Bank, thrift stocks climb 12 percent in fourth quarter

As the stock market continued its upward trend, the stocks of bank and thrift companies rose during the fourth quarter, posting an average return of 12 percent, according to Weiss Ratings Inc.

"Banks and thrifts are in the midst of a new round of consolidation," said Melissa Gannon, vice president of Weiss Ratings, in a news release. "The recent merger announcements are likely to put upward pressure on bank and thrift stock prices as investors anticipate likely takeover candidates."

Of the 650 bank and thrift stocks rated by Weiss, 316 (49 percent) received favorable ratings of B+ or higher. An average rating in the C range was given to 47 percent of the stocks, and only 4 percent were rated weak, receiving ratings of D+ or lower.

"Despite the sector's overall strength, a handful of banks and thrifts have struggled, primarily due to bad loans and insufficient capital levels," Gannon said. The five bank and thrift stocks that received ratings of D+ or lower were Entrust Financial Services Inc. of Denver, North Country Financial Corp. of Traverse City, Mich., Silverado Financial Inc. of Campbell, Calif., Amstar Financial Services Inc. of Miami, Fla., and Umbrella Bancorp Inc. of Summit, Ill.

Weiss reviews more than 8,000 stocks, including all those traded on the New York Stock Exchange, the American Stock Exchange and NASDAQ. Weiss also issues investment ratings on more than 12,000 mutual funds and provides financial safety ratings on more than 15,000 financial institutions. Weiss does not receive any direct or indirect compensation from the companies for which it issues ratings.