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Monday, June 06, 2005

Seacoast Commerce Bank (SCCB)

Here's another new, community bank that I'm looking into (website).
FDIC certification #57428.

UPDATE: They're sending me an annual report in the mail.

UPDATE: I got the annual report and read it cover-to-cover. Seems ok. I still need to do checklist work. I have a rough valuation in my head at this point. It may be a good investment, although probably not a great one.

I'm going through the checklist now, but I wanted to keep some notes here, especially related to competitor local banks: Pacific Trust Bank (35498), Balboa Thrift and Loan (26704), San Diego Community Bank (23158)

Pacific Trust Bank: They more than tripled their assets since 2000, but their income is unchanged due to larger interest expense, salaries, equipment, taxes vs tax benefit. Doing a detailed comparison on the FDIC database, PTB looks worse than SCCB.

Balboa Thrift and Loan: They have an amazingly high interest income (10.90%)... suspiciously high. Their website shows that they're focused on commercial real estate, home improvement, and auto loans. Must be a lot of auto loans to high risk people. Their high provisions for losses (2.07%) seems to confirm this. So this comparison is not valid.

San Diego Community Bank: Although they have a lot more assets, bank premisis and fixed assets are twice as much a percentage of total assets. They have $142,000 in goodwill for mortgage servicing rights purchased. 79% real estate loans vs 58% for SCCB: a lot more residential (SCCB has almost none). Not much commercial loans. 0.71% of assets in non-accrual (all residential). A lot more non-interest income (probably the mortgage servicing rights). These guys have really good interest income numbers (better income, better expense). Still, their ROA is only 0.67% and ROE is 4.78%, pretty crappy. The ROE is hurt by their overcapitalization. But it's not like they're a new bank or anything (at least since 1992).

The checklist passes so far, but I don't have a proxy statement to check the audit committee, salaries, board member details, and stock ownership details. I sent them an email asking if they have anything like a 14A proxy statement.

UPDATE: The CEO got back to me and said they don't publish anything resembling a 14A proxy statement. I can't say that I blame them.

I bought some shares anyway and, like BOJF, this will be a small investment.

UPDATE: Sometimes buying shares in a really, really small company can be a real pain. Sometimes it can be like playing chess or maybe a lot more like fishing.

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