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DES MOINES, Iowa
Shares of regional banks fell Monday, some to new 52-week lows, pulled down by a sagging market once again reacting to renewed concerns about Greek sovereign debt. Continued concerns of another U.S. recession also contributed to selling.
Some banks saw shares fall as much as 7 percent, while others were down between 1 and 3 percent in afternoon trading.
The turn downward came even as an industry analyst said the sell-off of many regional bank stocks has been excessive and investors should consider buying in at very good prices.
"We recommend investors take a contrarian view and start increasing exposure to mid- and small-cap banks," wrote JPMorgan Securities analyst Steven Alexopoulos in an investor note.
He upgraded the shares of four banks including First Horizon National Corp., PrivateBancorp Inc., TCF Financial Corp. and Zions Bancorporation.
They were all moved up to "Overweight" from "Neutral."
The average decline for the two dozen banks Alexopoulos covers was about 30 percent so far this year and many are down around 40 percent, he said.
He said the result is regional bank stocks at one of the most attractive entry points in several years.
While 2012 might be a difficult year for the banks as the economy continues to drag along with low interest rates, 2013 likely will be more positive with loan growth expected in the mid-single-digit range, Alexopoulos said. He expects 2015 to be the first conceivable year that the industry begins to deliver earnings in a normal environment.
He said dividend yields among the banks are more attractive. His top choice is FirstMerit Corp., an Akron, Ohio, bank which has a dividend yield of 5.7 percent. Shares fell 43 cents, or 3.8 percent, to $10.94 in afternoon trading.
First Horizon National Corp. shares fell 30 cents, or 5 percent, to $5.66, a new 52-week low. They have traded as high as $12.67 in January. PrivateBancorp shares fell 58 cents, or 7.7 percent, to $6.94, also a new 52-week low. TCF Financial Corp. fell 27 cents, or nearly 3 percent, to $8.90, and Zions Bancorporation was down 25 cents, or 1.7 percent, to $13.85.
The declines came as the S&P 500 lost 22 points, or 2 percent, to 1,109 in early afternoon trading. That's below its closing low of 1,119 for the year, reached on Aug. 8. The Dow Jones industrial average was down 186, or 1.7 percent, to 10,729.