Showing posts with label TRMK. Show all posts
Showing posts with label TRMK. Show all posts

United Bancorporation of Alabama, Atmore, AL (UBAB)

A Case of United Banking in Opportunity Zones


Remarkably, even in this political climate, politicians have crossed party lines to arm financial institutions with new tools for developing America's most distressed communities.  

United Bank of Atmore, Alabama is putting some of these tools to good work!

What's the opportunity here for investors? They could nearly double their money in three years. I see UBAB earning over $3 per share, having book value over $23 per share, and trading in the $30's.

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


Prospective Buyers
Non-interest bearing deposits spell opportunity for any enterprising bank. 43% of United Bank's deposits fall in this category and are free to lend in the community.

First Bancshares, Hattiesburg, MS (FBMS)
Home BancShares, Conway, AR (HOMB)
Trustmark, Jackson, MS (TRMK)

Financial Snapshot
†as of 03/31/2018
Total assets:
$608M†
Tangible book value per share:   
$15.65†
NPAs to assets:
1.0%†
Price to book:
113%
Market cap:
$43.3M
Dividend yield:
0.8%
Trailing 12-month ROA:
0.7%†
Trailing 12-month ROE:
10.9%†
TARP:
$0*

*Redeemed $10.3M 11/2016

The Crew
David D Swift, Sr, Chairman
Robert R Jones III, President and CEO
Gwendolyn Bailey Braden, Executive VP and COO

The Skinny
United Bank is lending in communities desperately in need of capital:
  • Five of United Bank's 18 branches (28%) are located in Opportunity Zones (see map).

 United Bank uses a variety of contemporary tools for getting capital in the hands of area developers, entrepreneurs, and job creators:

United Bank may be in some economically distressed areas, but it is performing great!
  • The bank has #1 market share of deposits in 6 of the 15 towns where it has branches.
  • UBAB has paid uninterrupted dividends since 1983.
  • UBAB’s ROA and ROE are on a par with those of other banks in the country.

Sources
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First M&F Corp, Kosciusko, MS (FMFC)

The Case of a Registration Statement That Doesn't Mean What You'd Think


If you're thinking of selling or avoiding FMFC stock because First M&F filed a Registration Statement on April 3, 2012, think again: 

According to bank Chairman and CEO Hugh Potts, First M&F has no intentions of selling additional shares. The bank simply renewed the March 2009 Registration Statement as required for its TARP warrants. So there's little risk of a big dilutive capital raise to anything like the 37 million registered shares, which at today's market could have brought book value down from over $10 to something under $6.

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

Prospective Buyers
Although it doesn't sound like FMFC would be open to selling, three banking heavyweights have a significant presence in its markets and would benefit from an acquisition of its branches:

BancorpSouth, Inc, Tupelo, MS (BXS)
16 local branches with $1.1B deposits (9% of total business)
Regions Financial Corp, Birmingham, AL (RF)
27 local branches with $1.3B deposits (less than 1% of total business)
Trustmark, Jackson, MS (TRMK)
15 local branches with $500M deposits (5% of total business)
Financial Snapshot
(as of 03/31/2012)

Total assets:
$1.6B
Tangible book value per share:
$9.71
NPAs to assets:
4.29%
Price to book:
52.4%
Market cap:
$49M
Dividend yield:
0.8%
Trailing 12-month return on assets:
0.32%
Trailing 12-month return on equity:
4.57%
TARP:
$17.8M*
*Converted to CDCI Preferred at 2% until 2018
The Crew
Hugh Potts Jr., Chairman and CEO
Jeffrey Lacey, President
John Copeland, Executive VP and CFO
The Skinny
- - - PLUSSES - - - - - - - - - - - - - - -
  • NPAs are down. After peaking at $87.9M (5.4% of assets), NPAs are down to $58.9M (4.5% of assets). 
  • Earnings are up. After four straight quarters of making pennies per share, FMFC earned $0.12 in Q1 2012. 
  • Equity is improving. After hitting a low of $104M, equity is up to over $111M. 
  • Insider ownership is strong. Insiders own over 24%, and there have been 12 separate insider buys in the open market this year.
  • Still room to make a buck. Keefe, Bruyette and Woods predicts FMFC will earn $0.75 per share in 2013. If they're right, investors buying FMFC stock today could make $2 or so per share.
- - - MINUSES - - - - - - - - - - - - - - -
  • Low tangible common equity. At 5.6%, FMFC's tangible common equity is a bit thin. Truly strong banks carry 8-10%.
  • Little chance of sale. Chairman Potts  — who's been building First M&F for the past 39 years — intends to continue building the bank.
    Sources
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