Real Recovery in Housing Means Real Opportunity for Investors

New evidence of U.S. housing recovery from the Mortgage Bankers Association:

The record 40 basis point drop in 30-Day delinquencies to 2.8 percent marks the lowest rate since 2Q 2006. As MBA Chief Economist Jay Brinkmann notes:

"Many mortgage servicers are already reducing their staffs that handled delinquent loans and foreclosures and we expect that trend to continue as the numbers continue to fall."

Again, good news for the housing market, and certainly for the regional banks
at the forefront of mortgage origination. No wonder the KBW Regional Banking Index has rallied 37 percent YTD, far surpassing Money Center Banks (XLF) and the S&P 500 as a whole.

Today we narrow the list of +130 regional banks based on 2014 earnings growth estimates and respective P/E ratios.

We set the bar for earnings growth at 15 percent, roughly double the estimate for the S&P 500 based on strategists tracked by Bloomberg. We also screen for 2014 P/E ratios below 15x, a level which is both cheaper than the market AND consistent with the legendary Peter Lynch value benchmark of PEG below 1 (P/E to Growth).

Eleven regional banks made our list. Note how many are in the Southest and Midwest... a gentle reminder as to the virtues of "Main Street" banking.

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