Small Bank Newsletter

December 2004

 

1. COMMUNITY BANK OF NEVADA (CBON $20-$25 estimated opening range) they are offering 2.7 million shares at around $18at the end of the month thru Keefe, Bruyetts & Woods. The stock will be almost impossible to get pre-market and should open in the $20-$25 range. The past two Nevada Banks this year (TBHS) and (VLLY) have done very well and based on this, and currently with stronger market conditions, this one should be the best of the bunch for the following reasons. Community Bank is larger than the other two, at almost $600 in assets and continued double digit growth across the board this year. Earnings in the first quarter were up to $1,535,460, up 65% from the same period in the year prior, much higher than VLLY numbers, which were very strong and TBHS which is still losing money. Now in their eighth year, they are positioned as the second largest independent bank in Southern Nevada and growing with 5 locations in Clark County, NV. While the number of shares makes this a huge offering compared to the others mentioned above, we still think there will be a lot of flippers, as many want to get out of most IPO's for a quick profit. If the price is in the $20-$22 area, we would buy all you can at this price and still accumulate strongly under $25 and maybe higher. This is the last bank of this size in this market, and everybody will want in. We feel that tremendous growth lies ahead and great earnings power should follow for many years; this could be the best Bank to invest for the long-term for many years in this high-priced market. You should make this one of your top holdings and it should return 20%- 25%+ per year on an annualized basis for the next 10 years. Lets hope they don't re-price the offering at a higher price, which could still happen. Simply doesn't get better than this. Headquartered in Las Vegas, NV.

 

FOLLOW UPS:

1. PENNSYLVANIA COMMERCE BANCORP (COBH) sold 300,000 shares at $49 and another 200,000 to CBH at $46.66. We would take profits on the 20% jump in price; they are building a new headquarter and training center at a cost of $15-$18 million dollars, too much to spend in our opinion. Sell over $55.
2. CITIZENS HOLDING (CIZ) earnings up 4% to $0.39 per share, asset quality still great and it even got better in the last quarter, hold and buy more under $19.
3. EVERGREEN BANCORP (EVGG) earnings up 28%, asset quality is much better and they continue to add locations. They also announced a 5/4 stock-split. The stock continues to run up. Hold for the long-run.
4. MIDLAND CAPITAL HOLDINGS (MCPH) no growth, and OK earnings, so hopefully they will sell within a few years. Worth $60 in a deal right now, so more than worth it to hold, and buy more under $43. Also a nice $0.20 per quarter cash dividend.
5. CENTURY BANK AND TRUST (CNBKA) earnings down to $0.38 a share in the latest quarter, but the bank said in its latest press releases that "Century is continuously evaluating strategic opportunities that will enhance its franchise", what does this mean ? We would sell this one over $31.50 for "short-term holders" as we think it could be dead money for a few years, long-term holders over 2-3 years, hold on.
6. WHITNEY HOLDINGS (WTNY) announced a 4.2% stock repurchase or up to 1.75 million shares. Hold.
7. CARROLLTON BANCORP (CRRB) re-stated first and second quarter earnings down from $0.36 a share in the first six months to $0.23. Almost 10% loan growth in the last quarter and higher interest rates will continue to help earnings re-bound next year. Buy more under $17 and all you can under $16, worth $22+ in a deal.
8. ATLANTIC COAST FEDERAL (ACFC) strong growth across the board and lots of noise in their first quarter as a public company. The stock continues to move up. Hold.
9. NB&T Financial (NBTF) earnings up 45% from the same period prior to $0.37 a share, but they still need to be stronger. Employees own a lot of stock, so hopefully, management will sell this year as the stock has done nothing the past few years. Many of their neighbors get taken for 2 times book which is what they should fetch with such a diverse franchise and ATM network. No growth, weak earnings for too long, and asset quality holding steady. It is time for them to sell - out, period. Buy more now under $26.50.
10. EXCHANGE NATIONAL BANCSHARES (EXJF) reported earnings of $0.49 down from $0.60 a year earlier and 5% loan growth. Continue to buy under $28, all you can, and slowly under $29.
BankNewsletter.com 1-888-814-7575 10/04

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