1/1/07
1.
SLADE’S FERRY BANCORP (SFBC $16.95) is the holding
company for Slade’s Ferry Trust Company which has nine retail
locations in southern MA and they are almost 50 years old now. Total
assets at $600 million at 9/0/06 with solid net interest margins at
3.32%. The bank has come down to new yearly lows the past week, this
is over done. They are located in some great markets and trading just
a few dollars above their $12.30 book value is a great buy today. The
stock is somewhat thinly traded so please buy it carefully with just
over 4 million shares outstanding and insiders owning a bunch.
Insiders also have been buying at higher prices, a good sign for the
future and have some options at much lower prices, but not a lot.
They pay about a 2% cash dividend and management is as smart as they
get. Loan growth has been ok at 4%, but with this tough yield curve,
I think they might sell sooner than later, and they must be worth
about 2 times book or $25.00 a 40% premium to today’s prices.
They should earn a $1.10 + in 2007 and downside risk, which is the
most factor for the next two years, should be 5-8% at most. Did we
say management is SMART, about the best we have listened to other
than IBCA! Asset quality is also very solid, with reserves at just
over 1.00% and non-performing loans very low at 0.10%. Mary Lynn
Lenz the president of this 116 person institution will always do the
right thing for the shareholders and the community. Not much else to
say other than buy now. Headquartered in Somerset, MA.
FOLOW
UPS:
FIRST
FINANCIAL SERVICES: (FBFS) announced a 20% stock dividend.
Hold.
ORITANI
FINANCIAL CORP (ORIT) this new conversion in Northern New
Jersey, should start trading next January or February. This will be
a good one, if you got it, hold forever, new comers pay up to $12.00
when it starts trading.
HARLEYSVILLE
SAVING (HARL) keeps hanging around yearly lows with plenty
of stock for sale. We keep buying under $18.00. One of our top six
holdings. Downside risk very low from here. Insiders own a ton.
PENNSYLVANIA
COMMERCE BANCORP (COBH) also at two year lows, keep buying
under $25.75, one of our top 12 holding now. Very strong bank,
trading at a very low price to book for this kind of growth.
STERLING
BANK (STNJ) the merger will not close to early 2007. Buy
more now under $10.50, one of our top 5 holding.
NATIONAL
MERCANTILE BANCORP (MBLA) volume starting to dry up, keep
adding under $13.35, CA franchise worth 2.5 times book +, or $18 a
share, our eighth largest holding.
PEOPLES
BANK (PBCT) trading at yearly highs of around $45 a share,
this is a great hedge/”short” for all accounts over
$45.00. Look to cover this one at around $40.00 a share.
Many banks
are trading at two year lows, a few we like, above, and are great
buys for these premier franchises as long as you have a 5+ year time
frame, you will make money, not 40% + anymore, but 11%-17% annualized
over the next 10-20 years is not bad, with low risk. We wish we
could be like Warren Buffett and have people sell us their
business/bank’s at great prices, and buy companies/banks at
50%-75% of their book value, since this usually doesn’t exist
in today’s world. Buying the banks we like at just over book to
1.5 times book, we feel, is a very good opportunity in today’s
world and with the very low long-term interest rates still in place,
the higher prices are warranted. These very low long-term rates will
not stay around much longer. Now is the time to add serious money to
select thinly traded names like HARL, SFBC, STNJ, MBLA, OPOF. Most of
the larger regional names that trade a ton like WFSL, FMER, UB, OCFC
and PRK have all moved back up 10%-20%, so trading in these names and
long positions are now finished in these stocks for the time being.
Now it is back to the small names at year – end. You could
otherwise go to Vegas if you need results next month! Please keep at
least one hedge/short if you are margined in 2007. If you can wash
the “short-term” gains in UB, sell this one over $60.60
and move the money into the smaller names above.
1/1/07:
BankNewsletter.com 1-888-814-7575
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