Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Is This the Best Bank in the Midwest?

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Financial stocks have been taking a beating recently. Banks that usually operate in certain regional areas usually stood out in my earlier examination of smaller banks. Let's use this information to determine which bank might be the best in the Midwest.

What is the Midwest?
Most of the banks on my list are based out of Ohio, with many banks serving different areas of the state. However, the “Midwest” in this context covers a large area from Ohio to Minnesota. The third bank from my screen below, Fifth Third Bancorp (Nasdaq: FITB  ) , has a small presence in other states outside of the region, like West Virginia and Florida.

Screening Factors
We will rank and average the banks based on four factors: P/E ratio, P/B ratio, dividend yield and net income margin. Only banks with a market cap over $300 million will be included.

My first screening will eliminate all banks without earnings over the past 12 months, looking for the cheapest bank according to this metric. My second factor is P/B ratio. In the banking industry, a value of 1.5 is reasonable, and the adage I like is "buy at a half, sell at two." Only banks that pay a dividend will be included -- the higher the better. Finally, I will be using net income margin as another method of comparing the bank profitability.

My initial screen turned up 17 banks, so I refined my screen to include banks with over a 3% dividend yield. That resulted in the following nine names:


P/E Ratio (TTM)

P/B Ratio

Dividend Yield

Net Income Margin

Huntington Bancshares (Nasdaq: HBAN  ) 11.1 0.82 3.2% 18.7%
Park National (AMEX: PRK  ) 11.8 1.08 7.2% 20.1%
Fifth Third Bancorp 10.7 0.77 3.1% 18.7%
FirstMerit (Nasdaq: FMER  ) 11.7 0.85 5.3% 16.1%
First Financial (Nasdaq: THFF  ) 11.6 1.08 3.3% 24.1%
Chemical Financial (Nasdaq: CHFC  ) 12.5 0.80 4.8% 16.2%
First Busey (Nasdaq: BUSE  ) 14.3 0.91 3.5% 16.9%
First Financial Bancorp (Nasdaq: FFBC  ) 13.7 1.18 3.3% 14.6%
Northern Trust (Nasdaq: NTRS  ) 14.2 1.24 3.1% 17.0%
Regional Averages 11.9 0.69 2.4% 2.1%

Source:, TTM = trailing 12 months.

Huntington Bancshares is the largest small business lender in the region, and the fifth largest in the country. It highlights its investments in local communities, investing nearly $100 million in neighborhoods throughout its region in 2009 and $700 million for small businesses. It did not lead any of the individual categories, but is boosted by high rankings in three of the four categories. In fact, the top three banks on this list have all been added to our resident banking expert Anand Chokkavelu's Rising Star Portfolio. Check out the reasoning for his selections right here.

Regional opportunities abound!
Other Fools point to great values in some of the larger banks, and I couldn't agree more. However, there are many great opportunities in some of the regional banks. I will be paying special attention to Huntington Bancshares and adding it to My Watchlist. Feel free to do the same.

Foolish contributor Robert Eberhard does not own any shares in the companies mentioned here. Follow him on Twitter, where he goes by @GuruEbby. The Motley Fool owns shares of FirstMerit, Fifth Third Bancorp, and Huntington Bancshares. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (7) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1567218, ~/Articles/ArticleHandler.aspx, 10/24/2016 10:52:37 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,228.61 82.90 0.46%
S&P 500 2,151.37 10.21 0.48%
NASD 5,301.65 44.25 0.84%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/24/2016 10:36 AM
HBAN $10.10 Up +0.04 +0.35%
Huntington Bancsha… CAPS Rating: *****
BUSE $22.93 Up +0.19 +0.84%
First Busey CAPS Rating: No stars
CHFC $44.31 Up +0.55 +1.26%
Chemical Financial CAPS Rating: *****
FFBC $21.60 Down +0.00 +0.00%
First Financial Ba… CAPS Rating: ****
FITB $21.30 Up +0.09 +0.42%
Fifth Third Bancor… CAPS Rating: *****
FMER $0.00 Down +0.00 +0.00%
FirstMerit CAPS Rating: ***
NTRS $71.23 Up +0.25 +0.35%
Northern Trust CAPS Rating: *****