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A savings and loan holding company, through its subsidiary, Trustco Bank, is engaged in providing general banking services to individuals, partnerships and corporations.
Thanks to ValueMoney for making me aware of this opportunity. Trustco Bank sailed through 2007, 2008 and 2009 with no losing quarters and no major surprises. On a going forward basis, the company is well positioned to earn high profits in this favorable yield curve environment while keeping balance sheet leverage low. Despite these favorable omens, Trustco stock price is trailing the 6S&P 500 over the last 2 years, 1 year and 6 months. Although Trustco's long term average p/bv ratio is 3.3, the stock's current p/bv ratio is just 1.8. The letter to shareholders and management discussion in the 2008 annual report present Trustco as a savings and loan company that still conducts its operations the old fashioned way. Instead of relying on formulas that were "good enough" to repackage, Trustco has always performed its own detailed credit analysis. Unlike other savings and loans, Trustco was unwilling to make subprime loans and was also unwilling to purchase securities that were backed by subprime loans. This discipline served the company well. Despite these conservative practices, Trustco managed to grow at a respectable pace while averaging a 21 percent return on equity over the last 9 years. The keys to the company's earnings success appear to be: (1) the fact that the bank does most of its business in states that have not experienced large declines in property values including New York, New Jersey, Massachussets and Vermont , and (2) the bank's policy of catering to the very best borrowers by charging low closing feest and no mortgage interest. Although the company has some exposure to Florida real estate, it seems to have avoided major damages there. In the future, the Florida presence will likely be a positive for Trustco.
oops, I meant to say "no mortgage insurance", not "no mortgage interest"
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