WSJ-Ranked Director Of Financial Services Gives A Buy-rating On Fulton Financial (FULT); Firm Seen As A Solid Performer For 2012
January 12, 2012 - The Wall Street Transcript has just published Northeast and Mid-Atlantic Banks Report offering a timely review of the sector. This Special Report contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. Please find an excerpt below.
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Richard D. Weiss, Director of financial services, joined Janney Montgomery Scott LLC's research department as a bank and thrift stock Analyst in 1999. Named by Forbes Magazine in 2006 as the number three stock picker regarding thrifts and mortgage finance for 2005, he was also selected by The Wall Street Journal as Best on the Street in the 2004 analysts survey. Additionally, he was named by Zacks as a five-star analyst in 2002 and 2001 and was the winner of the first annual SNL Securities stock-picking contest in 2001. Prior to joining Janney, he was a Member of the corporate finance department at Ryan, Beck & Co., where he assisted on over 50 public offerings for community bank and thrift institutions.
TWST: Where do you focus your attention in the Northeastern and Mid-Atlantic bank space?
Mr. Weiss: I cover small- and mid-cap banks and thrifts, and I cover some of the larger thrifts, such as People's (PBCT); and Hudson City (HCBK)and First Niagara (FNFG), though they are now a national bank in the northeast region of the country.
TWST: There continues to be some uncertainty in the regulatory environment, correct? What are the successful banks doing to deal with it?
Mr. Weiss: The successful banks are the ones that have adequate capital at this point, and probably either did not take TARP or have repaid it. In terms of asset quality, they have adequately reserves or just didn't have that much in terms of nonperformers. To please the regulators, you can't have too much capital. However, from investors you can, because investors also look at return on equity. And obviously, the higher the "E," the harder it is to get to certain hurdles.
TWST Where are you pointing investors now? What are some of your favorite stories at this point?
Mr. Weiss: Some of the ones that we do have "buy" ratings on would include Susquehanna (SUSQ). To me, their asset quality has improved, capital levels have climbed and it's a very nice franchise. I believe cost savings will be coming after their two acquisitions. Fulton Financial (FULT), another bank located in Pennsylvania, is a solid performer that we also favor. People's United Financial is "buy" rated as a result of its a very strong balance sheet, and it pays a dividend. New York Community (NYB) has an outstanding dividend, so on the strength of that, we have a "buy" rating on that.
TWST: Are those all the "buy" ratings right now?
Mr. Weiss: No. We have a few more. Northwest (NWBI) is also rated a "buy," and Provident (PFS). Those would be just solid companies that are very well positioned, not prone to make mistakes, conservatively run. They watch the bottom line and keep an eye on expenses. Both are very prudent bankers. Two more would be Investors (ISBC) and Beneficial (BNCL), which are both mutual holding companies. Our "buy" rating on each is really predicated on valuation, as both of those companies are well run and both trade substantially both at a discount to proforma tangible book value.
TWST: Is there anything else that people should know about the industry and the stocks you cover?
Mr. Weiss: I think the one that you brought up previously was the Marcellus Shale. We have a few stocks in that area, and that would be Northwest, First Commonwealth (FCF), S And T and Community Bank System (CBU). The Marcellus Shale, to me, takes a while to play out though. It's helping the employment, but the initial impact really is that the beneficiaries - people getting the royalty check, drilling on your land - those people tend to pay off their loans right now, rather than take out new loans. Ultimately, I think it's going to be very good for the banks. But in the short run, not so much. It's like growing the loans. It's healthy that the bank bought the loans, and with the employment, you don't really see that to loan growth just yet.
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