock could goto $10 the cfo is working hard to fix the bank the rebound in the economy should help imperial return to profitability eom

Sep 29 04:14 AM

[warriornasdaq:]

impc chart has reversed looks like the worst is over book value $19.50 reported june 30 2009 time to buy, back the truck up eom

Sep 30 02:05 AM