I've been doing some research on WAYN and have noticed that they own the land under 9 of their locations. Of course, they only have 11 locations in total. Four of these locations have been owned for more than 30 years. One location has been owned for over 100 years! I am willing to wager that this real estate is worth MORE than what it is being carried on the books for (even in the down market).
Management seems reasonably astute & conservative.
Tangible book value is only about .50/share less than stated book value. There is very little goodwill & intangibles on the balance sheet. This indicates that book value is a solid number.
HOWEVER, the one problem I see, is that management has not been able to earn more than 8% return on equity in the past decade.
Any body have any thoughts on this?
Despite my interest in WAYN, I have never been too involved with banks or financial companies. I never liked the fact that they tell you that they are making a lot of money and everthing is wonderful and the next thing you know, they go under or need to be bailed out by the government. Over the years, I have been more involved in small cap value stocks which were more often manufacturing companies. In more recent years I have put a lot of capital in Warren Buffett's Berkshire Hathaway (BRKB) and Wesco Financial (WSC). I did that, in part, because I thought the other companies were too highly priced compared to what I thought they were worth and because I thought that most managements were dramatically over compensated. AT least you can trust Buffett not to steal from his stockholders. His salary is $100,000 and there are no bonuses to him and no stock options etc.
I looked at RBNF's financial statements on Yahoo and compared them to WAYN. I prefer WAYN because it has smaller amounts of goodwill and other intangibles which I do not like to pay for. WAYN also appears to be less leveraged if you compare tangible net worth to total liabilities. So I wish you well with RBNF but I will stick with WAYN.
As to Sunwest, I was shocked at the price. The current quote is $2400 bid and $3100 asked with no trades. There is a spread that would slow a trader down. I was aware of the branch in Tustin but not the headquarters or the other three branches. At on time I thought I heard something derogatory about the management of Sunwest, but I don't remember what it was now and I may have been mistaken.
There is another bank in Southern California that I have a lot of respect for and it is Farmers and Merchants Bank of Long Beach (FMBL.ob). They have been around for a long time and are very conservative. The shares are high priced in nominal terms(around $3800) but it sells at a significant discount to what I expect is a very conservative book value of about $4400. This is not a recommendation, just a mention.
Finally, with the market meltdown last year, I was finally able to buy stocks after owning only BRKB for about five years. I currently own the following stocks: ALEX, ANAT, BP, BNI, BRKB, COP, CUO, FLXS, RDS-B, LUV, SCX, WAYN, WSC. I am not recommending all of these stocks now. Some of them have moved up significantly since I bought them and I am probably going to sell some. BRKB and WSC are Buffett related. COP, BP and RDS_-B are oil stocks that I view as protection against inflation and have high current yields. CUO, FLXS, SCX and WAYN are my small cap value stocks that I think are very underpriced. ALEX, ANAT, LUV and BNI were special situations that appealed to me to the best in their respective industries.
I hope I didn't bore you with this lengthy post.
I have a few ideas that you might find interesting...
Being from Orange CA, are you familiar with Sunwest bank? I got in around 1250, but I got out at 2100. It moved very quickly and I did not want to be greedy. I think SWBC.ob is a great bank and is one of the best run banks in the country. The FDIC seems to share this assessment, as they have selected SWBC.ob to take over a few failed banks. Because of this SWBC.ob has expanded their asset base significantly in the past year, They have also made a TON of money. If the stock goes back down, I'll be back in.
I am currently invested in Rurban Financial (RBNF). Like WAYN they are also located in OH. RBNF is spinning off a software division to shareholders in early 2010.
I am also keeping a close watch on several other small banks. I am always scanning for more and I think the small bank sector is a promising investment opportunity.
Sometimes, management is just too conservative and is happy with a subpar performance. What's interesting is that NPL are low comparatively to its peers, and the price-to-book ratio is about 0,5. It could easily get back to 1 after the crisis. I would have liked to see management buying the stock at the current price though. They did so in 2008. They could pick it up at a much better price now.
Finally, as WAYN enjoys a low leverage ratio, they could easily grow through a FDIC-assisted deal where they could reap a failed bank's assets and deposits. But are they too conservatives for doing it? That's the question.
Good to see that this board is attracting intelligent discussion, thanks.
Management of WAYN is very conservative, there is no doubting that. They have good capital ratios, no doubt.
HOWEVER, I think that they are just too small to be taking over any but the smallest failed banks.
I have made some excellent returns in the banks that are taking over failed banks. I think there is a LOT of money that is still going to be made. You have to be very careful & patient though.
If I can get into WAYN in the low 5's, I'll do it.
If management is not going to grow the bank, I think they need to return excess capital to the shareholders in the form of increased dividend. They can still be VERY conservatively capitalized and return a few dollars to shareholders.
Well, I think you are correct.
I am a bit of cheapskate, so I am trying to pay ONLY 50% or less of book value. I am also very cautious about the spread, which is sometimes very thick...
There are several other small bank stocks that are compelling like WAYN. Several of them are in the MidWest.
Are you invested or watching any other banks stocks?