Bank on Bank Stocks for Now
Posted by Jim Peters at July 8th, 2013
If you look at the news, you see that bank stocks are high performers, especially this year. While the economy is slow, it’s getting better, and most big bank stocks are on the rise. In the latest stress test, many big banks, while passing the stress test, came out ahead, showing that they can hold their own and continue to provide gains to their stockholders and customers. Big banks also settled with regulators over the foreclosure scare.
You may be uncertain: why go near these stocks? How can Bank of America and Citigroup be up this year, after taking so much relief money when the economy was so low? It’s tough to know what’s going on in the balance sheets of many of the big banks, too.
The good news is: financially, you’re best to go with regional banks, one of the best places to begin. You definitely want to look at regional banks that didn’t need to take Troubled Asset Relief Program funds (TARP). Many mid-range lenders didn’t need the government’s bailout funds and while they’re not yet names you know, they offer high-quality loans and can help you maximize your portfolio.
When looking at bank stock, you want to look at book value. When you subtract liabilities from assets, this is what you get. Many of the mid-range banks are better in this area than the big banks, having avoided the mistakes of the latter. In fact, many regional banks are stronger than big banks like Citigroup and Bank of America.