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

    2 comments :

    1. Phil, I appreciate your posts and your research. I have looked at the universe of stocks you covered here and have placed an order for a new position in LOGN. Against your advice, I am also in the market to increase my stake in Blackhawk. Keep up the great work!

      ReplyDelete
    2. Thank you for the kind words Boxxer55! Since I wrote the Blackhawk piece, the quarters have rolled in very nicely and Monday's news that they did a debt offering instead of diluting shareholders has me completely turned around. Most of the really cheap bank stocks have moved up and I'd imagine BHWB is now poised to follow.
      Good luck!

      ReplyDelete