One Last Tour of California's Banks

As we move into the weekend, I want to take a final tour of the California banking Industry. It is probably not as much fun as a tour of the California Wine Country but it may just be more profitable in the long run. There are some good reasons why California is seen as a beleaguered, troubled state by many these days. The state government is a mess and the real estate market was devastated by the credit crisis. In spite of this, California has several strong economic sectors and, much like Europe, it will muddle through and survive in the long run.

Many of the larger community bank stocks have traded up and are at a premium to tangible book value (TBV). Most of these premiums are small in the range of 1x to 1.25x TBV, but they are still too high to chase at the moment. A strong market pullback could change this, but for now resist the urge to chase banks stocks that are trading above book value. Most of the value right now is the smaller institutions....535 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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