TrustCo Bank Corp NY (TRST), KeyCorp (KEY): A Good High Yielding Small Cap Banking Stock

Home equity loans ranked second at $10.24 billion. What I like about KeyCorp (NYSE:KEY) is its highest loan loss reserve ratio among the three. In the past ten years, its loan loss reserve as a percentage of total loans has stayed in the range of 1.32% to 4.28%. In 2012, the loan loss reserve ratio was 1.66%. KeyCorp is trading at around $10.30 per share with a total market cap of around $9.5 billion. The market values KeyCorp at 10.72 times its forward earnings and 95% of its book value.

Among the three companies, TrustCo Bank Corp NY (NASDAQ:TRST) offers investors the highest dividend yield at 4.90%, whereas First Niagara pays a dividend yielding 3.40%. KeyCorp (NYSE:KEY) has the lowest dividend yield at 2%.

My Foolish take

Personally, I like TrustCo Bank the most with its highest loan loss reserve ratio, highest dividend yield, and its loan concentration in residential mortgage. I think investors should also consider TrustCo Bank Corp NY (NASDAQ:TRST) as a play on the improving U.S. residential housing market.

The article A Good High Yielding Small Cap Banking Stock originally appeared on Fool.com and is written by Anh HOANG.

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