The Case of a Good Catch on the Wisconsin River
Fishing for community bank stock that can produce a big return? The parent company of Peoples State Bank is one of only 35 banks in the country to have increased their dividend more than 1.5% in each of the last 10 years. And of those 35, PSBQ is one of just 9 whose stock nonsensically
declined over this period. I'd say this Fish is a real bargain.
Disclosure: As of this posting, I own shares of PSBQ and may subsequently either dispose of them or purchase more.
Prospective Buyers
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I think Peoples State Bank is swimming along so prosperously they needn't bite at any takeover offers, but any of these banking behemoths with overlapping branches should be thrilled to land such a strong franchise.
Associated Banc-Corp, Green Bay, WI (ASBC)
BMO Financial, Toronto, Canada (BMO)
US Bancorp, Minneapolis, MN (USB)
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Financial Snapshot
(as of 03/31/2012)
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Total assets:
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$607M
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Tangible book value per share:
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$32.51
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NPAs to assets:
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3.1%
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Price to book:
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82.3%
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Market cap:
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$42.4M
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Dividend yield:
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2.8%
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Trailing 12-month return on assets:
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0.86%
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Trailing 12-month return on equity:
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10.4%
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Luminaries
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William J. Fish, Chairman
Peter W. Knitt, President and CEO
Scott M. Cattanach, Senior VP, Secretary, Treasurer and CFO
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Gold Stars
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Thanks to the inarguably skilled leadership of Fish, Knitt, and Cattanach, PSB Holdings earns at least Five Stars in my book:
- Ability to swim upstream. Counter to banking industry trends during the Great Recession, PSBQ's financial performance has been strong across the board — The bank was profitable in every period. Earnings for 2011 were a healthy 29% higher than their pre-recession earnings of 2007. And NPAs never exceeded a low 3.2%.
- Stellar rise in book value. Since the start of 2007, PSB Holdings' tangible equity has grown by an astounding 56%, while most other banks' per share equity has declined.
- Healthy insider ownership. Insiders own over 15% of PSBQ stock. (See also my article in Seeking Alpha on the importance of Insider Ownership)
- Room for dividend growth. Even though People's State Bank has a healthy 2.8% dividend yield, their payout ratio is still a low 22%, indicating there's plenty of room for dividend growth in the future.
- No TARP to hold it down. PSB Holdings never needed TARP funding.
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Sources
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I live in Wausau,headquarters of PSBQ. They are now $900,000,000 assets. Ive been a shareholder for 30 years, its an exceptionally well run bank. I know the CEO and most people on the board. This bank will not be sold anytime soon, no reason to. Its still as well run as your commentary. They recently did a 3 for 1 split that is not accounted for on most financial sites so it appears as if its stock is freefalling
ReplyDeleteThanks lizcor68!
DeleteI agree with you. I was able to meet with Scott Cattanach and Mark Oldenberg last fall. They are good bankers. Filling Peter Knitt's shoes well. It is nice to have banks like PSBQ in one's portfolio where you don't worry because you trust management to always do good things for shareholders. South of you, I would put the State Bank of Cross Plains $SBBI in the same category.
Best,
Phil