Banks
Equity Tier 1 Ratios of Asian Banks
In the journal article “Sins of Past Guide Asian Banks“, Peter Stein notes that Asian banks are well capitalized than their U.K. and European peers. Singapore banks have higher equity Tier 1 ratios based on the proposed Basel 3 standards than Chinese and Indian banks. Australian banks are just a notch above European and British banks.
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Related:
The Complete List of Foreign Bank ADRs Trading on the OTC Markets
The Complete List of Foreign Bank Stocks (includes Canadian Banks)
28 S&L Stocks Paying more than 4% Dividends
The following Savings & Loan association(S&L) accept savings deposits and make home and other loans. S&Ls must have 65% of their lending in mortgage and consumer loans. Due to this, they are highly vulnerable to the housing market.
S&Ls with more than 4% dividend yields are shown below:
| Name | Symbol | Dividend Yield as of January 25, 2010 |
|---|---|---|
| Alliance Financial Corporation | ALNC | 4.51% |
| BCB Bancorp, Inc. | BCBP | 5.19% |
| Capitol Federal Financial | CFFN | 6.15% |
| Carver Bancorp, Inc. | CARV | 5.19% |
| Dime Community Bancshares, Inc. | DCOM | 4.66% |
| Emclaire Financial Corp | EMCF | 4.13% |
| Elmira Savings Bank, FSB | ESBK | 4.92% |
| First Capital, Inc. | FCAP | 4.97% |
| FFD Financial Corporation | FFDF | 5.57% |
| Flushing Financial Corporation | FFIC | 4.32% |
| Greene County Bancorp | GCBC | 4.39% |
| Harleysville Savings Financial Corp. | HARL | 5.53% |
| Hudson City Bancorp, Inc. | HCBK | 4.57% |
| HF Financial Corp. | HFFC | 4.74% |
| K-Fed Bancorp | KFED | 5.08% |
| Landmark Bancorp, Inc. | LARK | 4.64% |
| LSB Financial Corp. | LSBI | 4.95% |
| NASB Financial, Inc. | NASB | 4.14% |
| Northeast Bancorp/ME | NBN | 4.00% |
| OceanFirst Financial Corp., Inc. | OCFC | 4.48% |
| Oneida Financial Corp. | ONFC | 5.05% |
| River Valley Bancorp | RIVR | 6.27% |
| Rome Bancorp, Inc. | ROME | 4.26% |
| TF Financial Corporation | THRD | 4.19% |
| WVS Financial Corp. | WVFC | 4.49% |
| Brooklyn Federal Bancorp, Inc. | BFSB | 4.84% |
| Heritage Financial Group | HBOS | 4.44% |
| FIRST FINANCIAL NORTHWEST, INC. | FFNW | 5.36% |
Community Bank Stocks with more than 5% Dividend Yields
Unlike many other countries, there are thousands of small community banks in the U.S. These banks have a smaller foot print when compared to the regional or national banks such as Bank of America(BAC), Fifth Third Bank(FITB), U.S. Bank(USB), etc. However they are usually know their customers better and maintain close relationships with the local small businesses and consumers.
Some community banks operate in just a few counties and have very few branches. For example, United Bancorp Inc Ohio (UBCP) is a state chartered bank and has branches in just a seven country area in Ohio. Accordingly these banks have very low market caps and liquidity can be issue since the total number of outstanding shares is low. UBCP has a market cap of about $45M with 5.2M shares outstanding.
The following table lists 33 small cap community banks with yields of over 5%:
| Name | Symbol | Dividend Yield as of January 25, 2010 |
|---|---|---|
| Britton & Koontz Capital | BKBK | 6.30% |
| Bank of McKenney | BOMK | 5.38% |
| Community Bank Shares of Indiana, Inc. | CBIN | 5.93% |
| Capital Bank Corporation | CBKN | 7.86% |
| Capital City Bank Group, Inc. | CCBG | 6.40% |
| C&F Financial Corporation | CFFI | 5.00% |
| Cheviot Financial Corp. | CHEV | 5.42% |
| Chemical Financial Corporation | CHFC | 5.47% |
| Commercial National Financial Corp | CNAF | 5.03% |
| Citizens & Northern Corporation | CZNC | 10.74% |
| ECB Bancorp, Inc. | ECBE | 6.40% |
| Fauquier Bankshares, Inc. | FBSS | 5.73% |
| The First Bancorp, Inc. | FNLC | 5.45% |
| First South Bancorp, Inc. | FSBK | 7.83% |
| First united corporation | FUNC | 6.53% |
| Jeffersonville Bancorp | JFBC | 5.41% |
| Merchants Bancshares,Inc. | MBVT | 5.34% |
| Monarch Community Bancorp, Inc. | MCBF | 10.22% |
| NB&T Financial Group, Inc. | NBTF | 6.82% |
| New Hampshire Thrift Bancshares, Inc. | NHTB | 5.04% |
| Premier Financial Bancorp, Inc. | PFBI | 5.96% |
| Princeton National Bancorp, Inc. | PNBC | 5.05% |
| Pulaski Financial Corp. | PULB | 5.84% |
| Penns Woods Bancorp, Inc. | PWOD | 5.98% |
| Rurban Financial Corporation | RBNF | 5.10% |
| United Bancorp, Inc. | UBCP | 6.32% |
| United Bancshares Inc. OH | UBOH | 6.59% |
| United Bankshares, Inc. | UBSI | 5.31% |
| Union Bankshares, Inc. | UNB | 5.63% |
| Washington Trust Bancorp | WASH | 5.54% |
| United Community Bancorp. | UCBA | 6.50% |
| Porter Bancorp, Inc. | PBIB | 5.67% |
| Summit State Bank | SSBI | 7.35% |
The Complete List of Foreign Bank Stocks
The complete list of foreign bank stocks trading in the organized U.S. exchanges are listed below:
a) Foreign Banks
| S.No. | Company | Ticker | Country | Returns in 2009 |
|---|---|---|---|---|
| 1 | Allied Irish Banks | AIB | Ireland | -25.16% |
| 2 | Banco Bilbao Vizcaya Argentaria | BBVA | Spain | 46.79% |
| 3 | Banco Bradesco | BBD | Brazil | 121.58% |
| 4 | Banco de Chile | BCH | Chile | 69.98% |
| 5 | Banco Macro | BMA | Argentina | 175.05% |
| 6 | Banco Santander Brasil | BSBR | Brazil | N/A |
| 7 | Banco Santander Chile | SAN | Chile | 84.93% |
| 8 | Banco Santander S.A | STD | Spain | 73.23% |
| 9 | Bancolombia | CIB | Colombia | 94.90% |
| 10 | Bank of Ireland | IRE | Ireland | 60.59% |
| 11 | Barclays Bank | BCS | United Kingdom | 79.59% |
| 12 | BBVA Banco Frances | BFR | Argentina | 109.67% |
| 13 | Corpbanca | BCA | Chile | 112.00% |
| 14 | Credit Suisse | CS | Switzerland | 73.96% |
| 15 | Deutsche Bank | DB | Germany | 74.27% |
| 16 | Grupo Financiero Galicia | GGAL | Argentina | 154.87% |
| 17 | HDFC Bank | HDB | India | 82.24% |
| 18 | HSBC | HBC | United Kingdom | 17.30% |
| 19 | ICICI Bank | IBN | India | 95.90% |
| 20 | Itau Unibanco Holding | ITUB | Brazil | 116.49% |
| 21 | KB Financial | KB | Korea | 94.08% |
| 22 | Lloyds Banking Group | LYG | United Kingdom | -56.46% |
| 23 | Mitsubishi UFJ Financial | MTU | Japan | -20.77% |
| 24 | Mizuho Financial | MFG | Japan | -38.30% |
| 25 | National Bank of Greece | NBG | Greece | 36.75% |
| 26 | Royal Bank of Scotland | RBS | United Kingdom | -38.10% |
| 27 | Shinhan Financial | SHG | Korea | 57.51% |
| 28 | UBS | UBS | Switzerland | 8.46% |
| 29 | Westpac Banking | WBK | Australia | 87.59% |
| 30 | Woori Finance | WF | Korea | 151.93% |
b) Canadian Banks
| S.No. | Company | Ticker | Returns in 2009 |
|---|---|---|---|
| 1 | Bank of Novo Scotia | BNS | 78.00% |
| 2 | Bank of Montreal | BMO | 116.20% |
| 3 | Canadian Imperial Bank of Commerce | CM | 62.20% |
| 4 | Royal Bank of Canada | RY | 86.40% |
| 5 | TD Bank | TD | 80.70% |
In terms of performance, British bank Royal Bank of Scotland(RBS) is up 29% YTD. Barclays(BCS) and Llyods Bank(LYG) are up about 15% YTD. It must be noted that RBS fell heavily during the global credit crisis and had a 2: 1 reverse stock split. Itau Unibanco(ITUB), National Bank of Greece(NBG), Banco Santander Brasil(BSBR), Grupo Financiero Galicia(CGAL) and Banco Bradesco(BBD) are all down over 5% YTD.
Brazilian banks Itau Unibanco,Banco Santander Brasil and Banco Bradesco are the three most heavily traded foreign bank ADRs so far this year. The list of foreign banks trading in the OTC markets can be found here.
Will Bank Stocks Rally Again This Year?
Financial stocks have rallied 140% since last March’s lows. Many investors are wondering if financials will continue their run this year given the jobless economic recovery currently underway.
An article titled “Do you dare buy banks?” in the latest edition of Bloomberg BusinessWeek mentions that financials in the S&P 500 are expected to rally 16% this year based on some analyst forecasts.
From the article:
“No U.S. industry has faster profit growth than banks and brokers, and no group is more bad-mouthed by investors. It may be time for them to get over their distaste, says Mark Giambrone, a fund manager for San Antonio-based USAA Investment Management, which oversees about $74 billion. “The stocks are clearly too cheap,” says Giambrone, whose USAA Value Fund (UVALX) owns Wells Fargo (WFC), PNC Financial Services (PNC), and Bank of America (BAC), among other financial stocks. “There may be some bumps in the road ahead, but for the most part those are reflected in valuations.” The Standard & Poor’s 500 Financials Index (S5FINL) of 78 banks, brokerages, and insurance companies is down 60% since peaking in February 2007, more than twice the drop of the S&P 500-stock index.
Many of Giambrone’s peers remain unconvinced that all the pain has been taken in financial stocks. A survey by Bank of America found financial shares the least favored stocks among 123 money managers. But earnings at financial companies rose an estimated 120% in the fourth quarter, accounting for all the income increase in the S&P 500, data compiled by Bloomberg show. Those financial company earnings should triple by 2011, climbing four times as fast as the market, analysts figure. Should those estimates prove correct, financial shares are trading at about a 15% discount to the S&P 500.”
Banks are still not out of the woods yet. After last year’s 140 banks failures, so far four banks have failed this year. In addition to the slowdown in foreclosure activity in the housing market, there are some signs that credit card charge-off rates are declining. A Reuters report yesterday said:
“U.S. credit card data for December showed some signs that fewer consumers were falling seriously behind in their payments.
Four out of six companies reporting credit card activity for December said charge-offs declined in the month.
Delinquency rates, which portend future credit card defaults, declined at all of the companies except JPMorgan Chase & Co (JPM.N), according to regulatory filings on Friday.”
In the tables below I have listed banks paying more than 3% dividends:
1) Bank Stocks Trading in the NYSE
| S.No. | Name | Ticker | Dividend Yield as of Jan 13, 2010 |
|---|---|---|---|
| 1 | Bank of Hawaii Corporation | BOH | 3.64% |
| 2 | BancorpSouth, Inc. | BXS | 3.67% |
| 3 | Community Bank System, Inc. | CBU | 4.65% |
| 4 | Cullen/Frost Bankers, Inc. | CFR | 3.36% |
| 5 | F.N.B. Corporation | FNB | 6.71% |
| 6 | M&T Bank Corporation | MTB | 3.80% |
| 7 | Provident Financial Services, Inc. | PFS | 3.91% |
| 8 | Sterling Bancorp | STL | 4.84% |
| 9 | Valley National Bancorp | VLY | 5.12% |
2) Bank Stocks Trading in the NASDAQ
| S.No. | Bank | Ticker | Dividend Yield as of Jan 13, 2010 |
|---|---|---|---|
| 1 | Britton & Koontz Capital | BKBK | 6.00% |
| 2 | Capital Bank Corporation | CBKN | 8.12% |
| 3 | Capital City Bank Group, Inc. | CCBG | 6.22% |
| 4 | Citizens & Northern Corporation | CZNC | 10.00% |
| 5 | ECB Bancorp, Inc. | ECBE | 6.46% |
| 6 | Fauquier Bankshares, Inc. | FBSS | 6.25% |
| 7 | First South Bancorp, Inc. | FSBK | 7.85% |
| 8 | First united corporation | FUNC | 6.64% |
| 9 | Monarch Community Bancorp, Inc. | MCBF | 11.20% |
| 10 | NB&T Financial Group, Inc. | NBTF | 6.79% |
| 11 | Premier Financial Bancorp, Inc. | PFBI | 6.24% |
| 12 | United Bancshares Inc. OH | UBOH | 6.45% |
| 13 | United Community Bancorp. | UCBA | 6.50% |
| 14 | Summit State Bank | SSBI | 6.62% |
Investors have to be very selective in picking up bank stocks as there are still many unknown headwinds that banks face this year. To quote former Secretary of Defense Donald Rumsfield:
“As we know,
There are known knowns.
There are things we know we know.
We also know
There are known unknowns.
That is to say
We know there are some things
We do not know.
But there are also unknown unknowns,
The ones we don’t know
We don’t know.”
While some of the banks above high yields because their share prices have fallen, there are some banks that are stable and are worth looking into. A few of these banks are Bank of Hawaii(BOH), Cullen/Frost Bankers Inc(CFR), etc.
Are Large Banks Better Than Small Banks?
Large commercial banks are not necessarily better than small community banks based on various quantitative measures. That is the conclusion of a new research report published by A.M.Best titled “Community Bank Advantages Challenge Historical Assumptions“.
The study assumed banks with assets of $5B or more as large banks.
The following are some of the key points from this study:
- Small community banks tend to focus on the local market and build on relationships thereby providing stability and limiting risk
- Large banks take on more leverage and complex risk exposures and tend to have concentration risk such as the overexposure to subprime mortgages as revealed during the global credit crisis
- Small banks are better capitalized with their Tier 1 risk based capital and tangible equity ratios higher than large banks
- The Return of Equity(ROE) and Return of Assets(ROA) of community decline slowly relative to larger banks in adverse market conditions
- Community banks historically have had Median Tier 1 Risk Based Capital ratio of 2.17% and 3.67% higher than large banks since 2005
- The total charge-offs and provisions for loan losses to average total loans are lower for smaller banks than large banks
So in a nutshell, super-banks such as Wells-Fargo(WFC), Citibank(C), Bank of America (BOA), JP Morgan Chase(JPM), large banks such as Fifth Third Bank(FITB), Region Financial(RF), etc. are no better than small community banks. Despite their size, they do not diversify their risk exposures, do not have high market pricing power, do not offer high soundness, safety and performance, etc. Some of the top performing small community banks such as SVB Financial Group(SIVB), Westamerica Bancorp(WABC), First Financial Bankshares(FFIN), Glacier Bancorp(GBCI) can be found in the Bank Director magazine’s 2009 rankings list.
Of course not all small banks are well managed banks since most the banks that have failed so far since the credit crisis began are small to medium-sized banks. On a whole the majority of small banks are better run than large banks as proven by the comparison of various measures in AM Best’s report .
The full report is available here.
