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No. of Recommendations: 5
Thanks for the find, kelbon. Looks like it was the dividend cut during the financial crisis that kept this one off the radar. Given the rest of the bank's measures, it looks healthy enough...

Looking at data from Capital IQ, I see the following:
Debt: $194,551 mm
Equity: $158,991 mm

Net Income, last 12 months: $19,820 mm
Market Cap, $211,904.8 mm

Payout Ratio: 28.2%
Yield: 2.99%

Estimated long term EPS Growth Rate: 7.15%

From a debt to equity ratio, it looks ok. From a payout ratio perspective, it looks fine. From an overall dividend perspective, it did cut its payout in the financial crisis, but it seems to have recovered nicely: . That's much better than some other banks out there. :-)

From a valuation perspective, using the net income & growth rate numbers above, a 15% discount rate, and a 'growth stepdown' process of:
* estimated growth at listed expected pace for first 5 years, and
* estimated growth at 1/2 analysts' pace for next 5 years, and
* estimated growth at 3% in perpetuity after 10 years...

I get a fair value estimate of around $226,357.18 mm, which is a bit above the current market cap, which is a good thing.

All told, I'm still a bit skeptical on my track record with banks, which is why I ended up dialing the discount rate to 15% rather than my typical 12%, but it still passed.

Net -- I think you found a bank that's worth picking for the portfolio. Thank you.

Since your profile doesn't have your real name, in the selection article, I'll acknowledge you as the person that pointed the bank out by referring to you by your Fool handle of "kelbon". If you'd like your real name to appear instead, let me know what it is. If I catch it before I submit, it'll be there, otherwise, I'll put a note in for the editors to adjust after publication.

Best regards,
Inside Value Home Fool
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