This bank stock is up 25.33% over the last year, and the short interest is growing, currently at 5.30%. More due diligence is not as it has only recently returned to profitability after the financial crisis, but the company is trading slightly under price/book at 0.90.
Another name is an Ohio diversified financial services company, Firstmerit Corp (NASDAQ:FMER), which recently bought up Michigan-Wisconsin bank Citizens Republic Bancorp in April.
Firstmerit Corp (NASDAQ:FMER) has a low P/E of 14.78 and an attractive yield of 3.40%. Its market cap is slightly larger at $3.1 billion. Its branches are mostly in Ohio, with some shale wealth exposure from Western Pennsylvania, but with this Citizens Republic Bancorp purchase they will be able to provide full service wealth management to the fine people of Wisconsin.
Oppenheimer analyst Terry McEvoy picked Firstmerit Corp (NASDAQ:FMER) as one of his top three regional banks, liking the Citizens Republic acquisition and giving the name an $18 price target and an Outperform rating.
Short interest decreased significantly in Firstmerit Corp (NASDAQ:FMER) by 70% from numbers released by NASDAQ at the end of April. The company has also been seeing some insider buying, not only by director Russ Strobel but by several other insiders, too.
The company’s rofit margin is 21.94% and its operating margin is 33.73%. The stock is up 23.32% over the last year. FirstMerit is trading at a price/book of 1.26.
The third bank is headquartered in Minnesota, but has 25 branches in Wisconsin and is considered a competitor of Associated Banc Corp (NASDAQ:ASBC): $2.25 billion market cap TCF Financial Corporation (NYSE:TCB). It has a 25.94 trailing P/E and a forward P/E of 12.54 with a 1.40% yield. Although the yield is small it has paid a dividend for 25 consecutive years.
Of these three banks, TCF financial, a bank holding corporation, has the most red flags. Its Chairman and CEO William Allen Cooper sold 500,000 shares worth $7.5 million in early May. He has over 1 million shares remaining, but that sale equated to roughly a third of his holdings. That was easily the largest insider sale at the company for two years. However, FMR LLC still owns a 14% stake in the bank.
It is also more exposed to consumer real estate loans and less exposed to the sand riches. Its PEG ratio is higher than its peers and sector, and analysts expect only a 6.25% five year EPS growth rate.
The Foolish takeaway
As the Minneapolis Fed writes, the Wisconsin frac sand mines are bringing jobs and industry to Wisconsin, and until demand is finally exhausted it will be boom times there. Of these three banks FirstMerit is the best bet on the almighty sand dollar with the highest yield and insider conviction. And if there ever is a What the Frack! show, I want a cut!
Map source: The FED Gazette, published by the Federal Reserve Bank of Minneapolis.
AnnaLisa Kraft has no position in any stocks mentioned. The Motley Fool owns shares of FirstMerit.
The article The Best Little Reality Show You’ll Never See originally appeared on Fool.com.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
