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National Western Life Insurance Company Message Board

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  • bbarberayr bbarberayr Oct 18, 2011 11:29 AM Flag

    Further update to our NWLI notes

    Good luck with the board - makes a ton of sense to buy stock back down here, but they say that it is better to maintain a strong balance sheet to grow the business.

    Re Moody's National bank, NWLI filed an 8-k back in 2008 confirming this ownership:

    https://www.nationalwesternlife.com/pdf/NWL%20Form%208-K%20MNB%20Related%20Party%20Transaction%206-25-08.pdf

    The question I would ask, if you get the opportunity, is what is the book value of this holding. I would think it is quite small as they have owned this for a long time. We could then estimate the value of this holding based on comparable public banks and see if there is a higher discount to real book value here.

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    • >>The question I would ask, if you get the opportunity, is what is the book value of this holding. I would think it is quite small as they have owned this for a long time. We could then estimate the value of this holding based on comparable public banks and see if there is a higher discount to real book value here.<<

      You would have to look at the banks balance sheet. I think most of the assets are shorter term, and/or marked to market. I would guess that the value to NWLI of the bank, using conservative metrics would be the following:

      Tangible Book Value of Moody National Bank * (use a range you are comfortable with,say 60% to 115% of TBV).

      TBV of Moody National Bank as of 6/30/11 is $86M, total assets are $944M.

      You also have HomeTown Bank, National Association, which has $344M in assets and around $2.4M in equity. Their tier 1 ratio is around 8.75%. I am not sure of the ownership here.

      I would gather that NWLI's interest in Moody National Bank is worth around $9M. Not a real material amount. Perhaps I am wrong, and perhaps HomeTown Bank is owned or not owned by NWLI. With that said, you could have a value of somewhere between $7M to $12M on that asset. Again, not real material.

      My only concern with the banks would be a properly audited, and proper segregation of assets, liabilities and equity b/w NWLI and all related party banking affiliates.

 
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