OK, you woke me up...Now what? How is the housing market and unemployment on the eastern shore? What are the prospects for growth? How much competition are the Queenstown Bank, Farmers and Susquehanna Bank? What are the prospects of a larger bank buying SHBI since they sell slightly over book value? Is their dividend secure? I have lots of questions and few answers..
I must disclose that I have been in and out of SHBI many times over the last 35 years. I know SHBI has not been around that long but I started investing in the Centreville National Bank when Mr. Pippen was the President.The bank was run by great people who would lend anyone 100K if they could pledge a million dollar farm as collateral.
while you have been looking at this company for the past 35 years, i have known about it for all of 3 weeks.
so, as you might expect, i have no answers to your questions above.
as best as i can tell, these guys run a seriously boring shop - - which has served them well over the past few years.
they're the first company i've invested in that doesn't hold quarterly conference calls.
and their last 10Q was about as dull as they come.
but i have managed to notice a few interesting things about this stock:
the balance sheet keeps growing in the midst of a credit crisis:
Dec 2007: $956mm Dec 2008: $1.04B Dec 2009: $1.15B
it seems to me that once defaults subside (they will at some point), these guys are setting up for record net profits, probably in the $16mm range. that would put SHBI at about 7x earnings, given the current market cap of $111mm.
and interestingly enough, that's exactly what the one analyst predicting 2011 earnings here on Yahoo! puts SHBI at.
so at 7x future earnings and a hair above tangible book value, i have to think this is about as cheap as you have ever seen this stock.
i don't know that there are many banks willing to pay up for anything these days - - except slashed price assets from FDIC closed banks. so your buyout may not be coming anytime soon.
as for the dividend security, that likely depends on the economy going forward, and i'm not going to take a guess there.
but i can say this company is faring better than most, and should be a survivor, even if things get worse from here.
in short, looking at the numbers, it's as cheap as the other banks, but less risky.