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Microcap banks



September 16, 2009 – Comments (24) | RELATED TICKERS: PKBK , CFNB , PNBC

Unlike other public companies in the US, most banks with market caps <$100M do not submit their financial statements to the SEC.  Instead they submit their statements to their regulatory body, i.e. OTS, FDIC, Fed, etc.  Here is a useful link which distills the data so you don't have to go through hundreds of pages of regulatory info.

I did a CAPS screen for banks with P/E < 10, P/B < 1, LTD/E < 2, Revenue Growth > -1, Earnings Growth > -1, and ROE > 8.  However the CAPS data for these banks are not current, so these companies have to be cross-referenced to the source above.

I started to look these up because banking is a pretty stable business when it's done well, yet a lot of these were crushed and have not rebounded nearly as well as the overall market.  Here are a few of the banks I've looked up so far:

Name (Ticker)                     Market Cap    Assets      Tier 1      Tier 2     Income    Charge-Off    

Saehan Bank CA (SAEB)           $6.7M       $843M       $81M       $10M      -$10M      $15.9M

Home Valley Bank OR (HVYB)   $3.5M       $245M       $21M       $2.5M      $1M         $0.6M

Granite Bank CA (GBSI)           $2.7M       $141M       $16M       $1.7M      $.2M         $2.3M

First Bank of Delaware (FBOD)  $17M        $116M       $39M       $1.1M      $4.9M       $3.8M

FBOD looks interesting - they are one of the least leveraged banks I've ever seen, yet have very strong earnings despite pretty large chargeoffs.  HVYB may also be pretty underpriced.  Of course the California banks are more troubled, yet they may still turn out to be good deals.

More to come over the next few days.

24 Comments – Post Your Own

#1) On September 17, 2009 at 12:04 AM, JakilaTheHun (99.91) wrote:

I might take a glance at some of these.  I'm intrigued by small banks due to the unbelievable amount of bearishness still present in the sector.  I discovered First Merchants Corp (FRME) last night and I think it looks promising.  It's market cap is a slight bit higher than $100 M, but not by that much.

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#2) On September 17, 2009 at 12:30 AM, streetflame (29.12) wrote:

Other than the big charge offs this quarter in commercial and industrial loans, FRME looks pretty good.

I've actually never owned a bank in my life.  Among larger financials, I prefer insurance companies or other capital markets companies. Since banking is generally boring, hard to understand, low growth and high leverage, I'm only interested in banks if they are really extreme values.

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#3) On September 17, 2009 at 12:47 AM, checklist34 (99.05) wrote:

i love it!

tiny and regional banks are going to get alot of attention from me on a pullback...!  

but it can be difficult to get a position in them as volume can be so low.

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#4) On September 17, 2009 at 1:25 AM, herztical (27.56) wrote:

The only problem I see with mircocap banks as the transparency and the fact that they take on a few bad loans or investments they are screwed. There are still plenty of small cap banks that havn't rallied that offer a little more liquidity and transparency.

Anyway good luck either way

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#5) On September 17, 2009 at 8:49 PM, streetflame (29.12) wrote:

Some slightly larger OTC banks:

Name (Ticker)                     Market Cap    Assets      Tier 1      Tier 2     Income    Charge-Off    

First Citizens SC (FCBN)           $285M       $5.6B       $450M       $63M      $51M         $20M

Bank First National WI (FMWC) $65M        $793M       $55M        $5M      $6.2M         $5.4M

Highland Bank WV (HBSI)        $30M        $377M       $36M        $4M      $5.1M         $.8M 

First Banking Ctr WI (FBCI)      $30M        $924M       $73M        $10M     $5.4M        $3.3M  

Out of these FCBN looks like the best value, followed by FBCI.  One thing to keep in mind with banks is that many are holding companies, sometimes operating multiple banks, or banks with different names from the parent company.  Another nice thing about banks is that they are the only sector with many microcap dividend payers, many of which have not made cuts.

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#6) On September 17, 2009 at 9:10 PM, streetflame (29.12) wrote:


Then an all-California lineup including CTBP, CWBK, SMAL, CZNB, MOKB, VCBC, FCCC, NCAL, and OCBN.

If you guys know any other banks trading below book with low PEs let me know.

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#7) On September 20, 2009 at 1:25 PM, streetflame (29.12) wrote:

Name (Ticker)                     Market Cap    Assets      Tier 1        Income    Charge-Off    

The Bank of Georgia (GABA)     $4.2M       $385M       $34M       ($3.1M)         ($2.9M)

Idaho Banking Co (IDBC)         $2.8M       $247M       $22M        ($2.1M)        ($2.8M)

Sound Banking Co NC (SNBN)    $2.8M       $127M       $9.3M        $0M             $0M 

Cherokee Bank GA (CHKJ)        $3.6M        $198M      $15.5M      ($1M)           ($1.2M)  

So far I would say HVYB, FBCI, GBSI, and FCBN look like some of the best values among the profitable banks.  Among the distressed banks CHKJ and SNBN are probably the best so far.   Once I collect all of the basic data, I will make a big new blog post and drill down more into individual banks.

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#8) On September 20, 2009 at 1:34 PM, streetflame (29.12) wrote:

By the way, imagine how long it would take to collect this information before the internet.  Microcap stock screening is an incredibly powerful tool that a lot of people don't realize.

Although a lot of these have extremely low liquidity, you may be surprised by how easily a small limit buy order will get filled. (Even if it is substantially the last quoted price.)

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#9) On September 20, 2009 at 1:35 PM, streetflame (29.12) wrote:

*substantially below

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#10) On September 20, 2009 at 3:38 PM, streetflame (29.12) wrote:

"The only problem I see with mircocap banks as the transparency and the fact that they take on a few bad loans or investments they are screwed."

Herztical - your second point is definitely true -  loans and investing standards are extremely important in any kind of bank, but dumb luck plays a bigger role here than in large banks.

As far as transparency, I don't completely agree.  As stated above, all these financial statements are available within a few short clicks.  They have nearly as much detail as larger banks, but are less complicated and easier to understand. And unlike other microcap companies, they have highly involved regulators.

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#11) On September 20, 2009 at 3:59 PM, TMFBabo (100.00) wrote:

My only problem with these is the incredibly low volume.  I wouldn't mind buying a basket that includes some of these; they seem to be decent buys. 

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#12) On September 20, 2009 at 4:46 PM, DownEscalator (< 20) wrote:

I would definitely recommend checking out's bank screener:

I've found it to be a helpful tool as part of due diligence.  I figure they've looked at loan portfolios and know what's bad and what's good.

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#13) On September 21, 2009 at 12:07 PM, streetflame (29.12) wrote:

Thanks for the link DE.  Their ratings are pretty light on details but it's always good to get a second opinion.

Most of these banks have D ratings, i.e. pretty bad.  I was hoping to find some higher quality microcap banks with my screen, but most of them so far seem to be cheap but a bit troubled.

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#14) On September 21, 2009 at 11:25 PM, streetflame (29.12) wrote:

Name (Ticker)                     Market Cap    Assets      Tier 1        Income    Charge-Off    

MBank OR (MBNC)                   $6.4M       $301M       $34M       ($3.1M)         ($2.9M)

Albina Community OR (ACBC)    $1.1M       $214M       $26M       ($1.7M)        ($3.1M)

Uniti Bank CA (UIFC)               $16.5M      $226M       $29M        $.2M             ($1.2M) 

Prime Pacific Bank (PPFS)        $6.1M        $185M      $17M         $1.2M           ($0.7M)

A lot of these are down 80-90% from their high, and have not moved very much off of their lows yet.

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#15) On September 22, 2009 at 12:08 AM, APJ4RealHoldings (44.67) wrote:

Thank you for turning your attention on these.  Like you said;

-there is value to be found in this sector

-the high level of regulation in the industry keeps the books clean

-there definitely is a much higher level of transparency relative to the larger banks

-lots of information is available for those patient enough to do the due diligence

But, the risk of FDIC receivorship is highest amongst these small crowds (even though it is the large banks that got involved with the highest of risks) in which case your investment will likely be wiped out.  However,of those that survive, you are looking at a basket of multibaggers. 

I like to use ticker KRE as a guage of how overall small community banks are doing vs rest of market or big financials. 

I'll try to share info/opinions as I come across names in the industry. 

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#16) On September 23, 2009 at 12:09 AM, streetflame (29.12) wrote:

Name (Ticker)                     Market Cap    Assets      Tier 1        Income    Charge-Off    

CommerceWest CA (CWBK)     $24M       $256M       $35M       $2.1M         ($1.9M)

Oregon Pacific (ORPB)            $8.7M       $156M       $17M        $1.2M        ($0.7M)

Now these two are more attractive to me.  Rated A and B respectively by TheStreet from the link provided by DE above.  Very low PE and PB values for high quality, profitable, growing banks.  One thing I like is that ORPB has started a regular dividend in the last year - that is a great sign. Of course, they are not beaten down as much as distressed banks, but still about 70% off highs.

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#17) On September 24, 2009 at 10:45 PM, APJ4RealHoldings (44.67) wrote:

Thanks for compelling me to dig deeper into the my banks as well as potential investments.

I gave a closer look to the following banks I hold: 


Out of those 4, PFBI is definitely a keeper from my analysis.  The other 3 are much too risky for me to hold & I will look for an opportunity (pop) to sell off.  

See towards the bottom of my reply for a full fledged listing of bank tickers I looked at & my thoughts on them. 

I bought ORPB today @$5.00/share.  Excellent find. 

What is the key criteria for bank in my mind?

Two things:  1) Asset Quality  2) Core Deposits (& its growth/stability)

1)  Because I tend to look @overall numbers fairly quickly on many, numerous banks, I don't delve deep enough into asset quality.  However, there's one key concept that I do stick to.  I look for banks that have not aggressively expanded its assets from 2005 to 2008.  The more they expanded, the more of a penalty I assess them.  Asset prices on both residential/commercial side were too high during this time period & expected income levels at that time either by a household or a business were likely too close for comfort in their ability to make loan payments for the loan life, therefore I penalize these assets.  

Another factor is geographic area.  I also tweak the penalty/bonus on valuation of these banks depending on the area.  IE Banks in New Condo City, Florida would be penalized much mroe than say a major city in a midwestern state.  Any areas that were red hot during teh upward sky-high movement of asset prices during the bubble from 2003-2008 are weak, conversely the opposite is true for areas that remained cool. 

2) Any bank in the world is NOTHING without deposits.  Deposits are key, and what is respected most & also very crucial in the banking industry are core deposits.  For my due diligence purposes I'm counting only non-interest bearing demand deposits as core deposits.  For all the tickers I've looked at, I brought up call reports/TFRs for Q3 2008, Q4 2008, Q1 2009, & Q2 2009 & noted down both core dep. & total dep. for each of the quarters.  I computed the ratio & compared them across the quarters & compared the ratios across peers.  I tried to keep an eye on any funny movements & also an eye on movement of total deposits through recent quarters.  I assigned penalties/bonuses in my valuation accordingly. 

Then I just look at total (normal) equity in more recent quarter, make my adjustments, add in (if I believe there's) potential for future income, and then compare that total to today's market value. 

List of tickers looked at todate:

ORPB, CWBK, NARA, CVBF, PFBI, FRGB, FPTB & north carolina banks: ASFE, SSFC, & CSBC

From my valuation I liked: ORPB, FPTB, & PFBI alot

I thought ASFE, CWBK & CSBC were close to fairly valued

& think that the rest were too risky to touch. 

There's still quite a few tickers I'm going to look at in the next week. 

Again, I bought ORPB today, & hoping to fill an order on a buy for ASFE.  Holding onto PFBI. 

Looking to get rid of long positions on NARA & CVBF & FRGB sometime soon. 

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#18) On September 26, 2009 at 10:17 AM, streetflame (29.12) wrote:

Great post APJ.

I see ORPB fell to $4.00 (-20%) yesterday on a 900 share trade and no news.  It certainly demonstrates babo and checklist's concerns about volume.  But I agree, ORPB looks like a very good deal.

I will look more closely at core deposits vs other assets and include that in future installments of my small bank survey.  Sun Belt banks are definitely more dangerous.  Most of the small banks on my research list come from California (many distressed and not for the faint of heart), followed by Georgia, Oregon, North Carolina, Washington, West Virginia, Minnesota, Wisconsin, roughly in that order.  Need to read more about these local housing markets.

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#19) On September 26, 2009 at 12:56 PM, streetflame (29.12) wrote:

This website is great for bank info:  I just joined ($12 per year).  It looks extremely helpful for microcap stocks.

More banks rated A & B by TheStreet: BKBK, OCBN, MNBO, PMHV, FCCT, FWV.

More stocks significantly undervalued from Ockham: PFBI (along with BKBK, the most undervalued bank in the Southeast according to them!), lots of Northeast and Mid-Atlantic banks I haven't looked at yet.  I definitely recommend Ockham's service.

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#20) On September 26, 2009 at 1:00 PM, streetflame (29.12) wrote:

I would note that their methodology leaves something to be desired.  They are a bit too focused on revenues and earnings at the expense of book.  However it is one of the best starting points I have found for microcap stocks.

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#21) On September 27, 2009 at 7:42 PM, APJ4RealHoldings (44.67) wrote:

Yes, microcap stocks that are thinly traded are quite volatile. 

"I would note that their methodology leaves something to be desired. "

Are you speaking of the ockham research site?


Also, would anyone know a resource for historical annual financial statements for microcap stocks (ie where do you go if google finance or if yahoo finance does not present them)? My main interest is to see annual cash flows statements

ie: how does one get annual cash flow for tickers like cwbk? for 08, 07, 06, etc?

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#22) On September 28, 2009 at 8:43 AM, streetflame (29.12) wrote:

Search for the bank, then select the income and expense report.

Strangely I can't locate CWBK on there, either by searching for "CommerceWest" or "3052813".

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#23) On September 28, 2009 at 7:42 PM, APJ4RealHoldings (44.67) wrote:

Thanks streetflame, however I was looking for cash flow statements for any bank.

That link did provide the income statement, and yes I was able to pull up the income statement within that link for commercewest, but I could not find the cash flow statements.

Every bank's lending activity pops up within the cash flow statement which is essential for my analysis purposes.  Because, theoretically you can have a bank that has the same number number of assets the past 5 years (suggesting no change)...but if you look at that bank's cash flow statements over those years and if the "cash from investing activities" is showing large numbers, then there may have been massive turnover in the loan portfolio itself & have now a portfolio of newer (possibly) riskier, poor quality loans.

This I want to avoid.  I can find this info for the larger banks on google finance.  Now, if only I can find a resource that has this information for the smaller banks. 

Just not to confuse others, unlike other companies' major activities, banks lending operations shows up within investing activities, and deposit transactions shows up within financing activities within cash flows.  Most other industries, companies would have their major operations under "operating activities".



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#24) On September 28, 2009 at 11:00 PM, streetflame (29.12) wrote:

There's no cash flow section in the ~70 page official Call Report.( or in the UBPR (

New lending is not identified anywhere in the UBPR but $ of loans held by maturity (and written off, securitized, etc.) are listed for each period.  So assuming loans over one year are not paid off early and loans under 1 year are replaced you can roughly calculate cash flow.

It seems like the link is not necessarily current so I need to start over in that regard.  Thanks for your help so far in understanding this sector.

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