Fellow Investor,
Some banks didn't want, or need, a government bailout. This handful of healthy banks pay strong, wealth-building dividends to their shareholders. These banks never took one cent of government bailout money, never jumped like lemmings into risky mortgages, and never cut their dividend payments.
These banks will be the big winners as bankers return good old-fashioned banking -- and investors return to good old fashioned income investing...
In many ways, the financial performance of banks mirrors the economy.
When times are good, many banks take on more underwriting risk and expand into new areas of business. In an attempt to keep up with the growth of their peers, these publicly traded banks forget that the good times will not continue indefinitely.
But when economic growth slows, unemployment rises, and defaults on loans increase, the banks that have taken on unnecessary risk are quickly exposed. During the very recent Great Recession, we saw this first hand, and the U.S. government began bailing out every major bank in the country.
Get Back to Banking Basics...And Make Reliable, Wealth-Building Income
Banks today don't operate like they used to.
 | | J.P. Morgan ran his banking the old fashioned way and paved the way for a consistent, steady stream of income, much like the smaller regional banks of today. | You see, one hundred years ago banks were run as partnerships. The big banks operated with a long-term view, and were often owned and managed by families with names like the Morgan or Rothschild.
These families had significant portions of their own capital invested in the banks, and made this capital available for loans or investments. As a result, they had lots of skin in the game and a very significant interest in making sure that their bank took a cautious approach when making loans and allocating capital.
Additionally, most of these banks had been around for decades, even in some case for hundreds of years. In many ways they were family banks focused on managing the money and finances of their very wealthy family members, who also served as managing partners or directors of the banks. They had done business in this conservative manner for generations. As a result, their approach to banking included a focus on protecting wealth, managing risk, and maximizing long-term profits.
All of this changed when banks transitioned from partnerships into large publicly traded corporations.
After decades of mergers and acquisitions, a very large portion of the U.S. banking industry became concentrated in the hands of a few major global banks. And as public company banks are now led by executives - rather than partners - the mission of these global banks veered away from risk management and capital preservation. Instead of managing the bank's affairs with a long-term view, the executives became focused only on the here and now - the next quarterly earnings results.
This change meant that banks focused on mergers and acquisitions, even if the valuation didn't make a lot of sense. It also led to expansion into new areas of business, including money management, credit cards, sub-prime loans, credit default swaps, hedge funds, and proprietary trading.
The business of these banks was no longer just accepting deposits and making loans. Instead, over the last three decades there has been tremendous book in the financial sector. This growth has led to the transformation of banks into vast financial organizations with complex operations that are difficult to understand, value, or measure. And when the credit crisis hit, it became evident that even the executives who led many of these banks were either been asleep at the wheel, or unable to comprehend the business of their banks.
So many banks made horrible decisions during the "good times." And when the Great Recession hit their problems were exposed. Nearly all of the biggest U.S. banks were at fault, along with numerous small and medium sized banks that followed their larger peers into the abyss. These leveraged banks played the game of trying to meet or exceed quarterly earnings expectations, even if that meant jeopardizing the long-term health of the bank.
Regional Banks: Too GOOD to Fail
 | | Bank run, 1933: while American banks are no longer in real danger massive runs, most of today's Mega Banks are just a few leveraged deals away from disaster. | Of course, not every bank forgot the basics of healthy banking. A few banks stayed true to the basics of banking, and didn't loose their focus. This select group experienced healthy financial performance - even during the most challenging economic time since the Great Depression.
The best banks today aren't the big banks that got our country and our global economy into the recent mess.
Instead, the best banks today are small banks with a regional focus. They know and understand their local markets and focus on high quality service. They didn't expand too quickly, and have remained dedicated to the basics of banking - accepting deposits and making low-risk loans.
They're managed just like the great bank partnerships of one hundred years ago, with a focus on financial stability, risk management, healthy loan portfolios, and consistent profits. These banks didn't need, or accept, TARP financing from the U.S. government because they didn't need a bailout.
And today, they remain healthy, despite an unhealthy economy. These are the banks investors should want to own, and we'll be adding the best of these to the High Yield Wealth portfolio.
Today I'm recommending that you purchase two small, regional banks that have never taken a dime in bailout funds. They're not on any bankruptcy "watch list."
And they pay steady, reliable dividends to their shareholders.
Before I tell you the names of these old-fashioned banks, I'm going to briefly explain what's going on with the rest of the banking industry, how it got in trouble and why they'll continue to have problems in the years to come.
Big Banks Finally Raise Dividends (Slightly)
After the "big banks" were bailed-out by the Federal Reserve they were forced to dramatically reduce or even eliminate their dividends completely. Their rational made sense - if the banks needed the taxpayers to cover their losses under the guise that they were "too big to fail," than their shareholders shouldn't be getting the reward of a cash dividend.
Last month, the Federal Reserve unlocked the shackles after a few behemoths passed a hypothetical "stress test" and proved that their balance sheets could withstand another recession and that they were adequately capitalized to pay higher dividends while also being able to repay their outstanding TARP obligations.
JPMorgan Chase (NYSE: JPM) immediately announced it would increase its quarterly dividend to $0.25 from a nickel. Wells Fargo (NYSE: WFC) raised its dividend to $0.12 from a nickel. U.S. Bancorp (NYSE: USB) increased its dividend to $0.125 a share. Investors cheered, and shares of all three of these banks rose on the news.
Even the ugly stepchild of the big banks - Citigroup (NYSE: C) - moved higher after announcing it would reinstate a quarterly dividend of a penny per share in the second quarter after completing a 1-for-10 reverse stock split. Though his bank was a laggard, Citigroup CEO Vikram Pandit was enthusiastic nonetheless. "Citi is a fundamentally different company than it was three years ago," he gushed in a prepared statement. "The reverse stock split and intention to reinstate a dividend are important steps as we anticipate returning capital to shareholders starting next year."
It's true. Citigroup is fundamentally different. Three years ago it was paying a $0.35-per-share quarterly dividend and its share price was in the $20s, down from the $50s a few month's before that. Today, it's paying a penny-per-share quarterly dividend and trading at around $40, though really through the simple financial maneuver of a reverse stock split, shares are no better off than the were at the correctly priced $4 range. Yes, Citigroup is "fundamentally different." Then again, so are many of Citigroup's largest competitors.
Since 2008, Big Bank Dividends Fell Significantly
Why Some Big Banks Will Get In Trouble�Again
As you can no doubt tell, I'm not a fan of the "big banks." Are you?
Not only did they contribute to the recession in a very major way, but they also haven't done any favors for shareholders who have seen their share prices plunge, and their dividends reduced to almost nothing.
Investors who are bullish on the "big banks" say that these banks have room to grow their dividends. Their argument leaves me underwhelmed when considering that many of these banks were yielding less than one percent before the recent dividend increases, and continue to yield only two percent today.
That fact that these "big banks" operate on a national scale also limits their appeal. For example, these national banks have exposure to markets throughout the country. This means that shareholders have exposure to regions with both strong economies and lousy economies. Business may be booming in Houston, but that positive growth could just as easily be offset by a lousy housing market in Las Vegas.
Also underwhelming is the "new-and-improved" regulatory environment that is supposed to keep these big banks sane and safe. I took a look through a summary brief on Dodd-Frank that was produced by the Senate Banking Committee. There is the usual chest-pounding rhetoric on protecting investors, taxpayers, and consumers, but any confidence is undermined by a bureaucratic tone and surfeit of important-sounding acronyms.
At the end of the day, the big banks will likely recover and rise again. But there are much better ways to play a rebound in the U.S. banking system then to go out and buy big banks paying paltry yields of around two percent.
I'm also fairly certain that these dogs will soon be back to their old tricks - taking on stupid risks and focusing on near term quarterly financial results in lieu of the long-term health of their businesses. These big banks know that Uncle Sam is right behind them and ready to come to the rescue again the next time economic recession hits, or a bubble bursts.
Even after the last round of bailouts, these "big banks" remain too big to fail, and too big to succeed.
Why It Pays to Think Locally
There is no reason for investors to ride the "big-bank" roller-coaster.
Banking done right is a straightforward business.
A bank uses funds from equity and bond offerings and customer deposits, and then lends these funds to creditworthy businesses and individuals. It's a simple matter of earning a spread between the cost of funds received and the rate of interest earned on loans. This simple business model can be enhanced by additional core services for customers, such as wealth management or credit card processing.
No smoke and mirrors, and no funny business to dress up earnings.
| | High Yield Wealth: Your #1 Source for the SAFEST Dividends 
I'm Ian Wyatt, founder and investment strategist for Wyatt Investment Research.
I'm no stranger to income investing. For nearly a decade, I've lead my thousands of my loyal readers to some of the stock market's sweetest dividends. We've locked in like 7.8% and 6% annual cash payouts with top-rated dividend stocks like the two regional banks I've been telling you about.
I started the High Yield Wealth investment advisory service to focus my profitable insights on fortune-building income stocks.
And I'm not one to disappoint with my profitable investment research.
So now I'm focusing my tried and true, market beating research and wealth-building savvy on uncovering the stock markets' top performing income investments.
And I'm sharing the very best income investments and strategies for growing your wealth with you in the High Yield Wealth income investment advisory service.
Now, you're going to love the ultra-safe income stream you'll get from the top-notch income stocks you read about every month in High Yield Wealth. You'll find the two regional banks poised to give you an ultra-safe +10% gain every year. But you'll also find so much more at High Yield Wealth...
Like the Free Special Reports, including: 2 Healthy High-Yield Regional Banks for Dividend Investors. With cash dividend payouts on the rise, this is the best time secure your financial future.
| | The key to successful banking is discipline. This means pricing services profitably, maintaining high underwriting standards, keeping customers happy, and controlling costs. It's basic blocking and tackling, to use a football analogy. The best blocking and tackling football teams are the most successful over time, as are the most disciplined banks.
Today, the banks that are focused on the basics and have a real commitment to risk management and returning capital to shareholders are the local banks. The best regional bankers are prudent decision-makers who are immune to banking fads, and therefore maintain high standards. They operate as if they are partners, and not simply arms-length lenders.
They treat investors' and depositors' money as if it were their own. They focus on making loans for the next decade, not the quarter. For example, many of these banks will even hold their own loans, rather than securitizing them and selling them to bond investors.
These banks know they must maintain quality, because they know they can't hide behind a distant corporate veil - and they know that government guarantees that apply to big banks don't apply to them.
The best of these regional banks maintained high standards during the booming growth years leading up to the credit crisis of 2008 / 2009. As a result, they didn't make bad lending decisions and maintained a healthy portfolio of loans. Their loan write-offs have remained low, and their profits high even during the recession.
For their shareholders, they have continued to pay healthy dividends out of cash flow.
The best regional banks did well during the recession, and their best days lie ahead.
Notwithstanding minor set-backs, today the economic recovery appears to be gaining traction. GDP growth in the U.S. for 2011 was recently revised upward from 3.5 percent to 3.9 percent.
In March, the U.S. economy added 220,000 jobs, and the unemployment rate fell to its lowest level in two years, at 8.8 percent.
There remain areas of concern, including rising food and energy prices and falling home prices in some housing markets. While it's not exactly the glory days, it's becoming apparent that the worst is likely in the rear view mirror, and the future is brighter.
For strong regional banks operating in areas of the country that have healthy economies, the coming economic growth means good things for business. The health of these banks will be determined by the health of their local markets and customers, and the continued sound decision making skills of their managers. As the economy recovers and businesses and individuals begin to borrow more, I expect these banks will reap the rewards.
I've found two smaller banks run by two of the best, most experienced bankers in the business that follow a quality dictum and that are priced for investing success.
These two banks have proven that they don't require supervision from the Federal Government to do the right thing.
In fact, they've proven their desire to run their business in a healthy manner simply because it's the right thing for the bank, its customers, and its shareholders.
Most important, they have proven to be two of the most dependable, income-producing investments for yield-seeking investors. They have decades of uninterrupted dividend payments.
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Clearly, there's a huge opportunity for the banks that are getting back to basics, with sensible lending and big dividend payments. and their cash payouts to investors like you. 
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