Saturday, April 24, 2010

Regional bank stocks have held up well here in US markets ..... just be aware of their Commercial loan exposure!

Dow Jones 11204.28 (UP) Week ending 04-24-2010

When I think back on the books I have read by Peter Lynch the iconic fund manager that was Fidelity Magellan, I always remember him talking about what a great deal your local regional bank stocks are. While some small banks are failing, (seven were taken over today by US regulators),others have performed very well and are positioned for future growth.

So I started with a list of 8 and narrowed it down to 5 bank stocks. The first is Hudson City Bancorp. Inc. (Symbol HCBK, $13.62) which has a very nice 4.4% dividend yield.

Second is Signature Bank (Symbol SBNY, $40.50) which has 13.5% Net Profit margins.

The next pick is Susquehanna Bancshares Inc. (Symbol SUSQ, $11.52). Susquehanna has made some nice acquisitions of investment businesses over the last few years and their banks are spread out over growing market areas. Susquehanna in the short term did have their credit rating lower by S&P yesterday along with 30 other regional banks and 4 large banks.

First Niagara Financial Group Inc. (Symbol FNFG, $14,59) just completed the acquisition of Harleysville National Corporation, securing entry into Southeastern Pennsylvania and the Lehigh Valley. This is a very good long term move for the company. The company has 14.5% five year sales growth and steady earnings growth.

The last one to mention is State Street Corp. (Symbol STT, $44.48). This one is a bank with sizable revenues that is an earnings turnaround story. State Street is a custody bank. Custody banks earn fees from keeping records, tracking performance and lending securities to institutional investors including mutual funds, pensions and hedge funds. Their asset management units also invest money for retail and institutional customers.

Even though I am an amateur investor, I should give professional disclosure on my holdings. I own shares in Susquehanna Bank. They are headquartered in Camden, New Jersey a city which I have a soft spot for because of my alma mater college Rutgers University, Camden is located there. I also grew up in nearby Pennsauken, N.J. I need to do this because last week a Hong Kong blogger picked up my blog story and posted on their site like a news content feed story. I don't want to mislead my Chinese friends into thinking I am a writer for Barron's or a business magazine or something!

So be cautious and do your homework when investing.

Best Regards,


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