EFSC is the most undervalued stock in the whole banking industry now! (Still under $14.00/share)
- Net earnings 0.52/share for Q2 - Net earnings increased quarter-by-quater - extremely high quality of earnings - Asset quality is improving significantly and continuously - Loan portfolio is expanding dramatically despite the sluggish economy - Core earnings increased significantly - Capital strenthened from capital raise at $12.75/share a couple weeks ago - Ample liquidity - Much benefited from a couples of FDIC-assisted acquisitions during the past two years - Should be trading above $20 by the end of 2011
I am not paid to advertise, but I am fully loaded with this stock and happy to share with you guys just like my last post about FISI.
Based on EFSC's current fundamentals, and with comparison to its national peers' share prices, I believe EFSC should be traded above $18 per share now. However, the market does not seem to recognize this immediately.
In the past ten years, GABC has been a great bank with very stable earnings, juicy dividends, and never disappointed its shareholders. The financial crisis doesn't seem to have any negative impact on GABC. This is absolutely amazing. I feel that its management has been very conservative and outstanding people.
However, GABC did not grow much in the past ten years, so this bank may be good for senior people, but if you are still young, we have other choices. A good example for a fast growing bank is EWBC, a Chinese-American bank.
Anyway, let's go back to its fundamentals:
GABC completed an acquisition on Jan 1, 2011. From its Q1's statements, this acquisition did not seem very great to me. Though it increased its pre-provision earnings per share, it also worsened its asset quality a lot because the acquired bank has relatively more non-performing loans.
The Q2's performance has totally changed my mind, those folks made a good deal on the acquisition. Non-performing assets reduced by 8%, non-performing loans decreased by 4%.
More than adequate provision for loan losses is made in recent quarters.
Net interest income increased; loan portfolio is expanding even excluding the acquisition impact.
Deposits are growing rapidly, and decent net interest margin 3.95.
loan is only 73% of deposits, that means big growth potential once the economy recovers.
Most importantly, the Q2's earning quality is much better than Q1. Q2 did not sell securities to boost income. Q2 controlled expenses, improved efficiency. Q2 increased net interest income. Q2 improved asset quality. Q2 continues to expand loan portfolio Q2 continues to expand deposits rapidly Q2 has improved liquidity.
This quarter is probably their best one during the past one or two years.
I feel GABC is better in value than SBSI based on Q2's results, and I causiouly expect this trend to continue.
In short, GABC is a very good choice. If the price goes below $15.50, it would definitely a good value stock.
This is merely what I think, and I am human, I could be wrong.