Going to stick my toe in on this one. Among everything else I like, the recent announcements got my attention as well;
1) $2 million share repurchase
2) Redeeming 50% of its SBLF Preferred Stock
Thoughts, folks? These stocks are getting spooked by the drop in oil prices, outlook for the economy, potential rising rates, etc.....Good entry point?
PSEC announced drop in divvy before the opening bell....."Prospect Capital also reduced its monthly cash dividends to shareholders to 8.333 cents a share for February, March, and April 2015."....
200K? Drop in the bucket. About 2 or 3 months pay/bonus of the bigwig at HBKS who made 836,840 in 2012, who knows what he's making this year.
Congrats! Like what I see, performing my DD right now before jumping in. Potential rate impact seems to be spooking the market, however, it could over a good entry point.
Who knows what interest rates have in store for BDCs and their dividends in the coming months/years, but I like this little gem. From the latest quarterly report dated 11/10;
"This represents the fourth consecutive quarter of per share Adjusted Net Investment Income growth for MRCC. In an environment where many other BDCs are experiencing declining per share net investment income and are not covering their dividends, we are pleased that we have been able to grow our per share net investment income for each of the last four quarters and are comfortably covering our third quarter dividend of $0.34 per share."
Sentiment: Strong Buy
The company, which introduced a 5-cent dividend for stockholders in May, paid out the same rate for the third quarter. The company’s stock price has been rising steadily since the release of its third-quarter earnings last week to a peak of $10.10 from $9.08 the day of the release.
The company also was authorized to buy back 100,000 shares through October next year by its board of directors. Stock repurchases bring shares back into the company’s holding, increasing the earnings-per-share of the remaining stock.
The stockholder’s equity, which is the bank’s total assets minus its liabilities, has increased by about 9.6 percent year-over-year to about $33.5 million in the third quarter.
The company was started just over 15 years ago by Scruggs and Chapman, who said at the time there was a need in the area for a local bank. Today, their future plans simply are to grow.
“If you want to stop to pat yourself on the back,” Scruggs said, “you’re going to get passed.”
The gap between future growth and the bank’s current standing, Chapman said, can be bridged by both the economy’s room for improvement and the bank’s own initiatives.
“I think there’s room to definitely continue the march,” Scruggs said.
For the bank’s own part, its improvement mostly began, Chapman said, with a “strategic initiative we’ve taken on that started about three years ago ... getting the right people to push” commercial and industrial lending.
“Just changing the entire lending culture, really,” he said.
The bank is still looking for places to expand in new markets within the commonwealth, so long as it’s a smart choice, Chapman said. “We [still] feel like there’s a lot of ground to plow here,” he said.
Sentiment: Strong Buy
The Bank of the James has broken another company record on its balance sheet, its third consecutive quarter to do so for the year.
CEO Bob Chapman and chief financial officer Todd Scruggs attribute the good year to a growing economy, quality loans and an excellent staff.
Net income for the local bank also has broken company records this year for the second and third quarter, ending Sept. 30, rising 12 percent year-over-year to $914,000. Total assets, which have broken records each quarter this year, have increased to about $451.7 million for the third quarter, an increase of about 3.75 percent year-over-year.
“We’re not just floating rates out there,” to draw in new clients, Chapman said. “That just doesn’t happen by putting an ad in the paper. It happens when employees go the extra mile.”
A commercial lending officer took the time over one weekend to determine if a client was dealing with potential fraud in their account, Chapman said, adding he had dozens of similar stories.
“You have to give superior customer service,” he said.
In the meantime, the company has seen an improvement in the local economy, citing a rise in clients’ confidence. “They’re a lot more upbeat than they were five years ago,” Scruggs said.
Local companies, Chapman said, have taken out loans to reinvest in new equipment. The loans are not always huge, he said, but it has been a sign of improvement.
In the third quarter, net loans for the company rose 13 percent year-over-year to $373.39 million.
Meanwhile, the quality of loans also has improved. Charge-offs — debt deemed uncollectible and written off — decreased by more than one-third year-over-year, to $326,000.
Loan loss provision — money set aside to cover bad loans — was zero for the quarter. Meanwhile, loan loss provision year-to-date, currently at $55,000, is four-fifths less than it was during the same time last year.
Nonperforming assets, where the bank is not yielding any income, has dropped by about 22.7 percent to $4.4
According to the World Property Journal;
Based on the Mortgage Bankers Association's Builder Application Survey for October 2014, mortgage applications in the U.S. for new home purchases increased by 8 percent relative to the previous month. This change does not include any adjustment for typical seasonal patterns.
By product type, conventional loans composed 68.2 percent of loan applications, FHA loans composed 16.2 percent, RHS/USDA loans composed 1.5 percent and VA loans composed 14.2 percent. The average loan size of new homes increased from $298,274 in September to $300,289 in October.
"Applications for new home purchases picked up in October, particularly for higher priced homes," said Mike Fratantoni, MBA's Chief Economist. "The continued improvement in the job market and still low mortgage rates are supporting the upper levels of the purchase market, while the tight credit environment continues to constrain sales at the entry level."
The MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 461,000 units in October 2014, based on data from the BAS. The new home sales estimate is derived using mortgage application information from the BAS, as well as assumptions regarding market coverage and other factors.
The seasonally adjusted estimate for October is an increase of 8.5 percent from the September pace of 425,000 units. On an unadjusted basis, the MBA estimates that there were 36,000 new home sales in October 2014, an increase of 12.5 percent from 32,000 new home sales in September.
Sentiment: Strong Buy
As long as the PPS is at this level a significant portion of the investing community doesn't even consider it. Not sure of the viability of a reverse split but once it can get itself to a certain level and start paying a dividend it will see the love it deserves.
Concur, Mr. Chapman. This initiative does a few things; establishes a floor for the stock price (perhaps closer to $10 vice $9 (11% bump, thank-you very much), and allows the company the option to repurchase shares when it falls below BV ($9.94). Repurchasing shares below BV is a win-win for EPS and BV both go up.
Well, it's early, but BOTJ has had an interesting 3 trading days since their earnings/buyback release on 10/24. We've hit a 52 week high and volume has been much higher than normal (Only 2 other days in 2014 had higher volume than yesterday)
Sentiment: Strong Buy
I like the buyback announcement just as much as anything else; when your stock price is 9% less than book value (BV), it's a great move!! It not only increases your EPS, but when bought below BV it further increases the BV of the company. Win/Win!
What's not to like?
- Net income in third quarter 2014 was the highest quarterly earnings in the company's history, following record quarterly net income in second quarter 2014.
- The Company's year-to-date 2014 earnings were a company record for nine months.
- Book value per share rose to $9.94 at September 30, 2014 compared with $8.85 per share at December 31, 2013
- The company's board of directors has also authorized a share repurchase program extending through October, 2015, which authorizes the company to buy back up to 100,000 shares
- Total deposits were $398.83 million at September 30, 2014, up from $387.40 million at December 31, 2013
- Total assets at September 30, 2014 were a company-record $451.69 million, up from $434.51 million at December 31, 2013.
- Key measures of shareholder value, including total stockholders' equity and book value per share, rose significantly compared with the prior year.
- The company continued to demonstrate strong asset quality, reflected by a ratio of nonperforming assets to total assets of 0.98% compared to 1.32% in Q3/2013
Sentiment: Strong Buy