Assessing 29 Community Banks That Report Quarterly Results

The banks overexposed to C&D Loans are Cardinal Financial(CFNL) , Home BancShares(HOMB) and Union First Market Bankshares(UBSH) .

Overexposed to CRE Loans are Boston Private Financial Holdings(BPFH) , Cardinal Financial, East West Bancorp(EWBC) , Fulton Financial(FULT) , Hanmi Financial(HAFC) , Home BancShares, Independent Bank(INDB) , MetroCorp Bancshares(MCBI) , Sandy Spring Bancorp(SASR) , Union First Market Bankshares, Umpqua(UMPQ) , Virginia Commerce Bancorp(VCBI) and Western Alliance Bancorporation(WAL) .

Banks with a stuffed loan pipeline are East West, Hanmi, Home Bancshares, Virginia Commerce and Western Alliance.

It is highly unlikely that any of these 29 community banks will fail, but why take the risk with so many names to choose from? I would be conservative and use an investment strategy and not include the banks with two or three red marks.

Cardinal: Book profits because of two red marks with the stock at the multiyear high.

East West: This bank has a buy rating with two red marks. Hold if you are long. New potential investors should choose a different name.

Hanmi: This bank has not participated in the community bank rally even though it has a buy rating.

Home BancShares: This bank is the only one of the 29 that has three red marks. This is offset by a buy rating. If you are long this community bank consider booking profits as the bank is trading near a multiyear high.

MetroCorp: This bank is rated a strong buy despite an overexposure to CRE loans. This is one of the smallest banks shown in the Table, so it would not be my first choice. The stock is near a multiyear high, so consider booking profits if you are long this one.

Sandy Spring: This bank has just a minor overexposure to CRE Loans and has a hold rating. The stock has moving sideways the past two years ago, so it would not be on my buy list.

Union First Market: This bank has a buy rating but two red marks. This stock had a breakout above its 200-week simple moving average last week, but in my judgment there are better investment choices.

Umpqua: This bank has a buy rating with one red mark. The weekly chart is positive, but even so, consider other community banks from the table.

Virginia Commerce: This bank has a buy rating with two red marks, one being a pipeline that's 100% funded. This bank would thus not be on my buy list.