Regional Bank Valuation Update
Valuation and Performance Spreadsheets for: ALAB, BOKF, BOH, BXS, CBSH, CBSS,
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South-East, South-West & Pacific Regional Banks 5-31-07

Using the Forecaster Model     In 2006, geography was destiny - and the metrics were misleading. It was a winning strategy to 'avoid' California and Oregon and 'buy' Texas and Oklahoma. The stocks that the analyst liked did not out-'total return' the stocks the analysts did not like. The low yielders failed to out-return the high yielders. Nor was buying the high P/E stocks or high Price/Book stocks a winning strategy. In a sector where the dividend payout ratio varies from 17% to 77%, it is not a surprise that the dividend discount model fails to be predictive. This sector sells at a fairly consistent P/E ratios despite wide variations in CAGRs. That is not logical. And the CAGRs also fail to be predictive of the stocks with high price to book ratios. That is not logical. I am not giving up hope that this sector can be forecasted. But my readers should be pessimestic about the predictions in the forecaster spreadsheet until it shows more signs of some success. This is the link to the 2006 stats for this sector, showing the projections based on 2006 begining of the year stats - along with the 2006 returns in the 'forecasting' spreadsheet which is the last of five spreadsheet posted - or roughly in the middle of the long page.


Bank News

Bank of Hawaii Gets S&P Ratings Upgrade     Bizjournals 5-09
    Bank of Hawaii earned higher marks from Standard and Poor's, with the financial rating service upgrading the bank's credit rating to A- from BBB+ and pronouncing its outlook stable. Standard & Poor's attributed the adjustment to confidence in the Honolulu-based bank's dominant position in Hawaii and the growth potential of its Pacific network. That growth could offset one of the bank's liabilities -- a state economy with one industry as the lynchpin, said analyst Diane Hinton in a statement released by S&P. "The bank's elevated market share renders it vulnerable to the local economy, which is largely driven by tourism, and implies that growth prospects may be limited because of Hawaii's relatively concentrated domestic banking market," Hinton said.


Ratings & Dividend Changes     On 5-04 AG Edwards Initiated CYN at Hold. On 5-24 UB raised its quarterly dividend to 52 cents per share.


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