Small Bank Newsletter

K-FED BANCORP (KFED $11) is a Mutual Holding Company whi ch just sold 5,686,750 shares of common stock at $10.00 per share in a subscription offering. In addition, 8,860,750 shares of the holding company’s common stock were issued to K-Fed Mutual Holding Company. The stock opened at $14 and has headed south ever since, along with most bank stocks over the past few weeks. Kaiser Federal Bank has earned a 5 star Superior rating for 40 straight years. They have 4 locations in Los Angeles, San Diego and Santa Clara counties and have served this market for over 50 years. Trading at 1.70 times book for a MHC, is cheap, especially for the strong markets they are in. Many MHC’s trade at 2-3 times book, or more, in this current market.

Their asset quality is near perfect and reserves are very strong. They also have 30 ATM’s and total assets are $448 million. Management owns about 7% of the stock and the Bank has grown nicely over the past 5 years (formerly they were a credit union). Look for strong earnings growth for several years and a sale of the Bank in 4-5 years at $26-$29+ a share. Net interest mar gins are ok at 2.20%. The bottom line is that they are in the right markets where there is plenty of growth and the recent market sell off has given us all a chance to get in, at a fair price.

This stock is cheap and trades plenty, buy it now.

Accumulate now under $11.50 and buy all you can under $11. Downside should be limited to around $10.50 a share. Headquartered Covina, CA.

FOLLOW UPS:

1. INTERVEST BANCSHARES CORP (IBCA) earnings up 52% to $0.41 a share in the first quarter with more shares outstanding. Wow.

2. NORTHEAST INDIANA BANCORP (NEIB) announced a new 5% stock repurchase program. Hold.

3. SILVER STATE BANCORP (SSBX) earnings up 116% in the latest quarter to $.078 a share, and assets up 43%. Great numbers, but shares are getting fully valued. Sell over $70.

4. NORTH DALLAS BANK AND TRUST (NODB) earnings down slightly to $0.61 per share in the first. Buy more under $51.

5.NBC CAPITAL CORP (NBY) completed their acquisition of Enterprise Bancshares. Hold.