Nothing exciting, but on hind sight...The economy is still in the tank--at the very bottom, if you ask me--hence the demand for loans is weak. Coupled with more stringent loan criteria, flat loan production should not be a surprise.
The interest rate spread was very high. I thought it was due to Service-1 book of loans but was not sure. A slight contraction is no cause for alarm.
The recapitalization was done at about 15% discount from tangible book value, a discount too high in light of the bank's profitability.
The 30-89 days past dues increased in Q4, pretty much a norm among California banks. The non accruals is about 4% of loans against allowance half of that, that could turn out to be thin. (Just guessing here.)
There could be tug-in acquisition beside Service-1, but I am not expecting anything that large. The high cost $1.3 million in loan needs to go, and TARP--not so cheap either--also need to go. What's left can get it by, but not much else.
I believe things will improve this year and banks in general will benefit from it. The wild card is agriculture economy that the valley is based.
This bank is so tiny, hardly noticeable. How anyone bump into this one...I'd love to hear your story.
Way back in 2003 I was looking to make an investment in a community bank in California. There was a lot of consolidation going on in the group. This bank was well run and at the time I also liked the fact that it was tied to the agricultral economy in the central valley. I sold my positionin 2005 for reasons I cannot recall. I have watched this bank since I sold it, and was interested to read that Sandler Oneill picked it as one of the top ten investments for 2010. I must say, however, that I am not impressed with Sandler's logic. What's your story?