Financials have had a rough go of it, but some regional banks, unfettered from some of the onerous issues their bigger brethren are embroiled in, are starting to make some headway, writes Amy Calistri of The Daily Paycheck.
Over 400 banks and thrifts have failed since the beginning of 2008, following the housing bubble burst. And many once-stable dividends disappeared in the blink of an eye.
The banking sector has been slow to recover. That said, some positive signs are emerging from the banking sector, particularly among the regional banks.
Regional banks have started to outperform the bigger financial institutions. And in the past year, the index was able to catch up with the S&P 500.
Why the rebound in this banking niche? Regional banks aren't facing the same kind of legal issues associated with the mortgage industry like their larger peers. And some large financial institutions have decreasing revenue streams because they have had to terminate their in-house trading operations-something regional banks never had.
Granted, it is still a challenging environment. Regional banks aren't making as much on their customer deposits due to the low-interest-rate environment. And some regional banks are still contending with non-performing mortgage and business loans.
Stable and improving equity prices are a good sign. But it takes more than that to meet our criteria.
I specifically look for securities that yield 5% or more. With this in mind, I conducted a screen of regional banks with a market capitalization of greater than $500 million and a dividend yield above 5%.
Here are three of the top banks based on my screen:
New York Community Bancorp (NYB)-8% yield
First Financial Bancorp (FFBC)-7% yield
Astoria Financial (AF)-6% yield
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