Make Bank on California Pride: 3 Regional Financials to Buy Now

You probably haven't heard of BBCN, FRC and SIVB, but they've earned a closer inspection

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Make Bank on California Pride: 3 Regional Financials to Buy Now

Regional Financials: BBCN Bancorp (BBCN)

BBCNBank185 Make Bank on California Pride: 3 Regional Financials to Buy NowBBCN Bancorp (BBCN) is the largest Korean-American bank in America. Ranked by Forbes as the 30th best bank in America for 2014, BBCN has a whopping 86% of analysts rating its stock a “buy.”

A total of 28 of BBCN’s 49 branches are located in California, with most in the Los Angeles area. That said, 33% of its $5.1 billion loan portfolio originates from outside Southern California; most of which is either for commercial real estate or corporate and/or industrial purposes.

Although Korean-Americans are its primary customers, BBCN is focused on small- and medium-sized businesses of any description. To that end, it’s currently the eighth-largest SBA lender in the country by volume.

As regional financials go, BBCN generates revenue the old fashioned way earning a spread between the interest it receives from the customer and the interest it pays for the funds it lends. As a result, its efficiency ratio of 47.69% in the first quarter ended March 31, 2014, is exemplary. Its pre-tax, pre-provision (PTPP) income in Q1 2014 was $39.8 million, a return on average assets of 2.44%. While that’s its lowest rate of return over the past five quarters, it’s still better by 59 basis points than Cathay General Bancorp’s (CATY) PTPP of 1.85% ($49 million in net income before taxes and provisions for loan losses annualized/total average assets of $10.6 billion) in the first quarter.

BBCN is a well-operated bank. It’s easy to see why it ranks highly amongst all the financials — regional or otherwise.

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Article printed from InvestorPlace Media, http://investorplace.com/2014/04/3-regional-financials-bbcn-frc-sivb/.

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