Small Bank Newsletter

November 2003

 

INTERVEST BANCSHARES CORP. (IBCA 13) is a nationally chartered Bank, headquartered in NYC, with 5 full – service offices in Clearwater and Pinellas County, Florida. This ban k was featured before, in our past newsletter several years ago, but was sold in the Internet craze of 1998 and again, it was featured to buy at $7 in January of 2001. (But now it’s the same price with all the growth they have had). Now is the time to get a big position under $13.10 (the stock trades all day long between $12.85 and $13.15, buy it slowly) before year-end, as a sale of the bank is now closer. Once the cheap warrants expire, there will be no more big selling and no shares to buy. Load up now. This bank has almost doubled in size since two years ago in assets, deposits and loans. Loan growth is very strong still and even though they have 2 problem loans in the latest quarter, they are well reserved and backed by real estate with no losses expected. These guys know how to run a bank with their deposit base at over $150 million on the 3rd floor. WOW! That’s right, I’ll say it again, $150+ million in deposits on the third floor of a building and an efficiency ratio of 29%. That’s how to run a bank. Earnings for the quarter were $0.52 per share for the latest quarter with many more shares also now outstanding. They are located in all the right markets and a Bank of this size can continue to steal market share from the big boys as many other small banks merge. Their growth opportunities going forward are still great. Management is smart and owns most of the stock. We can look forward to strong stock appreciation over the next several years, as strong earnings will drive the price much higher, we feel. (about 17% per year). They have a book value of $12.61 a share and should earn $2.25+ a share in 2004. With a P/E of 6 it is hard to find a value like this in this market. This Bank trades plenty and is liquid. (earnings up almost 100% from 2 years ago). They have just over 5 million shares outstanding. Look for management to make this bank a mini powerhouse over the next several years. Accumulate under $13.15. Buy all you can under $12.50. Downside should be limited to around 10% if we get a hard correction in this sector. Worth at least $28+ a share 3- 4 years out in a deal. Long-term investors only.

 

FOLLOW UPS:

1. NBC CAPITAL CORP (NBY) earnings down a little to $0.38 a share in the last quarter. Increased their cash dividend by 9.1% to $0.24 a share. Buy more under $24. Look for a sale within one year.
2. HIBERNIA (HIB) reported a very solid quarter. Hold.
3. CHEMUNG FINANCIAL (CHMG) more bad loans, however the bank retired a lot more shares and they still had an OK quarter. A sale is coming with so many of their peers at bubble prices, someone will take them, friendly or not. Management wake up and take someone else’s great currency since you can’t get your stock in line with others in your market. Perhaps Tompkins Trust will take them. They know how to run a bank and have the curr