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 |
*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
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What do you make of the bank's recent announcement of a private stock offering to pay off the preferreds?
ReplyDeleteI have three thoughts about the offering: One, as a current shareholder I don't like being diluted with new shares sold below book value. However, I can buy more and retain my ownership so it is hard to complain too much. Two, I think these shares will be worth much more in the future, so I like the deal. Three, it should put them on better footing with their regulators and make future dividends much more likely.
DeleteGood Luck,
Phil