3 Regional Banks You Can Buy Right Now: Huntington Bancshares Incorporated (HBAN) and More

When investing in banks, it’s easy to get overly focused on the big ones, like Bank of America Corp (NYSE:BAC), Citigroup Inc. (NYSE:C), Wells Fargo & Company (NYSE:WFC), and the like. But you do this at your financial peril. There are many smaller banks out there with plenty to offer investors. And though this is no definitive list, here are three regional banks to get you started — all with market caps of $21 billion and under.

1. BB&T Corporation (NYSE:BBT)
At $21.18 billion, this is the biggest of our three in terms of market cap. The Winston-Salem, NC based lender operates about 1,800 financial centers in 12 states throughout the mid-Atlantic, Midwest, and the south: good geographic coverage that can translate into healthy overall revenue in good times and help dampen the effects of regional recessions in bad times.

By the numbers, BB&T has a price-to-book ratio of 1.12. This is good because banks with a P/B of in the neighborhood of 1.0 — barring no fundamental defects — may be undervalued and therefore a good buy. The bank also has a return on equity of 10.48%: not stellar but strong, and in the ballpark of giants JPMorgan Chase & Co. (NYSE:JPM) and Wells Fargo, two banks that unarguably have their financial acts together.

Finally, in the fourth quarter of 2012, BB&T had 37.1% year-over-year growth on just 6.8% year-over-year revenue growth — along with a 10.48% ROE, another sign the bank is efficient  and knows how to turn a little bit of revenue into a lot of profit for investors.

2. SunTrust Banks, Inc. (NYSE:STI)
With a market cap of $15.04 billion, this is the next largest of our three and also boasts healthy geographic coverage: 1,600 retail branches and 2,900 ATMs throughout the south and mid-Atlantic.

By the numbers, Atlanta-based SunTrust also has the kind of P/B we like to see: 0.76, with no fundamental defect in sight. In the fourth quarter of 2012, the bank reported year-over-year income growth of 381% on year-over-year revenue growth of 14.4%. This phenomenal income growth can be chalked up to strong non-interest income, due in part to higher mortgage-related revenue. In an era of a resurgent housing market, which continues to be driven hard by Fed Chairman Ben Bernanke’s third round of quantitative easing, this is good news.

At 9.67%, SunTrust’s ROE is also healthy and more than competitive with that of the big banks, like investor darling Bank of America: For all the fuss that’s made over B of A, the superbank’s ROE is just 1.79%. SunTrust has also done well for its investors, returning more than 20% in share price appreciation in the past year.