The combined market value of the three baskets discussed below was $120,993.7 as of 7/25/14. The combined decline last Friday was $273.92 or .00227%.
7/25/14: S&P 500 -.48%
The regional bank, REIT and lottery ticket basket strategies are updated on the last Monday of each month. The price shown in the following tables will be from last Friday.
Last Update 6/30/14: Stocks, Bonds & Politics: Update for Regional Bank, Lottery Ticket and REIT Basket Strategies/Bought 50 NKSH at $30.4
I frequently use a basket approach, particularly with industry sectors, that will vary in size as to the number of components. The focus will be on the total return of the basket, rather than individual components. Some of the advantages to this approach include diversification and risk mitigation. I am not concerned about a few mishaps provided other components are doing better than I anticipated when I made the initial purchase. As noted previously, I have been surprised by some of best and worst performers in the regional bank basket.
7/25/14: S&P 500 -.48%
The regional bank, REIT and lottery ticket basket strategies are updated on the last Monday of each month. The price shown in the following tables will be from last Friday.
Last Update 6/30/14: Stocks, Bonds & Politics: Update for Regional Bank, Lottery Ticket and REIT Basket Strategies/Bought 50 NKSH at $30.4
I frequently use a basket approach, particularly with industry sectors, that will vary in size as to the number of components. The focus will be on the total return of the basket, rather than individual components. Some of the advantages to this approach include diversification and risk mitigation. I am not concerned about a few mishaps provided other components are doing better than I anticipated when I made the initial purchase. As noted previously, I have been surprised by some of best and worst performers in the regional bank basket.
1. Update of Lottery Ticket Basket Strategy
The Lottery Ticket Basket Strategy uses a deep contrarian value strategy, appropriately characterized as catching a "falling knife". A common criteria for the stocks contained in this basket is a smashed stock price at the time of purchase and an ugly looking chart, though I may occasionally buy one who does not fit those common criteria. Any technical analyst would most likely have a sell rating on the stock.
See 2004 Study by the Brandes Institute: "Falling Knives Around the World"
Selections are made primarily on statistical criteria including price to book, price to sales, forward P/E, cash per share and/or free cash flow. I spend anywhere from thirty minutes to an hour researching a potential purchase prior to purchase.
For many selections, I may be pessimistic about the firm's future, but not as pessimistic as the market. I will also occasionally see a ray of light at the end of a dark tunnel. Since I expect failures, which are inevitable and unavoidable in this kind of approach, I limit my exposure to $300 per stock plus any prior trading profits.
After experiencing some success with this strategy, I now have a requirement that my total investment in all LT holdings can not exceed my total realized gains for this basket strategy. My total exposure is currently slightly under $6,000.
The name of the strategy aptly describes the risk. It is somewhat analogous in many cases to playing a hand of blackjack for the purchase amount knowing that the card count favors the house. It is a form of entertainment and an alternative to a casino visit.
Based on the results to date, this strategy is far more likely to produce positive results even with the LB's skill at the tables. The primary purpose of the LT strategy is to entertain Right Brain, let it swing for the fences with up to $300, and to keep the Nit Wit from interfering with Left Brain's management of Headknocker's portfolio.
The market reacted negatively to this report:
Closing Price 7/22/14: FMER: $18.23 -0.45 (-2.41%)
I thought that was an overreaction and simply changed my dividend option to reinvestment in response.
JPM downgraded FMER to neutral based on "accretion" headwinds, an issue that was well known prior to that downgrade. Barron's. The accretion issues impact on net interest margin is discussed at page 6 of the earnings call transcript.
Earnings Call Transcript | Seeking Alpha (page 5-expects net interest margin to decline in next two quarters)
After selling my 100 highest cost shares, I currently own 141+ at an average cost per share of $14.52: Item # 2 Bought 30 FMER at $11.35 (August 2011); Item # 2 Added 50 FMER at $15.2 (September 2012); Item # 3 Added 50 FMER at $15.09 (February 13, 2013 Post) The foregoing purchases account for 130 of the 141+ shares with shares purchased with dividends accounting for the remainder. I quit reinvesting the dividend based on valuation after the 2013 second quarter.
Closing Price Last Friday: FMER: $18.00 -0.23 (-1.26%)
K. Merchants Bancshares (MBVT): Merchants Bancshares reported second quarter net income of $3.41M or $.54 per share. The consensus E.P.S. estimate was for $.53. MBVT Analyst Estimates Profit will be hurt this year by spending on a "core conversion project" whose benefits will will start to be "seen in the fourth quarter".
In addition, MBVT is reducing "exposure to price volatility in the investment portfolio, increasing liquidity and building capital" in response "to market conditions that do not favor asset extension or compensate adequately for credit risk". I would agree with that approach now.
The NPA and NPL ratios are the lowest in my regional bank basket.
After harvesting a profit on one 50 share lot, I currently own 50 shares of MBVT: Item # 5 Bought 50 MBVT at $26.25 (5/2/2012)
The market responded favorably to this report:
Closing Price on 7/23/14: MBVT: $30.04 +0.54 (+1.83%)
L. F.N.B. (FNB): F.N.B. reported second quarter net income of $32.821M or $.2 per share. The consensus E.P.S. estimates were for $.2 and $.83 for the year. FNB Analyst Estimates For the 2013 second quarter, FNB reported net income of $29.123M or $.2 per share. There were more shares outstanding in the last quarter (diluted shares at 167.867+M vs. 145.844+M)
After some profitable trading, I was left with 50 shares bought at using FIFO accounting. Added 50 FNB at $7.8 (July 2010). I later added another 50. Bought 50 FNB at $11.25 (6/24/13)
The market responded favorably to this report:
Closing Price 7/23/14: FNB: $12.40 +0.27 (+2.23%)
Closing Price 7/25/14: FNB: $12.58 +0.02 (+0.16%)
M. West Bancorporation (WTBA): West Bancorporation reported second quarter net income of $4.74M or $.3 per share, up from $.25 for the 2013 second quarter. The consensus estimate was for $.28 and $1.13 for the year. WTBA Analyst Estimates
Bought 100 WTBA at $11.67 (6/29/13 Post)
The market responded favorably to this report:
Closing Price 7/25/14: WTBA: $14.57 +0.35 (+2.46%)
N. National Penn (NPBC): National Penn Bancshares reported net income of $26.2M or $.19 per share. The consensus E.P.S. estimates were for $.17 in the second quarter and $.7 for the year. NPBC Analyst Estimates
NPL Ratio: .8%
Coverage Ratio: 207%
Other metrics include the following:
Capital ratios are good:
NPBC was initially bought in the LT basket and was later promoted to the regional bank basket with the original LT purchase remaining in that basket. Item # 2 Added 100 NPBC at $10.68 (8/17/13 Post); Added 50 NPBC at $9.85 (October 28, 2013 Post); Item # 1 RB Bought as LT 30 NPBC @ $7.83 (4/26/11 Post)
Closing Price Last Friday 7/25/14: NPBC: $10.49 +0.03 (+0.29%)
O. Bought 100 SUSQ at $10.15-Satellite Taxable Account (see Disclaimer): I initially bought and sold SUSQ shares as part of the LT basket. Bought 50 SUSQ at $5.85 (10/1/09 Post)- Sold: 50 SUSQ @ 7.5 (11/3/2010 Post). I later decided to buy the shares back as an LT, Bought 30 SUSQ at $8.75, and will simply keep those shares in that basket. I am now elevating SUSQ to the Regional Bank Basket Strategy which is a "risk on" promotion.
Snapshot of Email Confirmation:
After my purchase, Susquehanna Bancshares reported second quarter net income of $43.5M or $.23 per share. The consensus E.P.S. estimates were for $.2 and $.8 for 2014. SUSQ Analyst Estimates The Board also announced a stock repurchase program of up to 3.5% of the outstanding shares.
SUSQ was originally classified as a LT due to its poor performance in 2008-2009. The poor results were manifested by the steep dividend cuts and severe share price decline. In the 2009 first quarter, the quarterly dividend was $.29 per share, which was then cut to $.05 for the 2009 second quarter, and then cut again to $.01 per share by the 2009 4th quarter. Susquehanna Bancshares, Inc. (SUSQ) Dividend Date & History The share price decline from $27+ in 2006 to 5+ in early 2009. SUSQ Interactive Chart
Earnings reports during that period reflected the problems during that period. E.P.S. declined from $1.23 in 2007 to a loss of 5 cents per share in 2009, barely recovering to just a $.13 per share annual profit in 2010. FORM 10-K at page 29.
Susquehanna Bancshares recently increased its quarterly dividend by 1 cent to 9 cents per share.
Closing Price Last Friday: SUSQ: $10.36 -0.04 (-0.38%)
P. Berkshire Hills (BHLB): Berkshire Hills reported second quarter core earnings of $.44 per share. The consensus E.P.S. estimates were for $.42 in the quarter; $1.68 for 2014 and $1.85 for 2015. BHLB Analyst Estimates
Net Interest Margin: 3.26%
Efficiency Ratio: 62.96%
Core Return Tangible Equity: 11.34%
NPL Ratio: .59%
NPA Ratio: .45%
Coverage Ratio: 132%
Charge-Offs to Total Loans (annualized): .31%
I am slightly in the hole after profitably selling a 50 share lot: Added 50 BHLB at $23.75; Bought: 50 BHLB at $24.51
Item # 1 Sold 50 BHLB at $28.74+ (7/13/13 Post)-Item # 2 Bought 50 BHLB AT $21.66 (3/12/12 Post)
The market responded favorably to this report:
Closing Price 7/24/14: BHLB: $23.67 +$1.07 (+4.73%)
Closing Price Last Friday 7/25/14: BHLB: $23.67 0.00 (0.00%)
Q. New York Community Bank (NYCB): New York Community Bancorp reported cash earnings of $.29 per share (GAAP at $.27). The consensus E.P.S. estimate was for $.26. NYCB Analyst Estimates
The capital ratios are okay:
The board declared a regular dividend of $.25 per share. At that quarterly rate, the dividend yield is about 8.43% at my total average cost per share of $11.86. Item # 2 Bought 50 NYB at $11.3 (10/15/2009 Post); Item # 4 Added 50 NYB at $10.57 (11/4/2009 Post); Item # 1 Added 50 NYB at $12.79 (2/17/2012 Post)
The largest of the three gains realized to date was booked on this 50 share lot: Bought 50 NYB at $10.57-Item # 7 Sold 50 NYB in IRA at $17.51 (7/28/2010 Post)($331.03-snapshot in Gateway Post on this topic)
The market responded favorably to this report:
Closing Price on 7/23/14: NYCB: $15.90 +0.34 (+2.19%)
Closing Price Last Friday 7/25/14: NYCB: $16.05 +0.06 (+0.38%)
R. Financial Institutions (FISI): Financial Institutions reported net income of $7M or $.48 cents per share for the 2014 second quarter. The consensus E.P.S. estimates were for $.46; $1.9 for 2014 and $2.07 in 2015. FISI Analyst Estimates
Net Interest Margin: 3.47%
Efficiency Ratio: 60.15%
NPL Ratio: .47%
NPA Ratio: .32%
Coverage Ratio: 306%
ROA: .95%
ROE: 10.52%
ROTE: 13.31%
The capital ratios are okay as of 6/30/14:
Bought 50 FISI at $15.55 (4/17/12 Post)
Added 50 FISI at $19.8 (8/30/13 Post)-Item # 5 Sold 50 of 150+ FISI at $21.26 (10/13/13 Post)
Added 50 FISI at $18.8 (9/30/13 Post)
Closing Price Last Friday: FISI: $22.53 +0.75 (+3.44%)
S. First Bancorp (FNLC): The First Bancorp Reports reported second quarter E.P.S. of $.35 per share up from $.29 per share in the 2013 second quarter. There are no analyst estimates.
I recently bought back a small position: Bought: 50 FNLC at $15.6
Bought 50 FNLC at $12.79-Sold 52 FNLC at $15.55 (June 2012)
Closing Price Last Friday: FNLC: $16.40 0.00 (0.00%)
T. United Bancorp (UBCP): This small Ohio banks is mostly out of sight, out of mind. I did notice an unusual earnings report that I decided to just briefly mention by linking the press release: United Bancorp, Inc. Reports Quarterly Earnings up 40% ($.14 vs. $.1)
I am reinvesting the dividend and currently own 100 shares bought in the open market.
Bought 50 UBCP @ 8.13; Bought 50 UBCP at 7.99
Sold 50 UBCP at $10.05 (May 2012)-Bought 50 UBCP at $8.49 (May 2010)
Closing Price Last Friday: UBCP: $8.10 +0.18 (+2.27%)
U. First Financial (FFBC): First Financial Bancorp reported second quarter net income of $16M or $.28 per share. The consensus E.P.S. estimate was for $.27. FFBC Analyst Estimates
Net Interest Margin: 3.7%
ROA: .99%
ROE: 9.19%
The capital ratios are good:
This bank holding company was paying out a regular and special quarterly dividend that together equalled its net income, with the last special payment made last year. When that was occurring, I reinvested the dividends. That practice started in the 2011 third quarter and ended in the 2013 third quarter. When the extra payment started, the regular dividend was $.12 per share and is now at $.15. Stock Splits & Cash Dividends | First Financial Bank
After profitably selling my highest cost shares, I currently own 139+ shares at an average cost of $14.88. Item # 4 Sold 57 FFBC at $17.03-Highest Cost Share (December 2013 Post); Item # 3 Sold 50 FFBC at $17.51 (September 2012) The current dividend yield based on that total cost number is 4.04%.
The open market purchases-for the shares currently owned-were discussed in these posts: Item # 1 ADDED 50 FFBC at $14.87 (December 2011 Post); Added Regional Bank Basket: 30 FFBC at $14.24 December 2012); Item # 2 Added 50 FFBC at $14.65 (June 2013 Post)
Closing Price Last Friday: FFBC: $16.59 +0.23 (+1.41%)
V. Bought Back 50 UVSP at $18.8-Satellite Taxable Account (see Disclaimer): I happened to notice late Friday that this stock had fallen back into my buy range, so I placed a limit order below the then existing bid price which was filled late in the trading day. The shares continued to slide after my purchase on lower than average volume:
Closing Price 7/25/14: UVSP: $18.74 -0.47 (-2.45%)
At that closing price, the TTM P/E was about 14.37, a little high for this bank, but the P/E based on the consensus E.P.S. for 2015 was acceptable at 11.12. UVSP Key Statistics The E.P.S. estimates are generated, however, by only one analyst: UVSP Analyst Estimates The estimate from that analyst is for an E.P.S. of $1.37 this year and $1.68 in 2015.
Snapshot of Trade:
I have previously sold UVSP: Bought 50 UVSP at $15.1 (March 2012 Post)-Item # 3 Sold UVSP at $20.5 (July 2013 Post)(snapshot of profit=$253.1)
When I sold those shares about one year ago at $20.5, the T.T.M. P/E was about 16.48. I was concerned about the valuation, so I decided to harvest a profit and move on to something else.
For the 2014 second quarter, Univest Corporation of Pennsylvania reported net income of $5.1M or $.31 per share, which included 2 cents per share of acquisition related costs.
As of 6/30/14, the capital ratios are okay:
The current quarterly dividend is $.2 per share. Univest Corporation of Pennsylvania (UVSP) Dividend Date & History-NASDAQ.com At that rate, the dividend yield at a total cost of $18.8 per share is about 4.25%. On the positive side, the dividend was not cut during the Near Depression period. On the negative side, the quarterly dividend was last raised from $.19 per share back in 2006. Given a payout ratio of over 60%, I would not anticipate an increase in the dividend anytime soon. Univest - Stock Splits & Dividends The last ex dividend date was on 6/9/14.
Univest currently has 31 branches. It owns the insurance broker Univest Insurance, Univest Capital Inc (corporate lease financing for business equipment and technology solutions); and Univest Investments (a full service broker and investment advisory firm).
Univest is in the process of acquiring the privately held Valley Green Bank with three offices in the Philadelphia. Univest - Mergers & Acquisitions
Valley Green Bank Branch Locations & Hours
The Valley Green branches look much better than the typical Univest branch located in rural areas near Philadelphia. The market may not like this move, given the price action since the announcement, but it at least appears to me to be a potentially positive bolt on acquisition. The Univest branches are located in rural areas near Philadelphia.
When buying a bank stock, I will drag and drop addresses of branch offices into my browser, and then click "google maps" for that address. I will take a tour of the area. The main Univest office is in a place called Souderton, PA. I did not see anything that look new in the town after driving my little google man around town. It looked like a small rural town. When the map is expanded, I can see that the branches are near the greater metropolitan Philadelphia area.
14 N Main St - Google Maps
Univest Stock Chart (long term)
The stock broke its 50 and 200 day SMA lines-to the downside-earlier this month. (One Year Univest Stock Chart)
Closing Price Last Friday: UVSP: $18.74 -0.47 (-2.45%)
The name of the strategy aptly describes the risk. It is somewhat analogous in many cases to playing a hand of blackjack for the purchase amount knowing that the card count favors the house. It is a form of entertainment and an alternative to a casino visit.
Based on the results to date, this strategy is far more likely to produce positive results even with the LB's skill at the tables. The primary purpose of the LT strategy is to entertain Right Brain, let it swing for the fences with up to $300, and to keep the Nit Wit from interfering with Left Brain's management of Headknocker's portfolio.
Snapshots of realized gains can be found at the end of the Gateway Post on this topic: Stocks, Bonds & Politics: Lottery Ticket Strategy: New Gateway Post
There were no deletions since the last update. There was one addition discussed below.
Net Realized Gains: $14,024 (same as last update)
Click to Enlarge:
The unrealized gains exceeding 30% are as follows:
AMOT corrected some since the last update and almost lost its number #1 pole position to the up and coming RFMD.
RFMD reported better than expected earnings and raised guidance: Reuters; News Release
A. Bought 50 ODP at $5.09 (see Disclaimer):
Snapshot of Trade:
Office Depot qualifies as a Lottery Ticket due to its recovery potential after its acquisition of OfficeMax late last year. This consolidation in the office supply space makes sense to me. The recovery potential is tied to a reduction in competition and store rationalization at a time when employment and the economy are gathering upward momentum, hopefully for the remainder of 2014 and throughout 2015. ODP plans to close about 400 stores by 2016 due to overlapping locations. NYTimes One of those closures will likely be near HQ, since the OMX and ODP stores are within a few hundred feet of one another.
I would not expect much, if any, share price gain until investors become convinced that the current analyst consensus forecast will be achieved or exceeded by ODP. The current consensus forecast, as of 7/22/14, was for an E.P.S. of $.15 this year and $.34 in 2015. ODP Analyst Estimates The P/E on that forward 2015 estimate would be about 14.97 at a total cost of $5.09 per share. A primary issue would be a confirmation of the acceleration in earnings growth in 2015, rather than the current P/E or even the forecasted P/E based on the 2015 estimate, in my opinion.
Goldman Sachs has ODP as one of its 25 small caps to buy. The price target is just $7.
S & P has the stock rated 5 stars as of 7/22/14 with a 12 month price target of $8.
ODP Key Statistics (based on $5.09 price and earnings reports through March 14)
P/B: 1.38
P/S: .21
P.E.G.: .37 (estimated 5 years)
I also own two senior unsecured bonds that were an OfficeMax obligation but are not an ODP debt obligation Bought 2 OfficeMax Senior Bonds at 97.494 (1/11/11 Post). That bond has a 7.35% coupon and matures on 2/1/16. Finra Information As of 12/31/13, only $18M in principal amount was outstanding. (Note 8 at page 81, 10-K) Total recourse debt stood $696M, including capital lease obligations, as of 12/31/13.
2. Update for REIT Common and Preferred Stock Basket:
This basket is starting to contract, primarily though preferred stock deletions under the current trading guidelines. The first publication of this basket was made on 3/5/14: Stocks, Bonds & Politics: Equity REIT Common and Preferred Stock Table as of 3/5/14
I am using a blended strategy of including both common and preferred stocks. I am not likely to add back preferred stocks until there is another meaningful correction in their prices.
Since my last update, I have sold the following securities:
Sold on the Toronto Exchange: 200 CAR_UN:CA at C$23.16/Sold Roth IRA 50 DLRPRE at $25.5 (7/12/14 Post)
Sold 100 REI_UN.CA at C$27.04 (7/19/14 Post)
Click to Enlarge:
3. Update for Regional Bank Basket Strategy:
The dividend yield showed in this table is calculated by Yahoo Finance based on last Friday's close. My dividend yield for each position will be different based on my total cost numbers. In most cases, with FNFG and VLY being notable exceptions, my dividend yield will be higher.
Dividend Yields 5% or higher: Based on Total Cost
NYCB: 8.44%
UBSI: 7.66%
WASH: 7.56%
CZNC: 5.39%
FNLC: 5.38%
CBU: 5.15%
TRST: 5.1%
CCNE: 5.%
CBU is a new addition to the list after raising its quarterly dividend to $.3 per share. My total cost for the 50 share lot, bought at $23.18, is $1,166. (see discussion in Item F below)
Realized Gains 2010 to Date: $16,156.25 (snapshots in Gateway Post)
Dividends Received 2010 through 2013=$6,623.72
Click to Enlarge:
Comparison Data From the St. Louis Fed:
Net Interest Margin for all U.S. Banks
Net Interest Margin for U.S. Banks with average assets under $1B
Net Interest Margin for U.S. Banks with average assets between $1B and $15B
Return on Average Equity for all U.S. Banks (abbreviated to "ROE")
Return on Average Assets for all U.S. Banks (abbreviated to "ROA")
Nonperforming Loans (past due 90+ days plus nonaccrual) to Total Loans for all U.S. Banks (abbreviated to "NPL ratio")
Charge-Off Rate On All Loans, All Commercial Banks
Assets at Banks whose ALLL exceeds their Nonperforming Loans (coverage ratio over 100%)(ALLL=Allowance for loan losses)
A. Sold 100 BRKL at $9.53 (see Disclaimer):
Snapshot of Trade:
Closing Price on Day of Trade (7/1/14): BRKL: $9.49 +0.12 (+1.28%)
Snapshot of Profit:
Bought 100 BRKL at $8.48
Snapshot of History:
Dividends=$59.5
Total Return= $151.71 or 17.75%
The TTM P/E was close to 18 at the $9.53 price, which is a rich valuation for a small regional bank estimated to grow its E.P.S to $.59 per share next year from $.54 in 2014. I consequently chose to sell this stock and to redeploy the proceeds into another bank stock.
Closing Price Last Friday: BRKL: $9.20 -0.02 (-0.22%)
B. Bought Back LARK at $19.76 (see Disclaimer):
Snapshot of Quote Shortly Before Order Entry:
Even for LARK shares, a volume of just 4 shares within an hour of the closing bell is lighter than normal.
Normally, there is a large bid/ask spread. The market capitalization is around $61M at the $19.76 price.
Snapshot of Trade:
I recently sold 50 LARK shares after an inexplicable pop in the shares. Item # 4 Sold 50 LARK at $23.5 (6/29/14 Post) I had bought those shares earlier this year at $19.7 (1/13/14 Post).
I had earlier bought and sold a 50 share lot. SOLD 52 LARK at $18.75 (1/9/12 Post)-Bought 50 LARK @ 16.6 (5/2/11 Post)
Landmark Bancorp Inc. (LARK) is a bank holding company that owns Landmark National Bank which currently has 30 branches across Kansas and is headquartered in Manhattan Kansas: Landmark National Bank Locations
As noted in the quote snapshot, the bank is currently paying a quarterly dividend of $.19 per share. Landmark Bancorp Inc. (LARK) Dividend History At a total cost of $19.76 per share, the dividend yield is respectable at about 3.85%.
Even though the quarterly dividend has remained at $.19 per share since 2006, LARK has paid a 5% stock dividend every year since 2001. Landmark National Bank-Dividends In effect, that stock dividend results in an equivalent dividend increase every year assuming my math skills, or lack thereof, are correct (since the same penny amount is paid on 5% more shares each year).
2014 First Quarter Earnings Report:
SEC Filed Press Release
2014 1st Q vs. 2013 1st Q
Net Income: $1.699M / $1.44M
E.P.S. (diluted): $.53 / $.46
Net Interest Margin: 3.49% / 3.38%
NPA Ratio: 1.53% / 1.24%
Coverage Ratio: 45.66% / 56.32%
ROA: .84% / .92%LARK has been paying a 5% stock dividend every year since 2001
ROE: 10.81% / 9.18%
ROTE: 16.5% / 12.14%
Book Value Per Share: $20.64 / $19.96
Capital ratios are okay as of 3/31/14:
Page 27 SEC Form 10-Q for the Q/E 3/31/14
Landmark did report a decline in earnings during and after the Near Depression. In 2008, E.P.S. was reported at $1.56, and then declined to $1.13 per share in 2009 before bottoming in 2010 at $.7. Thereafter, E.P.S. rebounded to $1.54 in 2011 and $2.18 in 2012. (page 37-2012 Annual Report SEC Form 10-K Risk factors are summarized starting at page 27 of the 2013 Annual Report.
While remaining a small bank, Landmark has grown some through acquisitions. Effective 11/1/13, Landmark completed its acquisition of Citizens Bank which added eight branches: Page 67. Earnings in 2013 were impacted by $1.9M in costs associated with this acquisition: Page 42.
Landmark owns its main office and 24 of its branches. Five branches are leased: Page 37.
Landmark did not participate in TARP: Page 9 2009 Annual Report 10-K.
After my purchase, LARK reported second quarter net income of $2.1M or $.65 per share, up from $.45 in the year ago quarter. SEC Filed Press Release
There are no analyst forecasts. I view 2014 earnings of $2.05 to $2.1 per share or higher to be a reasonable forecast given the first and second quarter results, though an unexpected large loan loss could derail that result. Any E.P.S. number over $1.96 would result in a less than 10 P/E at a total cost of $19.6 per share.
Closing Price Last Friday 7/25/14: LARK: $20.51 +0.17 (+0.84%)
C. Boston Private Financial (BPFH): Boston Private Financial Holdings, Inc. reported second quarter net income of $21.3M or $.25 per share, up from $.11 in the 2013 third quarter (adjusted to $.18 after items)
Net Interest Margin: 3.14%
Efficiency Ratio (non-GAAP): 64.39%
Nonaccruals to Total Loans: .82%
Coverage Ratio: 179%
ROA: 1.32%
ROTE: 17.15%
Tangible Equity to Tangible Assets: 7.77%
The capital ratios are good:
Closing Price Last Friday: BPFH: $12.70 +0.04 (+0.32%)
D. Huntington Bancshares (HBAN): Huntington's stock price reacted positively to the second quarter earning's report, rising 4.84% on 7/18/14: HBAN: $9.75 +0.45 (+4.84%) Net income rose 9% to $164.6M or $.19 per share, up from $.17 in the 2013 second quarter and one cent better than the consensus estimate of $.18. An encouraging sign was the 9% increase in total lending and a 39% increase in auto lending. News Release
I took a snapshot of some key data points:
Quarterly Financial Supplement
HBAN shares were initially bough in the LT category and later promoted to the regional bank basket. Added 40 HBAN at $7.04; Bought 30 HBAN @ 7.25 as LT; Added 30 HBAN as LT at $4.8
Closing Price Last Friday: HBAN: $9.98 +0.01 (+0.10%)
E. CNB Financial (CCNE): CNB Financial reported net income of $.39 per share. The estimate, made by just one analyst, was for $.34. CCNE Analyst Estimate
The capital ratios are okay:
I recently averaged up in CCNE: Item # 6 Added 50 CCNE at $16.11 (6/14/14 Post). The prior purchase was at $11.06 (6/30/10 Post)
Closing Price Last Friday: CCNE: $16.53 -0.35 (-2.07%)
F. Community Bank System (CBU): Community Bank System reported second quarter net income of $23.7M or $.57 per diluted share, up from $.52 in the the 2013 second quarter. The consensus estimate was for an E.P.S. of $.54. CBU Analyst Estimates As of 7/21/14, the day of the earnings release, the consensus E.P.S. estimate for 2014 is $2.17 and $2.23 for 2015.
The Board increased the quarterly dividend by 7.1%. The new rate will be $.30 per share, up from the previous $.28. This increase constitutes the 22nd consecutive year of increased dividends.
Metrics: Net Interest Margin 3.94%
Bought 50 CBU @ $23.18 (October 2010)
Closing Price Last Friday: CBU: $35.92 -0.11 (-0.31%)
G. Washington Trust Bancorp (WASH): Washington Trust reported net income of $9.8M or 58 cents per share, up from $.55 in the year ago quarter. The consensus estimate was for $.59 per share. WASH Analyst Estimates
Net Interest Margin: 3.35%
NPL Ratio: .49%
NPA Ratio: .42%
Bought 100 WASH at $15.26 (January 2010)-Sold 50 of 100 WASH @ $22.44 (January 2011)
Closing Price Last Friday: WASH: $34.16 -0.14 (-0.41%)
H. TrustCo (TRST): TrustCo reported net income improved by 20.9% to $11.8M compared to $9.9M in the 2013 second quarter. E.P.S. was reported at $.125 per share. The consensus E.P.S. estimate was for $.11 TRST Analyst Estimates
Net Interest Margin: 3.15%
Efficiency Ratio: 53%
Tangible Equity to Tangible Assets: 8.38%
Tangible Book Value Per Share: $4.06
My last two transactions were to pare my position based on valuation. Sold 308 TRST at $6.64 (profit $271.05); Sold 50 TRST at $7.29 (profit: $32.67). I currently own with 315+ shares at an average cost of $5.16. Bought 50 TRST at $4.01 (August 2011); ADDED 50 TRST at $5.1 (June 2012); Added 150 TRST at $5.17 (January 2013)(plus some reinvested dividends)
J. First Merit (FMER): FirstMerit reported second quarter net income of $59.5M or $.35 per share, up from $.29 in the 2013 second quarter. The consensus E.P.S. estimates were for $.36 and $1.45 this year. FMER Analyst Estimates
There were no deletions since the last update. There was one addition discussed below.
Net Realized Gains: $14,024 (same as last update)
Click to Enlarge:
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| Lottery Ticket Basket as of 7/25/14 |
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| AMOT +105.73% |
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| RFMD +103.85% |
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| FCE/A +64.1% |
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| AWCMY +61.81% |
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| ING +48.44% |
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| FCF +43.55% |
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| NPBC +30% |
A. Bought 50 ODP at $5.09 (see Disclaimer):
Snapshot of Trade:
Office Depot qualifies as a Lottery Ticket due to its recovery potential after its acquisition of OfficeMax late last year. This consolidation in the office supply space makes sense to me. The recovery potential is tied to a reduction in competition and store rationalization at a time when employment and the economy are gathering upward momentum, hopefully for the remainder of 2014 and throughout 2015. ODP plans to close about 400 stores by 2016 due to overlapping locations. NYTimes One of those closures will likely be near HQ, since the OMX and ODP stores are within a few hundred feet of one another.
I would not expect much, if any, share price gain until investors become convinced that the current analyst consensus forecast will be achieved or exceeded by ODP. The current consensus forecast, as of 7/22/14, was for an E.P.S. of $.15 this year and $.34 in 2015. ODP Analyst Estimates The P/E on that forward 2015 estimate would be about 14.97 at a total cost of $5.09 per share. A primary issue would be a confirmation of the acceleration in earnings growth in 2015, rather than the current P/E or even the forecasted P/E based on the 2015 estimate, in my opinion.
Goldman Sachs has ODP as one of its 25 small caps to buy. The price target is just $7.
S & P has the stock rated 5 stars as of 7/22/14 with a 12 month price target of $8.
ODP Key Statistics (based on $5.09 price and earnings reports through March 14)
P/B: 1.38
P/S: .21
P.E.G.: .37 (estimated 5 years)
I also own two senior unsecured bonds that were an OfficeMax obligation but are not an ODP debt obligation Bought 2 OfficeMax Senior Bonds at 97.494 (1/11/11 Post). That bond has a 7.35% coupon and matures on 2/1/16. Finra Information As of 12/31/13, only $18M in principal amount was outstanding. (Note 8 at page 81, 10-K) Total recourse debt stood $696M, including capital lease obligations, as of 12/31/13.
2. Update for REIT Common and Preferred Stock Basket:
This basket is starting to contract, primarily though preferred stock deletions under the current trading guidelines. The first publication of this basket was made on 3/5/14: Stocks, Bonds & Politics: Equity REIT Common and Preferred Stock Table as of 3/5/14
I am using a blended strategy of including both common and preferred stocks. I am not likely to add back preferred stocks until there is another meaningful correction in their prices.
Since my last update, I have sold the following securities:
Sold on the Toronto Exchange: 200 CAR_UN:CA at C$23.16/Sold Roth IRA 50 DLRPRE at $25.5 (7/12/14 Post)
Sold 100 REI_UN.CA at C$27.04 (7/19/14 Post)
Click to Enlarge:
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| REIT Basket as of 7/25/14 |
This strategy is explained in my Gateway Post on this topic:
Snapshots of realized gains and losses can be found at the end of that post.
The dividend yield showed in this table is calculated by Yahoo Finance based on last Friday's close. My dividend yield for each position will be different based on my total cost numbers. In most cases, with FNFG and VLY being notable exceptions, my dividend yield will be higher.
Dividend Yields 5% or higher: Based on Total Cost
NYCB: 8.44%
UBSI: 7.66%
WASH: 7.56%
CZNC: 5.39%
FNLC: 5.38%
CBU: 5.15%
TRST: 5.1%
CCNE: 5.%
CBU is a new addition to the list after raising its quarterly dividend to $.3 per share. My total cost for the 50 share lot, bought at $23.18, is $1,166. (see discussion in Item F below)
I am not tracking reinvested dividends in the following table. The unrealized gains per holding do not include reinvested dividends.
Over the life of this basket strategy, I anticipate that the dividends will provide 40% to 50% of the total return. I am generally keeping my total exposure between $40,000 to $50,000.
After a number of adds, I am now over my minimum $40,000 allocation after a bout of profit taking last year.
After a number of adds, I am now over my minimum $40,000 allocation after a bout of profit taking last year.
I have not been impressed with several of the recent earnings reports from regional banks. Some of the banks discussed below have decent 2014 second quarter reports. While net interest margin has not contracted much, it is yet to show any expansion either for most banks. Chart: Net Interest Margin for all U.S. Banks - St. Louis Fed
One ETF will own several of the small cap regional banks and REITs that I own now or have owned in the past: PSCF | S&P SmallCap Financials Portfolio
One ETF will own several of the small cap regional banks and REITs that I own now or have owned in the past: PSCF | S&P SmallCap Financials Portfolio
In 2013, my dividend total from this basket totaled $1,932,93, up from $1,896.25 in 2012 and $1,660.57 in 2011. I will have to increase my current exposure in order to exceed the 2013 amount this year, given my light exposure for the first four months which was several thousand below the "minimum" level.
Regional bank stocks are in a funk this year as interest rates started to go back down. One of the regional bank ETFs, KRE, closed at $40.61 on 12/31/13 and at $39.12 last Friday, but has closed as low as $36.84 this year (2/3/14). SPDR S&P Regional Banking ETF ETF Chart That ETF had worked its way back over its 50 and 200 SMA lines when I published the last update but has since fallen below those lines again.
The abnormally low rates benefited banks some when deposit yields were repriced down, but even 5 year bank CDs taken out in 2008 at higher rates have now matured, and the positive impact of that repricing is no longer present to any meaningful degree.
Instead, the decline in rates for loans simply compresses net interest margin. When rates were rising last year, regional bank stocks were in an uptrend based on the common belief that higher intermediate and long rates would be a net positive for them, particularly when short terms were likely to remain near zero through mid-2015 and then rise slowly and modestly in 2016-2017. The rate spike starting last May impacted intermediate and long term rates. Short term rates remained anchored by ZIRP.
I have used the downdraft in prices this year to add positions to my basket after selling into last year's strength.
Regional bank stocks are in a funk this year as interest rates started to go back down. One of the regional bank ETFs, KRE, closed at $40.61 on 12/31/13 and at $39.12 last Friday, but has closed as low as $36.84 this year (2/3/14). SPDR S&P Regional Banking ETF ETF Chart That ETF had worked its way back over its 50 and 200 SMA lines when I published the last update but has since fallen below those lines again.
The abnormally low rates benefited banks some when deposit yields were repriced down, but even 5 year bank CDs taken out in 2008 at higher rates have now matured, and the positive impact of that repricing is no longer present to any meaningful degree.
Instead, the decline in rates for loans simply compresses net interest margin. When rates were rising last year, regional bank stocks were in an uptrend based on the common belief that higher intermediate and long rates would be a net positive for them, particularly when short terms were likely to remain near zero through mid-2015 and then rise slowly and modestly in 2016-2017. The rate spike starting last May impacted intermediate and long term rates. Short term rates remained anchored by ZIRP.
I have used the downdraft in prices this year to add positions to my basket after selling into last year's strength.
Realized Gains 2010 to Date: $16,156.25 (snapshots in Gateway Post)
Dividends Received 2010 through 2013=$6,623.72
Click to Enlarge:
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| Regional Bank Basket as of 7/25/14 |
Comparison Data From the St. Louis Fed:
Net Interest Margin for all U.S. Banks
Net Interest Margin for U.S. Banks with average assets under $1B
Net Interest Margin for U.S. Banks with average assets between $1B and $15B
Return on Average Equity for all U.S. Banks (abbreviated to "ROE")
Return on Average Assets for all U.S. Banks (abbreviated to "ROA")
Nonperforming Loans (past due 90+ days plus nonaccrual) to Total Loans for all U.S. Banks (abbreviated to "NPL ratio")
Charge-Off Rate On All Loans, All Commercial Banks
Assets at Banks whose ALLL exceeds their Nonperforming Loans (coverage ratio over 100%)(ALLL=Allowance for loan losses)
A. Sold 100 BRKL at $9.53 (see Disclaimer):
Snapshot of Trade:
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| 2014 Sold 101+BRKL at $9.53 |
Snapshot of Profit:
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| 2014 BRKL 101+ Shares +$92.21 |
Snapshot of History:
Dividends=$59.5
Total Return= $151.71 or 17.75%
The TTM P/E was close to 18 at the $9.53 price, which is a rich valuation for a small regional bank estimated to grow its E.P.S to $.59 per share next year from $.54 in 2014. I consequently chose to sell this stock and to redeploy the proceeds into another bank stock.
Closing Price Last Friday: BRKL: $9.20 -0.02 (-0.22%)
B. Bought Back LARK at $19.76 (see Disclaimer):
Snapshot of Quote Shortly Before Order Entry:
Even for LARK shares, a volume of just 4 shares within an hour of the closing bell is lighter than normal.
Normally, there is a large bid/ask spread. The market capitalization is around $61M at the $19.76 price.
Snapshot of Trade:
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| 2014 Bought 50 LARK at $19.76 |
I recently sold 50 LARK shares after an inexplicable pop in the shares. Item # 4 Sold 50 LARK at $23.5 (6/29/14 Post) I had bought those shares earlier this year at $19.7 (1/13/14 Post).
I had earlier bought and sold a 50 share lot. SOLD 52 LARK at $18.75 (1/9/12 Post)-Bought 50 LARK @ 16.6 (5/2/11 Post)
Landmark Bancorp Inc. (LARK) is a bank holding company that owns Landmark National Bank which currently has 30 branches across Kansas and is headquartered in Manhattan Kansas: Landmark National Bank Locations
As noted in the quote snapshot, the bank is currently paying a quarterly dividend of $.19 per share. Landmark Bancorp Inc. (LARK) Dividend History At a total cost of $19.76 per share, the dividend yield is respectable at about 3.85%.
Even though the quarterly dividend has remained at $.19 per share since 2006, LARK has paid a 5% stock dividend every year since 2001. Landmark National Bank-Dividends In effect, that stock dividend results in an equivalent dividend increase every year assuming my math skills, or lack thereof, are correct (since the same penny amount is paid on 5% more shares each year).
2014 First Quarter Earnings Report:
SEC Filed Press Release
2014 1st Q vs. 2013 1st Q
Net Income: $1.699M / $1.44M
E.P.S. (diluted): $.53 / $.46
Net Interest Margin: 3.49% / 3.38%
NPA Ratio: 1.53% / 1.24%
Coverage Ratio: 45.66% / 56.32%
ROA: .84% / .92%LARK has been paying a 5% stock dividend every year since 2001
ROE: 10.81% / 9.18%
ROTE: 16.5% / 12.14%
Book Value Per Share: $20.64 / $19.96
Capital ratios are okay as of 3/31/14:
Page 27 SEC Form 10-Q for the Q/E 3/31/14
Landmark did report a decline in earnings during and after the Near Depression. In 2008, E.P.S. was reported at $1.56, and then declined to $1.13 per share in 2009 before bottoming in 2010 at $.7. Thereafter, E.P.S. rebounded to $1.54 in 2011 and $2.18 in 2012. (page 37-2012 Annual Report SEC Form 10-K Risk factors are summarized starting at page 27 of the 2013 Annual Report.
While remaining a small bank, Landmark has grown some through acquisitions. Effective 11/1/13, Landmark completed its acquisition of Citizens Bank which added eight branches: Page 67. Earnings in 2013 were impacted by $1.9M in costs associated with this acquisition: Page 42.
Landmark owns its main office and 24 of its branches. Five branches are leased: Page 37.
Landmark did not participate in TARP: Page 9 2009 Annual Report 10-K.
After my purchase, LARK reported second quarter net income of $2.1M or $.65 per share, up from $.45 in the year ago quarter. SEC Filed Press Release
There are no analyst forecasts. I view 2014 earnings of $2.05 to $2.1 per share or higher to be a reasonable forecast given the first and second quarter results, though an unexpected large loan loss could derail that result. Any E.P.S. number over $1.96 would result in a less than 10 P/E at a total cost of $19.6 per share.
Closing Price Last Friday 7/25/14: LARK: $20.51 +0.17 (+0.84%)
C. Boston Private Financial (BPFH): Boston Private Financial Holdings, Inc. reported second quarter net income of $21.3M or $.25 per share, up from $.11 in the 2013 third quarter (adjusted to $.18 after items)
Net Interest Margin: 3.14%
Efficiency Ratio (non-GAAP): 64.39%
Nonaccruals to Total Loans: .82%
Coverage Ratio: 179%
ROA: 1.32%
ROTE: 17.15%
Tangible Equity to Tangible Assets: 7.77%
The capital ratios are good:
Closing Price Last Friday: BPFH: $12.70 +0.04 (+0.32%)
D. Huntington Bancshares (HBAN): Huntington's stock price reacted positively to the second quarter earning's report, rising 4.84% on 7/18/14: HBAN: $9.75 +0.45 (+4.84%) Net income rose 9% to $164.6M or $.19 per share, up from $.17 in the 2013 second quarter and one cent better than the consensus estimate of $.18. An encouraging sign was the 9% increase in total lending and a 39% increase in auto lending. News Release
I took a snapshot of some key data points:
Quarterly Financial Supplement
HBAN shares were initially bough in the LT category and later promoted to the regional bank basket. Added 40 HBAN at $7.04; Bought 30 HBAN @ 7.25 as LT; Added 30 HBAN as LT at $4.8
Closing Price Last Friday: HBAN: $9.98 +0.01 (+0.10%)
E. CNB Financial (CCNE): CNB Financial reported net income of $.39 per share. The estimate, made by just one analyst, was for $.34. CCNE Analyst Estimate
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| 2014 Second Quarter vs. 2013 Second Quarter |
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| Capital Ratios CCNE as of 6/30/14 |
Closing Price Last Friday: CCNE: $16.53 -0.35 (-2.07%)
F. Community Bank System (CBU): Community Bank System reported second quarter net income of $23.7M or $.57 per diluted share, up from $.52 in the the 2013 second quarter. The consensus estimate was for an E.P.S. of $.54. CBU Analyst Estimates As of 7/21/14, the day of the earnings release, the consensus E.P.S. estimate for 2014 is $2.17 and $2.23 for 2015.
The Board increased the quarterly dividend by 7.1%. The new rate will be $.30 per share, up from the previous $.28. This increase constitutes the 22nd consecutive year of increased dividends.
Metrics: Net Interest Margin 3.94%
Bought 50 CBU @ $23.18 (October 2010)
Closing Price Last Friday: CBU: $35.92 -0.11 (-0.31%)
G. Washington Trust Bancorp (WASH): Washington Trust reported net income of $9.8M or 58 cents per share, up from $.55 in the year ago quarter. The consensus estimate was for $.59 per share. WASH Analyst Estimates
Net Interest Margin: 3.35%
NPL Ratio: .49%
NPA Ratio: .42%
Bought 100 WASH at $15.26 (January 2010)-Sold 50 of 100 WASH @ $22.44 (January 2011)
Closing Price Last Friday: WASH: $34.16 -0.14 (-0.41%)
H. TrustCo (TRST): TrustCo reported net income improved by 20.9% to $11.8M compared to $9.9M in the 2013 second quarter. E.P.S. was reported at $.125 per share. The consensus E.P.S. estimate was for $.11 TRST Analyst Estimates
Net Interest Margin: 3.15%
Efficiency Ratio: 53%
Tangible Equity to Tangible Assets: 8.38%
Tangible Book Value Per Share: $4.06
J. First Merit (FMER): FirstMerit reported second quarter net income of $59.5M or $.35 per share, up from $.29 in the 2013 second quarter. The consensus E.P.S. estimates were for $.36 and $1.45 this year. FMER Analyst Estimates
The market reacted negatively to this report:
Closing Price 7/22/14: FMER: $18.23 -0.45 (-2.41%)
I thought that was an overreaction and simply changed my dividend option to reinvestment in response.
JPM downgraded FMER to neutral based on "accretion" headwinds, an issue that was well known prior to that downgrade. Barron's. The accretion issues impact on net interest margin is discussed at page 6 of the earnings call transcript.
Earnings Call Transcript | Seeking Alpha (page 5-expects net interest margin to decline in next two quarters)
After selling my 100 highest cost shares, I currently own 141+ at an average cost per share of $14.52: Item # 2 Bought 30 FMER at $11.35 (August 2011); Item # 2 Added 50 FMER at $15.2 (September 2012); Item # 3 Added 50 FMER at $15.09 (February 13, 2013 Post) The foregoing purchases account for 130 of the 141+ shares with shares purchased with dividends accounting for the remainder. I quit reinvesting the dividend based on valuation after the 2013 second quarter.
Closing Price Last Friday: FMER: $18.00 -0.23 (-1.26%)
K. Merchants Bancshares (MBVT): Merchants Bancshares reported second quarter net income of $3.41M or $.54 per share. The consensus E.P.S. estimate was for $.53. MBVT Analyst Estimates Profit will be hurt this year by spending on a "core conversion project" whose benefits will will start to be "seen in the fourth quarter".
In addition, MBVT is reducing "exposure to price volatility in the investment portfolio, increasing liquidity and building capital" in response "to market conditions that do not favor asset extension or compensate adequately for credit risk". I would agree with that approach now.
The NPA and NPL ratios are the lowest in my regional bank basket.
After harvesting a profit on one 50 share lot, I currently own 50 shares of MBVT: Item # 5 Bought 50 MBVT at $26.25 (5/2/2012)
The market responded favorably to this report:
Closing Price on 7/23/14: MBVT: $30.04 +0.54 (+1.83%)
L. F.N.B. (FNB): F.N.B. reported second quarter net income of $32.821M or $.2 per share. The consensus E.P.S. estimates were for $.2 and $.83 for the year. FNB Analyst Estimates For the 2013 second quarter, FNB reported net income of $29.123M or $.2 per share. There were more shares outstanding in the last quarter (diluted shares at 167.867+M vs. 145.844+M)
After some profitable trading, I was left with 50 shares bought at using FIFO accounting. Added 50 FNB at $7.8 (July 2010). I later added another 50. Bought 50 FNB at $11.25 (6/24/13)
The market responded favorably to this report:
Closing Price 7/23/14: FNB: $12.40 +0.27 (+2.23%)
Closing Price 7/25/14: FNB: $12.58 +0.02 (+0.16%)
M. West Bancorporation (WTBA): West Bancorporation reported second quarter net income of $4.74M or $.3 per share, up from $.25 for the 2013 second quarter. The consensus estimate was for $.28 and $1.13 for the year. WTBA Analyst Estimates
Bought 100 WTBA at $11.67 (6/29/13 Post)
The market responded favorably to this report:
Closing Price 7/25/14: WTBA: $14.57 +0.35 (+2.46%)
N. National Penn (NPBC): National Penn Bancshares reported net income of $26.2M or $.19 per share. The consensus E.P.S. estimates were for $.17 in the second quarter and $.7 for the year. NPBC Analyst Estimates
NPL Ratio: .8%
Coverage Ratio: 207%
Other metrics include the following:
Capital ratios are good:
NPBC was initially bought in the LT basket and was later promoted to the regional bank basket with the original LT purchase remaining in that basket. Item # 2 Added 100 NPBC at $10.68 (8/17/13 Post); Added 50 NPBC at $9.85 (October 28, 2013 Post); Item # 1 RB Bought as LT 30 NPBC @ $7.83 (4/26/11 Post)
Closing Price Last Friday 7/25/14: NPBC: $10.49 +0.03 (+0.29%)
O. Bought 100 SUSQ at $10.15-Satellite Taxable Account (see Disclaimer): I initially bought and sold SUSQ shares as part of the LT basket. Bought 50 SUSQ at $5.85 (10/1/09 Post)- Sold: 50 SUSQ @ 7.5 (11/3/2010 Post). I later decided to buy the shares back as an LT, Bought 30 SUSQ at $8.75, and will simply keep those shares in that basket. I am now elevating SUSQ to the Regional Bank Basket Strategy which is a "risk on" promotion.
Snapshot of Email Confirmation:
After my purchase, Susquehanna Bancshares reported second quarter net income of $43.5M or $.23 per share. The consensus E.P.S. estimates were for $.2 and $.8 for 2014. SUSQ Analyst Estimates The Board also announced a stock repurchase program of up to 3.5% of the outstanding shares.
SUSQ was originally classified as a LT due to its poor performance in 2008-2009. The poor results were manifested by the steep dividend cuts and severe share price decline. In the 2009 first quarter, the quarterly dividend was $.29 per share, which was then cut to $.05 for the 2009 second quarter, and then cut again to $.01 per share by the 2009 4th quarter. Susquehanna Bancshares, Inc. (SUSQ) Dividend Date & History The share price decline from $27+ in 2006 to 5+ in early 2009. SUSQ Interactive Chart
Earnings reports during that period reflected the problems during that period. E.P.S. declined from $1.23 in 2007 to a loss of 5 cents per share in 2009, barely recovering to just a $.13 per share annual profit in 2010. FORM 10-K at page 29.
Susquehanna Bancshares recently increased its quarterly dividend by 1 cent to 9 cents per share.
Closing Price Last Friday: SUSQ: $10.36 -0.04 (-0.38%)
P. Berkshire Hills (BHLB): Berkshire Hills reported second quarter core earnings of $.44 per share. The consensus E.P.S. estimates were for $.42 in the quarter; $1.68 for 2014 and $1.85 for 2015. BHLB Analyst Estimates
Net Interest Margin: 3.26%
Efficiency Ratio: 62.96%
Core Return Tangible Equity: 11.34%
NPL Ratio: .59%
NPA Ratio: .45%
Coverage Ratio: 132%
Charge-Offs to Total Loans (annualized): .31%
I am slightly in the hole after profitably selling a 50 share lot: Added 50 BHLB at $23.75; Bought: 50 BHLB at $24.51
Item # 1 Sold 50 BHLB at $28.74+ (7/13/13 Post)-Item # 2 Bought 50 BHLB AT $21.66 (3/12/12 Post)
The market responded favorably to this report:
Closing Price 7/24/14: BHLB: $23.67 +$1.07 (+4.73%)
Closing Price Last Friday 7/25/14: BHLB: $23.67 0.00 (0.00%)
Q. New York Community Bank (NYCB): New York Community Bancorp reported cash earnings of $.29 per share (GAAP at $.27). The consensus E.P.S. estimate was for $.26. NYCB Analyst Estimates
The capital ratios are okay:
The board declared a regular dividend of $.25 per share. At that quarterly rate, the dividend yield is about 8.43% at my total average cost per share of $11.86. Item # 2 Bought 50 NYB at $11.3 (10/15/2009 Post); Item # 4 Added 50 NYB at $10.57 (11/4/2009 Post); Item # 1 Added 50 NYB at $12.79 (2/17/2012 Post)
The largest of the three gains realized to date was booked on this 50 share lot: Bought 50 NYB at $10.57-Item # 7 Sold 50 NYB in IRA at $17.51 (7/28/2010 Post)($331.03-snapshot in Gateway Post on this topic)
The market responded favorably to this report:
Closing Price on 7/23/14: NYCB: $15.90 +0.34 (+2.19%)
Closing Price Last Friday 7/25/14: NYCB: $16.05 +0.06 (+0.38%)
R. Financial Institutions (FISI): Financial Institutions reported net income of $7M or $.48 cents per share for the 2014 second quarter. The consensus E.P.S. estimates were for $.46; $1.9 for 2014 and $2.07 in 2015. FISI Analyst Estimates
Net Interest Margin: 3.47%
Efficiency Ratio: 60.15%
NPL Ratio: .47%
NPA Ratio: .32%
Coverage Ratio: 306%
ROA: .95%
ROE: 10.52%
ROTE: 13.31%
The capital ratios are okay as of 6/30/14:
Bought 50 FISI at $15.55 (4/17/12 Post)
Added 50 FISI at $19.8 (8/30/13 Post)-Item # 5 Sold 50 of 150+ FISI at $21.26 (10/13/13 Post)
Added 50 FISI at $18.8 (9/30/13 Post)
Closing Price Last Friday: FISI: $22.53 +0.75 (+3.44%)
S. First Bancorp (FNLC): The First Bancorp Reports reported second quarter E.P.S. of $.35 per share up from $.29 per share in the 2013 second quarter. There are no analyst estimates.
I recently bought back a small position: Bought: 50 FNLC at $15.6
Bought 50 FNLC at $12.79-Sold 52 FNLC at $15.55 (June 2012)
Closing Price Last Friday: FNLC: $16.40 0.00 (0.00%)
T. United Bancorp (UBCP): This small Ohio banks is mostly out of sight, out of mind. I did notice an unusual earnings report that I decided to just briefly mention by linking the press release: United Bancorp, Inc. Reports Quarterly Earnings up 40% ($.14 vs. $.1)
I am reinvesting the dividend and currently own 100 shares bought in the open market.
Bought 50 UBCP @ 8.13; Bought 50 UBCP at 7.99
Sold 50 UBCP at $10.05 (May 2012)-Bought 50 UBCP at $8.49 (May 2010)
Closing Price Last Friday: UBCP: $8.10 +0.18 (+2.27%)
U. First Financial (FFBC): First Financial Bancorp reported second quarter net income of $16M or $.28 per share. The consensus E.P.S. estimate was for $.27. FFBC Analyst Estimates
Net Interest Margin: 3.7%
ROA: .99%
ROE: 9.19%
The capital ratios are good:
This bank holding company was paying out a regular and special quarterly dividend that together equalled its net income, with the last special payment made last year. When that was occurring, I reinvested the dividends. That practice started in the 2011 third quarter and ended in the 2013 third quarter. When the extra payment started, the regular dividend was $.12 per share and is now at $.15. Stock Splits & Cash Dividends | First Financial Bank
After profitably selling my highest cost shares, I currently own 139+ shares at an average cost of $14.88. Item # 4 Sold 57 FFBC at $17.03-Highest Cost Share (December 2013 Post); Item # 3 Sold 50 FFBC at $17.51 (September 2012) The current dividend yield based on that total cost number is 4.04%.
The open market purchases-for the shares currently owned-were discussed in these posts: Item # 1 ADDED 50 FFBC at $14.87 (December 2011 Post); Added Regional Bank Basket: 30 FFBC at $14.24 December 2012); Item # 2 Added 50 FFBC at $14.65 (June 2013 Post)
Closing Price Last Friday: FFBC: $16.59 +0.23 (+1.41%)
V. Bought Back 50 UVSP at $18.8-Satellite Taxable Account (see Disclaimer): I happened to notice late Friday that this stock had fallen back into my buy range, so I placed a limit order below the then existing bid price which was filled late in the trading day. The shares continued to slide after my purchase on lower than average volume:
Closing Price 7/25/14: UVSP: $18.74 -0.47 (-2.45%)
At that closing price, the TTM P/E was about 14.37, a little high for this bank, but the P/E based on the consensus E.P.S. for 2015 was acceptable at 11.12. UVSP Key Statistics The E.P.S. estimates are generated, however, by only one analyst: UVSP Analyst Estimates The estimate from that analyst is for an E.P.S. of $1.37 this year and $1.68 in 2015.
Snapshot of Trade:
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| Email Confirmation-Satellite Taxable Account |
When I sold those shares about one year ago at $20.5, the T.T.M. P/E was about 16.48. I was concerned about the valuation, so I decided to harvest a profit and move on to something else.
For the 2014 second quarter, Univest Corporation of Pennsylvania reported net income of $5.1M or $.31 per share, which included 2 cents per share of acquisition related costs.
As of 6/30/14, the capital ratios are okay:
The current quarterly dividend is $.2 per share. Univest Corporation of Pennsylvania (UVSP) Dividend Date & History-NASDAQ.com At that rate, the dividend yield at a total cost of $18.8 per share is about 4.25%. On the positive side, the dividend was not cut during the Near Depression period. On the negative side, the quarterly dividend was last raised from $.19 per share back in 2006. Given a payout ratio of over 60%, I would not anticipate an increase in the dividend anytime soon. Univest - Stock Splits & Dividends The last ex dividend date was on 6/9/14.
Univest currently has 31 branches. It owns the insurance broker Univest Insurance, Univest Capital Inc (corporate lease financing for business equipment and technology solutions); and Univest Investments (a full service broker and investment advisory firm).
Univest is in the process of acquiring the privately held Valley Green Bank with three offices in the Philadelphia. Univest - Mergers & Acquisitions
Valley Green Bank Branch Locations & Hours
The Valley Green branches look much better than the typical Univest branch located in rural areas near Philadelphia. The market may not like this move, given the price action since the announcement, but it at least appears to me to be a potentially positive bolt on acquisition. The Univest branches are located in rural areas near Philadelphia.
When buying a bank stock, I will drag and drop addresses of branch offices into my browser, and then click "google maps" for that address. I will take a tour of the area. The main Univest office is in a place called Souderton, PA. I did not see anything that look new in the town after driving my little google man around town. It looked like a small rural town. When the map is expanded, I can see that the branches are near the greater metropolitan Philadelphia area.
14 N Main St - Google Maps
Univest Stock Chart (long term)
The stock broke its 50 and 200 day SMA lines-to the downside-earlier this month. (One Year Univest Stock Chart)
Closing Price Last Friday: UVSP: $18.74 -0.47 (-2.45%)
