ATLO, BCBP, CCNE, CVBF, HTBK, MBWM, MTB, STBA, UBFO, XOM

Economy: 

Treasury Yield Curve: 

As discussed in recent comments, the 1 month T Bill yield reflects a concern that the republicans will cause at least a temporary default in U.S. debt payments. 

Goldman Sachs is predicting that the extraordinary measures undertaken by the treasury to pay the nation's bills may be exhausted in early June. If that happens, the 1 month bill is the only short term bill that will mature before that exhaustion. Consequently, there is a piling into the 1 month bill which is driving the yield below where it would be with a federal funds rate currently at 4.75%-5%. 

The probability that the FED will increase the FF rate by .25% closed yesterday at 89.1%. The current range is 4.75% to 5%. 

I view it as probable that the .25% increase to 5% to 5.25% will take the FF rate to its 2023 peak. 

December 2023 Probabilities for FF: 

CME FedWatch Tool - CME Group

Since the expectation is almost certain that the FF range will be 5%-5.25% as of 5/3/23, the more probable than not prediction is that the FF rate will be .5% lower than that range on or before 12/13/23. At most, I see a .25% cut before year end, probably in December, and that would require either a persistent downtrend in inflation or a clear recession in place rather than a fear that one is about to occur.  

GDPNow - Federal Reserve Bank of Atlanta As of 4/18/23, the Atlanta Fed's model predicted 2.5% real GDP growth in the first quarter.  

Existing-Home Sales Slid 2.4% in March

Mortgage Applications Decrease in Latest MBA Weekly Survey | MBA

+++

Allocation Shifts Discussed in this Post: 

Treasury Bills:  $5,000 in principal amount

Corporate Bond: $3,000 in principal amount

Common Stocks: -$167.4 net outflow

(consisting of $1,250.48 in proceeds minus $1,083.08 in purchases, all regional bank stocks)

Common Stock/Stock Profit Realized Gain: +$758.98

2023 Net Common Stock/Stock Fund Outflow:  -$31,320.81

Exchange Trade Junior Bond: -$250 (realized gain = $98.35)

The junior bond ENBA was called by Enbridge at par value on 4/15/23. I owned 10 shares: 

I also owned a few shares in a ROTH IRA account.

Investment Category: Exchange Traded Baby Bonds, part of a larger category of  Exchange Traded Bonds. Exchange traded simply means the bonds trade on the stock exchange rather than in the bond market, accrued interest is not paid to the seller (trades flat), and interest payments are generally made quarterly rather than semiannually. 

++

Municipal Bond Early Call: 

The optional redemption period starts on 6/1/23. 

+++

Trump and His Party: 

My Pillow CEO Mike Lindell ordered to follow through with $5 million payment to expert who debunked his false election data-CNN; Mike Lindell firm told to pay $5 million in ‘Prove Mike Wrong’ election-fraud challenge - The Washington Post The data provided by Lindell was nonsensical and was not even from the 2020 election. Arbitration Decision.pdf

Sen. Ted Cruz's (R-TX) Telling Call With Fox Business Host Caught On Newly Released Tape; Hear Ted Cruz (R-TX) caught on tape owning himself and Trump - YouTube

Statement from Secretary Cardona on Speaker McCarthy’s Debt Ceiling Proposal | U.S. Department of Education (McCarthy's proposal would negatively impact 83,000 borrowers in his district)

Texas judge Matthew Kacsmaryk did not disclose law review article to Senate - The Washington Post Shortly before his nomination, Kacsmaryk took his name off an article that was about to be published, recognizing that the contents would endanger his confirmation as a federal judge. The article was then published with two other individuals as authors. 

Judge Refuses to Grant Trump Delay in Trial of E. Jean Carroll Civil Suit Accusing Him of Rape - The New York Times The trial starts on Tuesday. This civil trial involves Carroll's claim that Trump raped her in a department store dressing room in 1996. NY recently passed a statute, the Adult Survivors Act, that allowed rape victims 1 year to file a civil suit for an alleged rape that would otherwise be barred by the statute of limitations. 

Donald is not going to attend the trial because he is concerned about creating traffic congestion and does not want to inconvenience anyone. Trump's attendance at E. Jean Carroll trial against him would be a 'burden,' his lawyer says Trump lawyers want the judge to tell the jurors that his attendance had been excused by the court. Judge refuses to tell jury in Trump civil rape trial that former president is 'excused' The trial starts on 4/25. It would be unwise for Donald to be absent IMO.  

Carroll is also claiming that Trump defamed her by calling her a liar. The initial statements were made by Trump when he was President. It is unresolved whether Trump was acting as President when making the statement and, if so, whether that shields him from a defamation suit. Appeals court refuses to decide if Trump can be shielded from rape accuser's defamation suit

National : President: Republican primary : 2024 Polls | FiveThirtyEight

On 10/12/22, Doofus Don repeated a number of allegedly defamatory statements about Carroll, which of course are not even arguably protected by a Presidential privilege. Writer who accused Trump of rape to file new defamation lawsuit | The Seattle Times (see quoted language at Trump Claims Immunity From Carroll Defamation Suit Because He's A Journalist Now, Okay? - Above the Law) His lawyers are claiming that he was merely commenting on the first defamation lawsuit and those statements are protected by the litigation privilege. 

{Generally statements made in the court proceeding, during a deposition or in court filings are absolutely privileged, but out-of-court statements about matters in litigation, such as statements made in a Truth Social or Twitter account, may be defamatory depending on the circumstances, Trump loses bid to narrow rape accuser E Jean Carroll’s defamation case | The Independent, 3/30/23); The Boundaries of Litigation Privilege | ABI }

The two defamation suits have been combined for trial with the rape claim.  

DeSantis says state lawmakers will 'formally nullify' Disney's attempt to thwart state takeover; Major Republican Donor Ditches DeSantis Over Abortion, Book Bans DeSantis has become a highly visible warrior in the American Taliban party.  

Don the Authoritarian will never stop making fact free claims about the November 2020 election. This rant was published on 4/17/23:

Trump Lambasts Fox "news" in all-caps 3 am Truth Social post - Raw Story One claim, which has been proven in the alternate reality known as TrumpWorld, originated from a woman whose knowledge was acquired from reading the wind. Sidney Powell's 'ghost' election fraud source goes on the record for wild interview - Raw Story 

Fox "news" must have not received Donald's "Truth Social" tweet.  Dominion and Fox "news" reach $787.5 million settlement in defamation lawsuit

Dominion Voting still has defamation suits pending against other defendants including One American News Network, Newsmax and several individuals. Legal Updates: Learn how we are defending Dominion - Dominion Voting Systems 

After reviewing those complaints and court decisions denying motions to dismiss, the defamation suits against OAN (Herring Networks) and Newsmax are IMO better than the one against Fox, as more allegedly defamatory statements were made directly by employees rather than guests being interviewed which was the case with the Fox lawsuit. (see e.g. Order of Federal District Court Judge Carl J. Nichols in  US DOMINION, INC. et al v. HERRING NETWORKS, INC. et al (D.D.C. 2022) and Dominion Voting Systems Complaint.pdf)

Texas county election head who was targeted by Sidney Powell quits after lynching threats-Raw Story 

Trump Calls His Own Former Chief Of Staff 'A Born Loser' 

Over a five year period, Justice Thomas did not report the following income earned by his wife Ginny, later claiming he did not understand the instructions: 

The instruction was to report earned income by a spouse, hardly a concept beyond the comprehension of a Supreme Court Justice and easily understandable, except by those who had to drop out of first grade in order to prevent their brains from exploding when attempting to process the difficult subject matter. 

With his flagrant violations of disclosure rules, Thomas has been giving Americans the middle finger salute for two decades. 

MTG  (R-GA) Wants to Impeach Judges Who Sentenced January Sixers

As previously discussed here, three nine year children were slaughtered in their Nashville school. The assailant used an assault rifle. Nashville school shooter fired 152 rounds during the attack CNN (4/3/23)Why semi-automatic rifles like those used in the Nashville shooting can cause so much damage - ABC News 

The Tennessee republicans have now responded with what they characterize as gun reform. Tennessee legislature passes bill further protecting gun companies from lawsuits | PBS NewsHour 

The general gun reform approach among Tennessee republicans is to allow anyone easy access to assault weapons with magazines capable of incinerating a school bus without having to reload. 

The other action taken by the republicans in response to the Nashville school shooting was to expel two black state House representatives for briefly interrupting an unimportant session with a gun protest. 

GOP leader, who voted to expel TN Three, resigns; accused of sexual harassment; East Tenn lawmaker resigns after sexual harassment finding – Tennessee Lookout The Tennessee republicans had concluded in March that this republican leader was guilty of sexual harassment, but no action was taken by them, nor did the republicans disclose their finding about sexual harassment. It was only after an investigative reporter discovered the secreted finding and confronted the legislator that he resigned. 

House G.O.P. Unveils Debt Limit Bill Lifting Borrowing Cap for One Year - The New York Times In exchange for the Democrats agreeing to republican policy priorities, the GOP will not cause a government default prior to March 31, 2024 when it will have more demands for a debt limit increase. 

Trump touts authoritarian vision for second term: ‘I am your justice’ - The Washington Post

Since too many college students are not voting the right way, republicans want to make it difficult for them to vote. GOP lawyer Cleta Mitchell decries ease of ‘campus voting’ in private RNC pitch - The Washington Post; Trump Ally Says Key to Republicans Winning Elections Is to Stop College Kids From Voting | Vanity Fair The justification offered by republicans, which is now standard for them, is that voting restrictions are necessary to prevent fraud rather than to make voting onerous for disfavored groups. I have found only one example of a college student voting twice, but the lack of evidence of any fraud does not prevent the anti-democracy party from restricting voting access, or to make voting as onerous as possible on disfavored groups. 

In a thriving Michigan county, a community goes to war with itself - The Washington Post The Trumpsters in Ottawa County, Michigan gained control over the county commission. The first order of business was to get rid of the county motto "Where You Belong" since the slogan promoted divisive Marxist ideology. Just incredibly warped thinking.    

++++

Putin and His Servile Orcs: 

Ballooning 'black' budget and leaked conversations: Emerging cracks in Putin's Russia | DW News - YouTube

Putin Plotting Best Ways to Attack UK by Sending Spy Ships The Russian ships are mapping British infrastructure facilities off the coast. 

Putin visits occupied Kherson region in Ukraine, pushing illegal annexation - The Washington Post For countries like China, India, and Brazil, Ukraine simply needs to reward Russian aggression by accepting the illegal annexations of Ukraine's internationally recognized territory in exchange for a temporary cessation of hostilities, which those nations refer to as "peace". 

Then, when Russia regroups and resupplies, "peace", as used by those allegedly neutral nations, can be achieved by Russia occupying the remainder of Ukraine.  

Civilized people needed to be reminded about the atrocities, war crimes, and crimes against humanity that Russians will routinely commit when given the opportunity to do so. 

Putin could care less about the 200,000+ Russian soldiers who have died or been wounded as part of his "special operation". If Russia loses another 300,000 in Ukraine, Putin could care less. Russian lives mean nothing to Russia's government.   

Putin cares even less about the Russian speaking Ukrainians who have been murdered by Russian soldiers or who have had their homes and businesses destroyed by Russian attacks. 

And, Putin would care even less about Russians murdering non-Russian speakers who are citizens of a neighboring civilized and free country. He is after all a murderous psychopath who is concerned only about his power and wealth.   

Quoting from a recently published NYT article: After "the Russian atrocities in areas it occupied in Ukraine, from Bucha and Irpin to Mariupol and Kherson, frontier states like Poland and the Baltic countries no longer want to risk any period of Russian occupation" With Russia’s Invasion of Ukraine, NATO Readies for Combat on Its Borders - The New York Times The understandable reaction is to beef up defenses along the border with Russia. Every inch of territory needs to be strongly defended from day one of a Russian invasion. 

How Putin Became a Hero on African TV - The New York Times Russia's Fake News appears to be working in many African countries, as 26 out 54 nations refused to condemn Russia's invasion of Ukraine. 

The Putin critic Vladimir Kara-Murza received a 25 year prison sentence for criticizing the Russian invasion of Ukraine. Vladimir Kara-Murza: Russian opposition figure jailed for 25 years - BBC News Russia is now, and will likely remain forever a murderous totalitarian and Orwellian state, capable of committing war crimes and crimes against humanity on an industrial scale. Kara-Murza and a few other civilized Russians are delusional in believing that the Russia and an overwhelming majority of its citizens are capable of changing.   

Unfortunately for Russia's neighbors, the Russian threat to their democracies, way of life, culture, and freedoms will never subside. They are just in a really bad geographic neighborhood. 

Peter Zeihan is right about the importance of geography. The Accidental Superpower: The Next Generation of American Preeminence and the Coming Global Disorder: Peter Zeihan He has a YouTube channel. Zeihan on Geopolitics - YouTube

Kremlin attempts to build antiwar coalition of extremists in Germany - The Washington Post There is a natural alliance of German extremists, including the neo-Nazis, and Russian Orcs loyal to Heil Putin. And there are a significant number of Americans willing to join that coalition. 

+++

1. Small Ball Sells: 

A. Eliminated XOM  - Sold 9 at $116.9: 

Quote: Exxon Mobil Corp.

XOM Analyst Estimates | MarketWatch

XOM SEC Filings

2022 Annual Report 

SEC Filing 4/4/23 - Earnings Considerations for 2023 First Quarter

It would be impossible for me to buy XOM at $116.9 so I took my profit. I still view crude oil and natural gas prices to be in a dominant downtrend after peaking last year. I am also concerned that a recession would crimp demand and place more downside pressure on energy prices. 

WTI Crude Oil Prices - 10 Year Daily Chart | MacroTrends

Natural Gas Prices - Historical Chart | MacroTrends

Profit Snapshot: $731.11

The purchases were made during the 2020 price meltdown.

2022 Discussions: Item # 6.B. Sold 1 XOM at $113.67 (11/15/22 Post)(profit snapshot = $77.57); Item # 6.N. Sold 1 XOM in Fidelity Taxable Account at $103.69 (11/1/22 Post)(profit snapshot = $64.33); Item # 4.D. Sold 4 XOM at $102.79 (6/15/22 Post)(profit snapshot = $245.51); Item # 4.A. Pared XOM in Fidelity Taxable Account - Sold 2 at $89.66 (5/5/22 Post)(profit snapshot = $92.39); Item # 2.G. Pared XOM -Sold 1.437 at $81.03; 1.78 at $85.48 (3/24/22 Post)(profit snapshot = $97.4)

2022-2023 XOM Realized Gains: $1,308.31 (20.127 shares)

Dividend: Quarterly at $.91 per share, last raised from $.88 effective for the 2022 4th Q. payment.

Exxon Mobil Corporation (XOM) Dividend History | Seeking Alpha

Last Ex Dividend: 2/13/23

Last Earnings Report (Q/E 12/31/22): SEC Filing 

GAAP Net income of $12.8B or $3.09 per share

Non-GAAP E.P.S. = $3.4, down from $4.45 in the 2022 third quarter

Free Cash Flow: $12.266B, down from $22.047 in the third quarter 

GAAP to Non-GAAP

B. Eliminated BCBP in Fidelity Account:  

Quote: BCB Bancorp Inc. (BCBP)

After starting BCBP in my Schwab account, I noticed this 5 share lot lying dormant in my Fidelity account. 

Since I am making a long term commitment to reducing duplicate positions, I bought another 5 shares in my Schwab account, discussed in Item # 2.G. below, and eliminated the position in my Fidelity account.  

Profit Snapshot: +$9.16

See Item # 2.G. Below. 

C. Eliminated FDN - Sold 1 at $143.21:

Quote: First Trust Dow Jones Internet Index ETF Overview

I am reducing my allocation to non-dividend paying stocks and low yielding stock funds. 

Sponsor's website: First Trust Dow Jones Internet Index Fund (FDN)

Holdings: 42

Stocks with Weightings over 2% as of 4/21/23:  

Expense Ratio: .51%

Profit Snapshot: +$18.71

Last Buy Discussion: Item # 4.D. Bought 1 FDN at $124.5  (11/29/22 Post) 

Sell Discussions: Item # 2.M. Eliminated FDN in Schwab Account - Sold 1 at $247.59 (12/10/21 Post)(profit snapshot = $82.68; Item # 1.F. Eliminated FDN in Fidelity Account-Sold 2 at $244.75 (10/15/21 Post)(profit snapshot = $160.79)

FDN Realized Gains to Date: $261.68 (4 shares)

Dividends: No payments since 2011. 

Current Position: None

2. Small Ball Purchases - Regional Bank Basket Strategy:

Among the super regional banks, the first quarter did not show a worrisome outflow in deposits IMO, but reported profits took small hits from increases in loan loss reserves based on uncertain economic forecasts and deteriorating fundamentals in office property loans.  

Most smaller regional banks that I follow are reporting what I would characterize as okay or better reports. Better than expected reports are generally being met with more downward pressure on the stock prices. 

Some examples of decent first quarter report, which I will not be discussing here, include the following stocks that I own: 

Bar Harbor Bankshares (BHB) Reports First Quarter Results; Declares Dividend (E.P.S. at $.86, up from $.60)

Associated Banc-Corp (ASB) Reports First Quarter 2023 Net Income Available to Common Equity of $100 Million, or $0.66 per Common Share (2022 first quarter E.P.S. at $.47)

Cathay General Bancorp (CATY) Announces First Quarter 2023 Results (E.P.S. = $1.32, up from $.99)

First Financial Bancorp (FFBC) Announces First Quarter 2023 Financial Results (E.P.S. = $.74, up from $.44)

A. Added 5 HTBK at $7.92: 

Quote: Heritage Commerce Corp.

Cost: $39.6

HTBK is the parent of of Heritage Bank of Commerce which has offices in San Jose, Danville, Fremont, Gilroy, Hollister, Livermore, Los Altos, Los Gatos, Morgan Hill, Oakland, Palo Alto, Pleasanton, Redwood City, San Francisco, San Mateo, San Rafael, Sunnyvale and Walnut Creek. The operating bank has 17 branches which excludes one that is closing on 4/28 in Sunnyvale.  

Locations-Heritage Bank of Commerce

HTBK Analyst Estimates | MarketWatch

HTBK SEC Filings

Last Discussed: Item # 1.B. Added 25 HTBK at $8.41 (4/1/23 Post); Item # 2.J. Added to HTBK - Bought 5 at $8.78 (3/19/23 Post)(discussed owned securities and deposit information in that post, see  2022 Annual Report at pages 67-68, 79-80 

I discussed the 2022 4th quarter report in this post: Item # 3.C. Added 5 HTBK at $11.88 (1/30/23 Post); SEC Filing

New Average Cost per share: $9.44 (60 shares)

Tangible Book Value per share as of 12/31/22: $7.46

Dividend: Quarterly at $.13 per share ($.52 annually)

Yield at New AC per share: 5.51%

Yield at $7.92 = 6.57%

Last Ex Dividend: 2/8/23  

B. Added 5 ATLO at $20.44 - Schwab Taxable Account: 

Quote: Ames National Corp.

Cost: $102.2

Ames National Corporation Profile | Reuters

ALTO SEC Filings

ATLO Analyst Estimates | MarketWatch

Last Discussed: Item # 2.D. Eliminated ATLO in Fidelity Account - Sold 5 at $24.84 (2/27/23 Post)(profit snapshot = $10.97). I discussed the 2022 4th quarter report in that post. SEC Filed Press Release

Last Buy Discussion: Item # 3.D. Added to ATLO in Schwab Account - Bought 10 at $20.2 (7/27/22 Post)

I will add only to the position in my Schwab account. 

New Average Cost per share: $22.39 (25 shares) 

Dividend: Quarterly at $.27 per share ($1.08 annually)

Ames National Corporation Dividend History

Yield at New AC = 4.82%

Yield at $20.44: 5.28%

Next Ex Dividend: 4/28/23

2022 Annual Report 

As of 12/31/22

Owned Securities: 

P. 65

The yields on tax free bonds are shown on a tax equivalent basis using a 21% tax rate.  

ATLO places an emphasis on owning tax free municipal bonds. 

Amortized Cost= $317.179M/Value at $286.003M 

Total Unrealized Loss as of 12/31/22: $83.6M

Securities Used as Collateral (p. 65): $256.7M (Collateral would be used for public entity deposits, FHLB loans, and repurchase agreements) 

My rating on interest rate risk management is B-. The higher than normal rating is based on a relatively low duration of 4.06 years and a low weighting in 10+ year maturities. The main negative is the low weighted yield.  

Deposits:

Noninterest bearing: 20.9% of the total

Uninsured: 20.46% of the total 

C. Added 10 UBFO at $5.92: 

Quote: United Security Bancshares (UBFO)

Cost: $59.2

SEC Filings

Tangible Book Value per share:  $6.33 as of 12/30/23

New AC per share: $6.12 (25 shares)

Dividend: Quarterly at $.11 per share

Yield at New AC = 7.19%

Yield at $5.92: 7.43%

Last Ex Dividend: 4/5/23 (owned 10 shares as of)

Last Discussed: Item # 1.J. Added 5 UBFO at $6.17 (4/6/23 Post); Item # 1.D. Started UBFO - Bought 10 at $6.29 (4/1/23 Post)(discussed 2022 4th Q. report, SEC Filing

2022 E.P.S. = $.92 (up from $.59 in 2021)

TTM P/E Using $.92 and $6.12 AC = 6.65

D. Restarted CCNE - Bought 10 at $17.85: 

History this Account: 

Quote: CNB Financial Corp. (Pennsylvania)(CCNE) 

Cost $178.5 

CCNE Analyst Estimates | MarketWatch (2023 E.P.S. consensus at $2.72)

CCNE SEC Filings 

Last Discussed: Item # 1.J. Eliminated CCNE - Sold 10 at $23.63 (3/6/21 Post)(profit snapshot = $92.8)

Last Buy Discussion: Item # 1.E. Restarted CCNE-Bought 5 at $15.25; 5 at $14.95; 5 at $13.75 (6/20/20 Post)

Dividends: Quarterly at $.175 per share ($.7 annually), last raised from $.17 effective for the 2021 4th quarter payment. 

CNB Financial Corporation (CCNE) Dividend History | Seeking Alpha

Yield at $17.85: 3.9%

Last Ex Dividend: 2/28/23

Last Earnings Report (Q/E 3/31/23): SEC Filing

Comparisons are to the 2022 first quarter. 

E.P.S. = $.73, down from $.84

"The decrease in diluted earnings per share comparing the quarter ended March 31, 2023 to the quarter ended March 31, 2022 was primarily due to the dilutive effect of the Corporation's common stock offering completed in September 2022, resulting in the issuance of 4,257,446 shares of common stock at $23.50 per share and net proceeds of $94.1 million after deducting the underwriting discount and customary offering expenses."

NIM: 3.79%, up from 3.48% (but down from 4.03% for the Q/E 12/31/22)

Efficiency Ratio: 60.47%, down from 60.53%   

NPA Ratio: .42%, up from .38%  

Charge off ratio: .07%, up from .06%

Coverage Ratio: 209.54%

Dividend Payout Ratio: 24%

ROTE: 14.58%, down from 16.91%

Total Risk Based Capital Ratio: 15.97%, up from 14.44%

Deposit Information: I did not see a problem that concerned me. 

Uninsured deposits were at $1.6B or 33% of the total. Excluding "$101.1 million of affiliate company deposits and $462.2 million of pledged-investment collateralized deposits, the adjusted amount and percentage of total estimated uninsured deposits was approximately $1.1 billion, or approximately 22% of total CNB Bank deposits as of March 31, 2023." The bank had $132.7 in cash or cash equivalent deposited at the Federal Reserve. Total deposits increased by $131.7M during the quarter and by $90.4M after the FDIC seized Silicon Valley Bank. 

CCNE Realized Gains to Date: $1,178.2

Other Sell Discussions: Item # 2.B Pared CCNE-Sold 5 at $20.61 Fidelity taxable; Eliminated CCNE Schwab Taxable -Sold 6 at $21.24 (12/25/2020Post)(profit snapshots= $26.79 and $31.22 = $58.01); Item # 3.A. Eliminated Remaining CCNE-Sold 50 at $23.76 (2/17/2017 Post)(profit snapshot = $618.1); Item # 1 Sold 50 CCNE at $18.74 and Another 50 Share Lot-Update For Regional Bank Basket Strategy As Of 7/26/16 - South Gent | Seeking Alpha (profit snapshots $56.07 and $40.99)

Current Position All Accounts: 10 shares

I also have a small ball position in CNB Financial Corp. 7.125% Preferred Series A (CCNEP), a $25 par value equity preferred stock. 

E. Added 5 STBA at $28.8; 2 at $27.72; 3 at $27.6: 

I am now averaging down in either 5 share lots or what I call the 2 then 3 share mode. 

Cost: $282.24 

Quote: S&T Bancorp Inc. (STBA)

STBA Analyst Estimates | MarketWatch

Last Discussed: Item # 1.H. Added to STBA - Bought 1 at $32.13, 1 at $31.08; 3 at $30.35 (4/6/23 Post)(summarized owned securities and deposit information as of 12/31/22, sourced from the 2022 Annual Report); Item # 3.A. Started STBA - Bought 5 at $35.2 (2/5/23 Post)(summarized the last earnings report, SEC Filed Press Release)

New AC per share: $30.63 (20 shares)

Dividend  = Quarterly at $.32 per share ($1.28 annually), last raised from $.31 effective for the 2023 first quarter payment.   

S&T Bancorp, Inc. (STBA) Dividend History | Seeking Alpha

Yield at New AC =  4.18%

Last Ex Dividend: 2/9/23 

Last Earnings Report (Q/E 3/31/23): SEC Filing and SEC Filed Slide Presentation 

Comparisons are to the 2022 first quarter. 

E.P.S. $1.02, up from $.74

Consensus at $.943 per Fidelity

Net Income: $39.799M, up from $29.143M

NIM: 4.32%, up from 3.16%

Efficiency Ratio: 50.42%, down from 56.82% (down is good)

NPL Ratio: .34%, down from .75% 

Charge off ratio: Net recovery of $5.1M or .29% (this would add to income)

Coverage ratio: 439%

ROA: 1.77%, up from 1.25%

ROTE: 19.61%, up from 14.61%

Tangible Book Value per share: $21.81, up from $20.49

Deposits: $7.2B

"Total deposits decreased $66.9 million, or 3.8% annualized, compared to December 31, 2022. Deposit balances declined early in the quarter for the month of January followed by stability in February and growth in March. Certificates of deposit increased $240.6 million compared to December 31, 2022 mainly due to migration from other deposit categories." 

Insured Deposits: 67% of the total 

Uninsured Deposits include $323M in public entity deposits that are backed by collateral 

Funding Sources in Millions: 

F. Restarted MTB - Bought 1 at $117: 

History this Account: 

Quote: M&T Bank Corp.

MTB Analyst Estimates

MTB SEC Filings 

Last Discussed: Item # 3.B. Eliminated MTB - Sold 4 at $182.75 (2/24/22 Post)(profit snapshot =  141.91)

Buy Discussions: Item # 3.D. Added 1 MTB at $146.9 (7/9/21 Post); Item # 1.C. Bought 1 MTB at $152.4; 1 at $150 (4/24/21 Post) 

Current Position: 1 share

As previously discussed, I owned  shares in (PBCT) when MTB offered to acquire that bank in a stock exchange. Since I did not want to receive MTB stock in exchange for my People's United Financial shares, formerly traded under the PBCT symbol. I liquidated the PBCT position prior to the mergers consummation. Item # 3.A. Eliminated PBCT - Sold 62+ at $20.93 (2/24/22 Post)(profit snapshot = $580.1) 

Proceeds from 62+ PBCT = $1,314.78

The exchange ratio was .118 MTB share for each PBCT share. M&T Bank Corporation Announces Agreement to Acquire People's United Financial, Inc. - Feb 22, 2021

Value of 62+ PBCT Shares at .118 MTB and $117 share price: $867.26

I was in a liquidation mode for PBCT after the merger announcement before eliminating the position Item # 3.F. Sold 20 PBCT at $18.39 (5/14/21 Post)BMY, D, DPG, FSMEX, IIVI, NVS, PBA, PBCT, SAIC, STWD, TRST, TY, VTRS; Item # 1.G. Pared PBCT in Schwab Account-Sold 30 at $17.77 (3/13/21 Post) The total realized gain was $1,525.02. 

Dividend: Quarterly at $1.3 per share ($5.2 annually)

MTB Dividend History | Nasdaq

Yield at $117: 4.44%

Last Ex Dividend: 3/3/23

Last Earnings Report (Q/E 3/31/23): SEC Filing 

Except for the non-performing loans data, my overall impression of this report was favorable. 

Comparisons are to the 2022 first quarter. 

GAAP E.P.S. $4.01

GAAP Net Income: $701.624M

GAAP Net Income available to common shareholders = $675.511M

The difference in the two GAAP net income reflects the existence of equity preferred stock that has a preferential claim on net income compared only to the common. 

Non-GAAP E.P.S. = $4.09

The difference between GAAP and non-GAAP is amortization non-cash expenses. 

Consensus at $3.99

NIM: 4.04%, up from 2.65%. 

Efficiency Ratio: 55.5%, down from 64.9%

I generally view an efficiency ratio over 60% as unacceptable. 

NPL Ratio: 1.92%, down from 2.24% 

I view the 1.92% as way to high which is one reason for my caution.  

Charge off ratio: .22%, up from .03%. Still good at .22%. 

ROTE: 19%, up 12.44%

Tangible Book Value per share: $88.81

"M&T repurchased 3,838,157 shares of its common stock in accordance with its capital plan during the recent quarter at an average cost per share of $154.76 resulting in a total cost, including the share repurchase excise tax, of $600 million, compared with 3,664,887 shares at an average cost per share of $163.72 and total cost of $600 million in the fourth quarter of 2022."

Total Deposits: $159.075+B, down from $163.514+B as of 12/31/22

Non-interest bearing deposits: $59.955+B

2022 Annual Report 

Owned Securities: 

In Thousands as of 12/31/22, page 132

Other sell discussion: Item # 2.O. Eliminated MTB in Fidelity Account-Sold 1 at $156.25; 2.62 at $160 (11/5/21 Post)(profit snapshot = $42.52)

G. Added 5 BCBP at $10.72- Schwab Taxable Account:

Quote: BCB Bancorp Inc. (BCBP)

Cost: $53.6

BCB Bank Locations

BCBP Analyst Estimates | MarketWatch

BCBP SEC Filings

Last Discussed: Item # 1.A. Started BCBP in Schwab Taxable Account - Bought 20 at $11.94; 10 at $11.5 (4/15/23 Post) 

Tangible Book Value per share as of 3/31/23: $16.07

New Average cost per share: $11.64 (35 shares)

Discount to $16.07 TBV at $11.64 cost : 27.57%

Dividend: Quarterly at $.16 ($.64 annually)

Yield at new AC = 5.5%

Yield at $10.72: 5.97%

Next Ex Dividend: 5/4/23

Last Earnings Report (Q/E 3/31/23): BCB Bancorp, Inc. Earns $8.1 Million in First Quarter 2023; Reports $0.46 EPS and 6.1 Percent Net Loan Growth 

Comparisons are to the 2022 first quarter. 

Net Income: $7.933M, down from $9.676 

Diluted E.P.S. = $.46, down from $.56

"The decline was primarily driven by higher loan loss provisioning and unrealized losses on equity investments for the first quarter of 2023 as compared with the first quarter of 2022."

The primary reason for the income decline was a $3.227M "realized and unrealized loss on equity investments" that turned noninterest income into a $1.664M loss. 

I suspect that almost all, if not all of the decline resulted from increases in the unrealized loss. 

As of 12/31/22, the value of equity investments was at $17.686M. The value as of 3/31/23 was at $14.458M or a 3.228M decline in value during the quarter. I could not find any disclosure identifying those equity investments. 

NIM: 3.15%, down from 3.46% (increased costs of liquidity is squeezing NIM) Those costs include higher deposit costs and higher cost loans from the FHLB. Interest earning assets had a yield of 4.86%, up 104 basis points compared to the 2022 first quarter. Interest bearing liabilities rose 174 basis points form .5% to 2.24%.

Efficiency Ratio: 53.68%, up from 52.95%

NPL Ratio: .16%, down from .38% 

Coverage Ratio: 571%, up from 368.1%

ROE: 11.05%, down from 14.67%

Tangible Book Value per share: $16.07, up from $14.41

Total Deposits: $2.867B, up $2.631B

Core Deposit 1st Quarter Growth: 7.1% annualized 

Using the Current Expected Credit Losses methodology, the bank added $622,000 to the loan loss reserve compared to a credit of $500,000 in the previous quarter. 

H. Added 2 MBWM at $28.75; 5 at $28.6: 

Quote: Mercantile Bank Corp.

Cost: $220.5 

MBWM Analyst Estimates | MarketWatch

MBWM SEC Filings

Last Discussed: Item # 1.C. Started MBWM - Bought 5 at $30.4; 5 at $29.95 (10/1/21 Post)  I noted that the 2023 E.P.S. estimate was than at $2.93. The current consensus is $4.39. 

New AC per share: $29.54 (17 shares)

Dividend: Quarterly at $.33 per share ($1.32 annually), last raised from $.32 effective for the 2023 first quarter

MBWM Dividend History | Nasdaq

Yield at New AC = 4.47%

Next Ex Dividend: 6/1/23

Last Earnings Report (Q/E 3/31/23):  SEC Filing

Comparisons are to the 2022 first quarter. 

Net Income: $21M, up from $11.5M

E.P.S. = $1.31, up from $.73

Consensus at $1.16 per Fidelity

NIM: 4.28%, up from 2.57%

Efficiency Ratio: 51.69%, down from 64.10%

NPL Ratio: .20%, up from .05%

NPA Ratio: .17%, up from .03%

The NPA and NPL ratios remain excellent at very low levels. 

Charge off ratio: Net recovery of .01%, unchanged

Existing Allowance for Credit Losses: $42.777M with NPLs at $7.782M. 

ROA: 1.75%, up from .9%

ROE: 18.76%, up from 10.36% 

Total Risk Based Capital Ratio: 14.15%, up from 14.09%

Tangible Book Value per share: $26.09, up from $24.06

"All of Mercantile’s investments are categorized as available-for-sale. The net unrealized loss on investments totaled $71.2 million as of March 31, 2023, providing for an after-tax effect reduction to equity capital of $56.3 million. Although unrealized gains and losses on investments are not factored into regulatory capital ratio calculations, our excess capital over the minimum regulatory requirement to be considered a “well-capitalized” institution would approximate $125 million on an adjusted basis."

Deposits: $3.598+B vs. $3.712+B as of 12/31/22

"The reduction in local deposits primarily reflected a customary level of customers’ tax and bonus payments and partnership distributions, as well as transfers to the sweep account product. Wholesale funds were $378 million, or approximately 9 percent of total funds, at March 31, 2023, compared to $308 million, or approximately 7 percent of total funds, at December 31, 2022."

Non-interest bearing deposits: $1.376+B or 38.3% of the total. 

2022 Annual Report 

Owned Securities: 

I. Added 2 CVBF at $15.12: 

Quote: CVB Financial Corp.  (CVBF)

Cost: $30.24

CVBF SEC Filings

New AC per share: $15.85 (12 shares)

Dividend: Quarterly at $.20 per share

CVB Financial Corp. Announces 134th Consecutive Cash Dividend 

Yield at New AC = 5.05% 

Last Ex Dividend: 4/4/23 (owned 10 as of)

Last Discussed: Item # 1.D. Restarted CVBF - Bought 10 $16 (4/8/23 Post) I discussed the 2022 4th quarter report in that post. 

Last Sell Discussion: Item # 4.A. Eliminated CVBF - Sold 15 at $25.7; 5 at $25.66  (12/27/22 Post)

CVBF is scheduled to report its first 2023 first quarter results next week. 

3. Treasury Auction Purchases: $5,000 in Principal Amount 

I had $22K in treasury bills mature in my Schwab account last week. I initially considered using $10,000 to buy the 2 month bill auctioned last Thursday, but downsized the amount to $3,000. 

It is not currently clear whether the House republicans will cause a U.S. debt default unless the democrats agree to republican policy objectives. 

The pricing of 1 to 4 month treasury bills point to concerns that there may be a delay in treasury debt payments starting in June 2023, as shown by the relatively low 1 month yield compared to the 2, 3 and 4 month yields. 

A. Bought 2 Treasury Bills at the 4/19/23 Auction: 

Matures on 8/22/23

119 Day Bill

Interest: $33.45

Investment Rate: 5.252%

B. Bought 3 Treasury Bills at the 4/20/23 Auction:  

Matures on 6/20/23

56 Day Bill

Interest: $22.63

Investment Rate: 4.968%

4. Corporate Bonds: $3,000 in principal amount

I frequently complain about the third party pricing services used by brokerage firms to value corporate bonds. 

The fair market value assigned by those services is almost always below the last trade price and frequently below the current bid for the lot size that I own. 

One of the more absurd recent examples is the 95.510 third party price for my 2 Bank of Nova Scotia 1.65% SU bonds that mature on 5/1/2023: 

Snapshot Intraday on 4/21/23

The bond has a Aa2 rating from Moody's. I could have sold those 2 bonds yesterday for 99.931 but it would have been foolish to do so since I am about to receive par value without having to pay a $1 per bond commission to sell them. I would have much appreciated the opportunity to buy that bond at 95.51 with 8 days left to maturity. 

Another example is the third party price for 2 Jeffries 5% SU bonds, rated BBB, that mature on 10/28/23. I noted a few days ago that the third party price dropped by over 10% to below 90 and was priced yesterday at 89.264 which is also inconsistent with the third party pricing of another Jeffries SU:

Snapshot on 4/21/23

If anyone could actually buy the 5% SU bond maturing in about 6 months at 89.264, which of course would be impossible now, the total return would be close to 15%. It is just absurdly asinine and obviously wrong pricing that is almost invariably too low. Third party pricing that is almost always too low can not be accidental. It is not random.   

A. Bought 1 Kinder Morgan Energy Partners 4.15% SU Maturing on 2/1/24 at a Total Cost of 99.087: 

Issuer: Kinder Morgan Energy Partners was acquired by Kinder Morgan Inc.(KMI). 

Kinder Morgan Announces Closing of the Merger Transactions (11/26/14) This bond was originally issued in July 2013. 

I have a position in the common stock. Item # 1. Bought 100 KMI in Vanguard Taxable Account at $15.89 (1/7/22 Post) Earlier this year, I eliminated KMI common stock positions in two other taxable accounts. Item # 3.E. Eliminated KMI in 2 Taxable Accounts - Sold 10 at $17.34; 17+ at $17.37 (2/27/23 Post)(profit snapshots = $148.56)

KMI SEC Filings

2022 Annual Report

SEC Filed Earnings Press Release for the Q/E 3/31/23 

Asset Map

Kinder Morgan History

Finra Page: Bond Detail (prospectus linked)

Credit Ratings: Baa2/BBB

YTM at Total Cost: 5.355%

Current Yield at TC = 4.19%

I now own 2.  

Last KMI SU Bond Offering (1/2023): Prospectus for $1.5B SU Notes Maturing in 2033 

B. Bought 2 Main Street Capital 5.2% SU Maturing on 5/1/2024 at a Total Cost of 98.605: 

Issuer: Main Street Capital Corp. (MAIN) - Internally Managed BDC

Website: Main Street Capital Corporation (MAIN)

MAIN SEC Filings 

2022 Annual Report 

Finra Page: Bond Detail (prospectus linked)

Credit Rating: BBB- (S&P and Fitch)

Fitch Assigns 'BBB-' Rating to Main Street Capital; Outlook Stable; Fitch Affirms Main Street Capital at 'BBB-'; Outlook Stable | MarketScreener

YTM at Total Cost: 6.636%

Current Yield at TC = 5.27%

This 2024 SU note is the next one that matures. There are 2 SBIC debentures that mature earlier on 3/1/2024. The total amount is $63.8M, page 156 Annual Report. 

I no longer have a position in the common stock. 

This purchase replaces the 2 Main Street Capital 4.5% bonds that matured on 12/1/22: 

Disclaimer: I am not a financial advisor, but simply an individual investor who has been managing my own money since I was a teenager. In this post, I am acting solely as a financial journalist focusing on my own investments. The information contained in this post is not intended to be a complete description or summary of all available data relevant to making an investment decision. Instead, I am merely expressing some of the reasons underlying the purchase or sale of securities. Nothing in this post is intended to constitute investment or legal advice or a recommendation to buy or to sell. All investors need to perform their own due diligence before making any financial decision which requires at a minimum reading original source material available at the SEC and elsewhere. A failure to perform due diligence only increases what I call "error creep". Stocks, Bonds & Politics: ERROR CREEP and the INVESTING PROCESS Each investor needs to assess a potential investment taking into account their personal risk tolerances, goals, and situational risks. I can only make that kind of assessment for myself and my family members.