The financial world was decimated last autumn when it was learned just how deadly a dose of bad lending could be for the banks. And that damage was only exacerbated by an assumed leverage whose effects are still unclear. What is clear, however, is that the derivatives market is still anything but transparent and that profit/loss reporting is not yet up to the standards of the mainstream equity and bond markets.

IN PICTURES: Top 7 Bank Failures in U.S. History

That's why when Lehman Bros. (OTC:LEHMQ) went under and AIG (NYSE:AIG) took a few deep stabs of the federal government intervention, the rest of the financial world held their breath and waited for the tsunami to wash over them. Big and small were affected as one – though some were far less deserving of such a soaking.

Let's look at some smaller financials whose businesses are as good as they ever were – and who have the fundamentals to prove it.

Winning and Losing with Derivatives
BGC Partners, Inc. (NASDAQ:BGCP) is tied intimately to that above-mentioned derivative trade. BGC Partners are brokers, providing execution, clearing, processing and other back-office services for banks, broker-dealers, investment banks and investment firms around the world.

BGC currently trades with a P/E of just under 10 and offers investors an annual yield of about 10.50%. The stock is up 135% in just three months (as of Friday's close) and sports some good valuations: price to book is 1.41 and price to sales a lowly 0.23.

Profitable Mid-American Insurance
Cincinnati Financial Corporation (NASDAQ:CINF) is in the insurance business, specifically as marketers of both personal and commercial lines of property/casualty product. The company's shares have also appreciated this last quarter, climbing over 30% to stand today at $24.12. Much of the gain is attributable to the firm's year-over-year earnings gains. The latest quarter saw earnings of 22 cents per share compared to a loss of 26 cents per share in the same period in 2008. Cincinnati Financial has an annual dividend yield of about 6.5% and trades with a P/E multiple of just under eight. The stock trades with a P/B of 0.93 and a price-to-sales ratio of 0.98.

Looking Good and Trading Low
First BanCorp
(NYSE:FBP) is a Puerto Rico-based provider of a full line of banking services, and an equally impressive array of fundamentals. The company's shares trade with a P/E of just over 9 and yields a healthy 5.2% dividend yield. Remarkably, the company trades at just half its book value, with a P/B of 0.53.

First BanCorp's shares are up 58% from its 52-week low established in the first quarter.

The Wrap
When the tide rolled out on the financials last year, it left savvy investors with some fairly choice pickings. The above companies are a great place for value hunters to set out for some financial wins. (Read Buy When There's Blood In The Streets to learn how contrarian investors find value in the worst market conditions.)

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Tickers in this Article: BGCP, CINF, FBP, LEHMQ, AIG

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