Three Banks With Great Figures

Bob Bonelli was a banker before he switched to Wall Street in 1991 as a money manager. Now he is hot on his old bailiwick. "Banks have never looked better than they do now," explains Bonelli, who heads the Ernst Financial Group's Bank Equity Fund. "And I expect they will be the next group that will get caught up in the new takeover frenzy."

The fund has invested $6 million in 20 stocks, many of which, says Bonelli, are buyout bait. Among the tempting targets, he believes, is Comerica, one of the largest bank-holding companies in Michigan, with assets of $25 billion; Provident Bankshares, parent company of Provident Bank of Maryland, a full-service bank in Baltimore, with 38 branches; and Magna Group, the third-largest bank-holding company in St. Louis.

All have strong balance sheets and adequate reserves, a growing loan volume, and healthy double-digit earnings growth, says Bonelli. Comerica is one of the best bargains among the regionals, he says. The stock historically trades at a price-earnings multiple of 12. Now trading on the Big Board at 27, its p-e is just 9. Bonelli figures Comerica will earn $3.20 a share this year and $3.70 next year. Based on earnings alone, the stock is worth 36, he says. Buyout value: 40.

Provident Bankshares may be another undervalued play. Trading on NASDAQ at 17 1/2, the stock is selling below its book value of more than $19. With its solid franchise in Baltimore, Provident is worth 30 to 35 in a takeover deal, says Bonelli. Magna, with assets of $4 billion, may become a takeover target because of its dominance in central Illinois and northeast Missouri. Bonelli figures the NASDAQ stock, now 185 8, is worth 25 based on earnings growth alone. In a buyout, Magna should fetch 30, Bonelli says.