Enterprise Financial Services Group, Allison Park, PA (EFSG)

A Case of an Enterprising Enterprise


Enterprise Bank is true to its name in ways that make EFSG one of the top "feel-good" stocks in my portfolio.

Unlike other banks I have seen, Enterprise is structured and staffed to be a true, full-service partner for the most enterprising members of its community — including startup businesses and businesses in distress, which most banks consider too risky to serve.

I anticipate that within three years, EFSG will have a book value of $30 per share, be earning $2.25 per share, and be paying an 80 cent dividend. To me, those numbers easily support a $22.50 stock price, more than double today's $10.30.

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

Prospective Buyers Enterprise Financial Services Group has designed a truly unique, niche business outside of the focus of the average bank, so it's hard to imagine it being very attractive to acquisitive neighbors. I don't think bigger banks would appreciate what's most valuable about it.

Financial Snapshot
Estimates based on 06/30/2017 Call Report and 9/2016 Annual Report

Total assets:
$268M
Tangible book value per share:   
$25.92
NPAs to assets:
6.7%
Price to book:
39%
Market cap:
$9.1M
Dividend yield:
0%
Trailing 12-month ROA:
0.65%
Trailing 12-month ROE:
7.43%
TARP:
$0M*

*Redeemed $4M 08/25/2011 into $5M SBLF

The Crew

Charles H. Leyh, Chairman, President and CEO
Bradley J. Ryniawec, Senior VP, Assistant Treasurer and CFO
Douglas W. Lockard,  Vice Chairman

The Skinny

The main reason EFSG is at the top of my "feel good" list is this:

Where other banks have wealth management groups to help those who already have a surplus of money to make even more, Enterprise has a business consulting practice, insurance services group, and even a real estate subsidiary to help small and struggling business customers with everything from bookkeeping and website design to property management.

I'm more bullish on Enterprise than my friend Nate Tobik, who has also written about Enterprise. (See "Is this bank a quadruple or a zero?" for example.)

My logic for having faith in EFSG as an investment is pretty well expressed by these excerpts from the bank's recently released 2016 Annual Report:

"This last fiscal year has seen pretax earnings improve approximately 40% over the prior year."

"Growth continues to occur."

"Legal collection and OREO holding costs continue to drop."

"[Our] plan will include resuming dividend payments"


Sources

  • Confidential interviews with shareholders and analysts

1 comment :

  1. That's good to read!! Thanks for commenting your thoughts and opinions with us!! It certainly was informative and helpful all along!! Keep up the good work!!

    ReplyDelete