Thursday, July 23, 2009

American Bank Stocks In The Bin

There are currently four American bank stocks in the Low P/E Bin. All of them are TARP-related, but only two have actually taken TARP funds; the other two refused. These banks are:

- Bank of Hawaii (refused);
- CVB Financial Corp. (has applied to return TARP funds);
- International Bancshares Corporation;
- United Bankshares Inc. (refused).

Although each company's banking operations are in different areas of the U.S., and each has different financials, their trading patterns show a distinct similarity. All of them are stuck in ranges; each bank save one has recently broken to the downside only to return to the original range. The bank that's been spared is Bank of Hawaii, whose recent slips have bordered its current range.

There's also another pattern. Of the three than have broken their ranges downwards, two have had repairs that were explicitly earnings-related. These are also the two stocks of the four above that leapt up the most today. CVB Financial was up 6.67%, and ex-Bin stock United Bankshares was up 8.90%. Both of them had 2Q EPSs that were down with respect to 2Q '08's, but were also better than expected. The former has recently announced a stock offering to get itself out of TARP, and the terms of the offering are now even sweeter for the investors fortunate enought to get a piece of it.

International Bancshares has shown the same pattern, but with no news to explain why. As far as I can tell, its break-and-repair pattern is speculative.

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