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Tuesday, July 05, 2005

Community Banks (continued)

I had to move some of the banks to a separate entry because it was expanding too much. The quotes are my notes.

Pacific West Bank, #57872,v : PWBO
These guys are ramping up fast. No easily found share count (have to call to send details). More focus on commercial/industrial loans. Some real estate loans (all the single family stuff is home equity). Most deposits are money market. Some unused commitments (tiny revolver, mostly other). Obviously no derivatives. Nothing past due. Very little leverage at this point: equity to assets is 61%. Too soon to say much about the bank. Trading range is $11.75 to $12.
Maryland Financial, #57821, may issue common stock at some point
Main Street Bank, #57742: unregistered common stock
Bank of Santa Clarita, #57816: BSCA
Approx 1,796,296 shares outstanding. They're looking to issue another $7 million in stock in a 2ndary. 17 employees (13 last quarter). 2 quarters of operations. $13.75 million IPO. $12.3 million equity in Mar 05. $31 million assets. $15.6 million loans. $10.3 million real estate loans, mostly commercial and construction. Nothing past due. $18.6 million deposits: $10 million interest bearing. $1.2 million unused commitments. High provisioning (50% of net interest income). $530K loss ($797K loss last Q). Net interest margin good so far. Low assets per employee at this point. Equity/assets = 40% (down from 58%).

Q2 results announced 7/7/05: assets now $39 million (not much of an increase from $31 million). $26 million in deposits (40% increase). $24 million in loans (56% increase). Revenue up to $377K (70% increase). Net loss $457K, $162K was loss reserves. Equity is now $11.99 million.

Recent stock price about $21. Market cap about $37 million (book value is less than $9). More equity will be raised. The stock price jumped from about $11 to $20 after the Q1 results were announced. Dropped about 75 cents after the Q2 results.
Citizens Community Bank, #57563: call (201) 670-8484
San Diego Trust Bank, #57608: SDBK
San Diego Trust Bank (OTCBB:SDBK) was recognized by the California Bankers Association and Carpenter & Company during their annual Strategic Summit, for having achieved the highest stock appreciation of any bank in California over the last year, in the asset class $50 million to $100 million. The award, "Market Cap Champion", was presented to Michael Perry, the Bank's President & CEO, in recognition for having achieved a 170% increase in the value of the company's stock during the past year. The Bank's stock steadily climbed from its initial offering price of $10.00 per share to $27.00 per share as of December 31, 2004. Since that time, the company's stock has continued to perform well closing at $37.75 as of Friday, May 13th.
So much for that, although it is back down to $25.25.
Pascack Community Bank, #57215: PCCB
1.07 million shares (supposedly), recent market cap $11.4 million. Latest equity $8.6 million. Latest income: positive. Ok, so what's going on...

$65 million in assets, up from $45 million last year. $44 million in loans ($447K allowance). $36 million real estate loans: $22 million commercial, $8.5 million residential. All increased significantly over last year. $56 million deposits: $17.5 milion transaction accounts, $38 million non-trans accts, $11.3 million time deposits. $10 million unused commitments ($5million revolver, $2.9 million commercial real estate). $835K past due, all residential real estate 30-90 days. No chargeoffs or recoveries. 3.75% net interest margin. 3.30% non-interest expense. ROA 0.51%. Efficiency 80%. Assets per employee $5.87 million. Net loans/leases to deposits 78.41%. Equity to assets 13.28%.

Comparing them to the template bank (BOJF) at the same point in the startup cycle, PCCB is yielding 5.36% vs cost of 1.61% (=3.75% net interest margin) compared to BOJF yield of 8.44% vs cost of 4.01% (=4.43% net interest margin). PCCB has 0.33% non-interest income vs 1.08% for BOJF. PCCB non-interest expense is 3.3% vs 4.31%. Net income is 0.51% vs BOJF's 0.86%. Not as much of a difference as I expected to find. BOJF efficiency was 78%, not much better, but with only $1.76 million per employee. Loss allowance is about the same. Capitalization ratios are very similar.

Now here's something interesting: looking at a peer group of all banks with less than $100 million in assets in New Jersey, PCCB is significantly better across the board. The peer group actually had a loss in Q1 05!!! Small banks in NJ routinely have crappy results over the years.

I don't know what to think about that... except that I'm not about to invest in something that has a 3.59% return on equity for more than book value.
Towne Bank of Arizona, #57697: TWNB
Commonwealth National Bank, #57201: CWEA
2.11 million shares, $24 million market cap. Crappy results. Too much residential real estate in a bubble region.

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