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Zacks Industry Rank Analysis

On March 14, 2013, I was looking for a strong candidate to flag in a top-down industry context.  

I came upon the Western U.S. Regional Banks.

It enjoys a high Zacks Industry Rank at #21, up +7 in the ranks from last week.  I decided to stop there.  Only one Zacks Ranked regional bank region stands above it.  That is the Southeast region at #14, up +3.  

Inside this West Region Bank industry are 41 banks.  There have been 15 positive revisions to annual earnings recently, and only 4 negative revisions.  

What really struck me is 19 of 41 banks in this group have a Zacks Rank of #1 or #2.  Half of West Region banks are ranked at a Buy or Strong Buy based on earnings estimates.  That has to mean a strong set of positive, regional economic undercurrents is in play, which an investor can benefit from.

This Western region does benefit disproportionately from a number of positive economic trends inside the USA.  
  • Housing construction and home prices are now rising well above the national average.  Industrial, Retail and commercial has rebounded too.
  • The IT industry is concentrated on the West Coast.  
  • This region enjoys demographic growth above the national trend.  
  • Throw in fresh support from strong positive job growth numbers. This was one of this region’s concentrated problem areas.

In light of all positive trends, this region’s banking system stands to reason as a place to find a good stock.

Take a read through the following brief descriptions of four candidates.  I chose each one based on its current Zacks Rank (#1 or #2) and Zacks Rating (Outperform), its diverse location, and overall sentiment scores.

I also wanted banks that reflect well the underlying fundamental trends in play.

Note that Q1-2013 quarterly reporting arrives for these banks in the third week of April -- a month away.

Columbia Banking System, Inc. (COLB)

Zacks Rank #1 (Strong Buy) with an Outperform rating.  This bank offers a dividend yield of 2.0%, and +14% EPS growth over the last five years.  It reports quarterly earnings on April 24, 2013.

COLB is a registered bank holding company whose wholly owned subsidiary, Columbia State Bank, It conducts a full-service commercial banking business.

Headquartered in Tacoma, Washington, the company provides a full range of banking services to small and medium-sized businesses, professionals and other individuals through banking offices located in the Tacoma metropolitan area and contiguous parts of the Puget Sound region of Washington, as well as the Longview and Woodland communities in southwestern Washington.

Western Alliance Bancorporation (WAL)

Zacks Rank #1 (Strong Buy) with an Outperform rating. The bank has seen notable consensus earning estimate revisions over the last 30 days.  It reports earnings on April 18, 2013.

WAL is the parent company of Alliance Bank of Arizona, Bank of Nevada, First Independent Bank, Torrey Pines Bank, and Western Alliance Equipment Finance. These dynamic companies provide a broad array of services to clients in Nevada, Arizona and California.

Western Alliance Bancorporation is a leading bank holding company in the Southwest, headquartered in Phoenix, with banking subsidiaries in Arizona, California, and Nevada. The company provides services to businesses, entrepreneurs, professionals, nonprofit organizations and consumers seeking the robust product array of a national bank with the individual, personal attention of a community bank, delivered through a dedicated, local Relationship Manager.

Bridge Capital Holdings (BBNK)

Zacks Rank #2 with an Outperform Rating, but it was a Zacks Rank #1 a week ago.  Small Cap Value stock.  Supports the Info Tech business in the Bay area. NO dividend.  It reports earnings on April 25. 2013.

BBNK is the holding company for Bridge Bank, a full-service business bank that is dedicated to meeting the financial needs of small and middle-market, and emerging technology businesses in the Silicon Valley, Palo Alto, Sacramento, San Diego, and Fresno business communities. Bridge Bank provides clients with a comprehensive package of business banking solutions delivered through experienced and professional bankers.

Bank of Hawaii Corporation (BOH)

Zacks Rank #2 with a Neutral rating.  Unlike the other banks above, it offers a healthy 3.6% dividend. It reports on April 22, 2013.

BOH is a regional financial services company serving businesses, consumers and governments in Hawaii, American Samoa and the West Pacific. The company's principal subsidiary, Bank of Hawaii, was founded in 1897 and is the largest independent financial institution in Hawaii.

(Note: We are re-issuing this article to correct a problem. The original version, published March 14, 2013, should no longer be relied upon.)

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