Donald A. Worthington of Howe Barnes Hoefer & Arnett, Inc. in our recent Western Banks roundtable gave us his view on the industry and his picks for the sector:

“Buy ratings at the time. I just have a couple and they tend to be smaller, under the radar screen banks like Pacific Premier Bancorp (PPBI), and Central Valley Community Bancorp (CVCY). Even though it is located in the Central Valley, CVCY has done a good job of avoiding the severe credit problems that others have had in that market. I think it is a matter of keeping an eye on the quality franchises and being familiar enough with them so that you can buy them on dips in their stock prices and get into them at attractive prices. You need to have a longer-term outlook. Fundamentally, I believe this industry will bounce back and there will be many good investment opportunities in the future. You just have to select names that are going to survive and are well positioned to build market share once the credit cycle works its way through.”

Mr. Worthington also has a sell:

“The only Sell rating I have currently is on TriCo Bancshares (TCBK), which is actually a good, well-run franchise. I just think it’s overvalued, particularly with a large home equity loan exposure relative to its total loan portfolio. So it is a valuation call based on where the stock is trading — substantially north of tangible book value and well above the median peer group valuation. I would just avoid that stock for now. “

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This entry was posted on Monday, July 20th, 2009 at 9:56 am and is filed under Financial Services Stocks. You can follow any responses to this entry through the RSS 2.0 feed.