Logansport Financial Corp, Logansport, IN (LOGN)

A Case of a Safe Port for Bank Stock Investors


A company with this great a record ought to be trading at a premium to book value. Although there are literally hundreds of banks like this trading far below what they are worth, Logansport Financial is one of my favorites. All signs point to LOGN's book value being over $30 next year. If it trades down the road at 120% of book like I anticipate, investors will own a $36 stock, 80% higher than where LOGN trades now. In the meantime, shareholders can sleep at night, earning a decent 2.7% dividend.

Disclosure: As of this posting, I own shares of LOGN and may subsequently either dispose of them or purchase more.

Prospective Buyers
PNC Financial Services, Pittsburgh, PA (PNC) - unlikely to be interested in acquiring a property as small as LOGN.
Salin Bancshares, Indianapolis, IN (privately held) - has been rapidly expanding throughout Indiana and might find LOGN an attractive candidate for acquisition.
Security Federal Savings Bank, Logansport, IN (privately held) - a Mutual Savings Bank that does not have stock with which to acquire another institution. Should Security decide to go public, buying LOGN could make sense.
Financial Snapshot
(as of 12/31/2012)

Total assets:
$173M
Tangible book value per share:
$28.66
NPAs to assets:
1.35%
Price to book:
75%
Market cap:
$14.5M
Dividend yield:
2.76%
Trailing 12-month return on assets:
0.91%
Trailing 12-month return on equity:
7.8%
TARP:
None

Luminaries
David Wihebrink, Chairman and former CEO
Arden Cramer, President and CEO
Chad Higgins, Treasurer, Secretary, and CFO
Gold Stars
Logansport Financial's Management team has been doing everything right for decades.

The have a stellar REPUTATION in the industry for being top-notch bankers.

They have produced remarkable RESULTS compared to their peers:
  • Increased book value from $12/share in 1996 to $28/share today
  • Amassed 3x average deposits for community banks, exceeding the industry gold standard by 50% (See bancography.com)
    • Didn't lose any money during the Great Recession
    • Never had to take TARP
    Their record of REINVESTING bodes well for investors.
    • Insiders own 11%
    • The company recently repurchased over 15% of shares outstanding, paying $22.65/share for the last 9000 shares
    • Stock buy-backs are providing a nice floor for the shares and helping to increase book value by far more than earnings accretion alone
    • At today's stock price of $21.66/share, investors can buy LOGN stock for less than the company itself paid to repurchase shares
    Sources
    • Interviews with management
    • Confidential interviews with shareholders

    CenterBank, Milford, OH (privately held)

    A Case of Greenlee, OH vs Lindenbaum, NY


    Management at CenterBank is just plain stinky and deserves to be called out for their crummy behavior — pretending to be good "small town America" guys getting screwed by bad "NY City Wall Street guys," when they're really just sore losers playing the victim. The way they are shirking their obligations to the taxpayer-funded Troubled Asset Relief Program (aka TARP) undermines the moral fabric of our financial system and dishonors every hard-working American taxpayer. Shame on them!

    Disclosure: As of this posting, I do not own shares of CenterBank and wouldn't touch them with a ten-foot pole.
      Financial Snapshot
      (as of 12/31/2012)

      Total assets:
      $113M
      Tangible book value per share:
      N/A
      NPAs to assets:
      2.9%
      Price to book:
      N/A
      Market cap:
      N/A
      Dividend yield:
      N/A
      Trailing 12-month return on assets:
      0.9%
      Trailing 12-month return on equity:
      9.4%
      TARP:
      $2.3M*
      *Resold in auction October, 2012 to Basswood Capital Management LLC
      Scoundrels
      Daniel Rolfes, Chairman
      Stewart M. Greenlee, President and CEO
      Stephen R. Church, Controller
      Red Flags
      - - - - The Skinny - - - - 
      • After CenterBank lost $700K in 2008, the U.S. Government came to its rescue with $2.3M of TARP funding on April 1, 2009
      • Although its retained earnings were negative, CenterBank paid its TARP dividends to Washington without fuss for 13 consecutive quarters
      • In a January 2012 Cincinatti.com interview, CEO Stewart Greenlee insisted CenterBank would repay TARP before the scheduled 2014 interest rate increase
      • In October 2012, after giving CenterBank ample opportunity to repay it, the U.S. Government auctioned off the bank's TARP, as it is doing across the country to wind down the emergency program
      • CenterBank insiders submitted a bid at the auction, but private investors submitted a higher bid, “winning” the TARP “fair and square” for $.82 on the dollar
      • Given their December 2012 report of positive retained earnings, CenterBank is now in a better position to pay its TARP obligations than ever
      • Instead, CenterBank has reneged on its January 2012 promise, stopped paying TARP dividends, launched a Pity Me Campaign, and started demanding that the new TARP holders hand it over to them at a 10% discount for the crime of being from “New York”

       - - - - CenterBank's Pity Me Campaign - - - -
      • But we wanted to buy ourselves out of it! (sniff sniff)
      • We can't help it we were outbid!
      • We shouldn't have to send our dividends to NY (stomp stomp)
      • Technically, since it’s non-cumulative preferred stock, no one can make us!
      • Let’s make them sorry and pay for outbidding us (ruff ruff)

      - - - - The Facts of the Matter  - - - -

      CenterBank is …
      • Violating an implicit understanding that any reasonable person engaging in business with them would have believed they had every reason to trust
      • Holding hostage honest people doing the government and taxpayers a service — for personal gain
      • Hurting taxpayers everywhere — who paid the money to save their butts and foot their $2.3M TARP rescue package in the first place
      • Hurting the government in remaining TARP auctions because investors will be afraid to buy TARP preferred (we have proof of this already, because the last auctions have brought lower bids)
      • Creating a new problem for taxpayers — who will have to put more money into the government coffers to make up for the $ the government loses
      • Behaving far more like Stalin-era Communists than anything honest American
          Sources