Tuesday, July 29, 2008

Banks You Can Bank On

Since looking at how many troubled banks are out there and their geographic distribution, I've been focusing my attention on financial issues that offer more bank for the buck. These are banks that, largely because of conservative lending practices and capital management, have not followed their sector lower and, indeed, are up on the year.

I identified the following nine banks by screening for year-to-date performance and weighted relative performance with the help of the excellent Barchart site. These issues are trading relatively close to their 52-week highs in a market that has been nothing short of brutal for banking stocks. After all, the Banking Index ($BKX) is down over 30% this year, and that's after the recent solid bounce from the market lows.

These stocks are the result of an initial screen; they're not buy recommendations in themselves. Please exercise due diligence before adding to your portfolio. Following each bank name and symbol is the percentage price change on the year and the approximate dividend yield. Only shares paying a dividend in excess of 2% were included in the screen; it's always nice to have a positive carry when you're waiting for a market turnaround:

Univest Corp. of PA (UVSP): 24.29%; 2.9%
Citizens Northern (CZNC): 43.38%; 3.8%
Community Bancsystem (CBU): 16.81%; 3.5%
First Bancorp (FNLC): 27.01%; 4.0%
First Financial Bankshares (FFIN): 19.98%; 3.0%
First Financial Corp. (THFF): 35.66%; 2.3%
Mainsource Financial (MSFG): 14.37%; 3.3%
City Holding (CHCO): 29.41%; 3.2%
Hancock Holdings (HBHC): 16.36%; 2.2%

There are many more banking shares that are up on the year. A large proportion are located in the northeast, where overbuilding and housing price collapses have not been as prevalent as in the west and southeast. If these shares can keep their heads above water during the most difficult of times and can maintain healthy balance sheets, they should be poised to make loans and prosper in a general economic recovery.
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5 comments:

Julien said...

Brett

I run a levered global macro trading portfolio and i'm a big fan of your blog, and particularly your book - The psychology of trading. I also write a regular blog, and in today's i have written about how i've used your insights, as will as Richard Heuer's - in planning my trading campaign for the coming months. you can find my blog on macrotraderdiary.blogspot.com
Regards
Julien

Kris said...

Brett,

I couple weeks ago a currency trader was commenting on the blog. I would like to get in touch with him. I'm a equities trader but am very interested in the currency market and would like some direction and coaching and I thought he may be able to help since he referenced his desire to start a small firm of currency traders. Is there anyway to connect us. My email is krisr@arccontracting.com. Do you recommend any books or teaching tracks for the currency markets? Lastly I want to thank you for your book. It's help me turn the corner in my trading. I've recommended it dozens of other traders.
Best Regards,
Kris

littlemog said...

Thanks for the posting Dr. Brett.

It's good to see healthy banks being covered in these times outside of the usual gloom in the main news.

Brett Steenbarger, Ph.D. said...

Thanks for the link, Julien. That's a great theme for a blog--

Brett

Brett Steenbarger, Ph.D. said...

Hi Kris,

Unfortunately, I'm not aware of solid training programs specific to the currency markets--

Brett