QRRY – Quarry City Savings and Loan Association

[mjohn707]

Quarry City is a single branch bank located in Warrensburg, Missouri, which is 40 miles east of Kansas City in the West Central region of Missouri.  It is the county seat and largest city in Johnson County, which has a total population of 54,000 people.  The county is heavily agricultural with just under 75% of the total land mass devoted to agricultural production.  It is also the location of the Whiteman Air Force Base and the University of Central Missouri. 

 

The bank was organized in 1890 and converted from a state-chartered mutual savings bank in 2013 when it issued 407,691 shares at a price of $10.  The bank raised a total of $3.2M after expenses.  Two brothers, Steve and David Andrew are the CEO and CFO.  They each own 5% of the stock and receive a total of 157K each in total compensation.  The company has 12 employees including the two brothers.  They rank 6th of 9 banks in their deposit market, with a 7.1% share.  The bank is small and only has $46.7M in total assets.  They are also overcapitalized with $7.9M in common equity. 

 

At the recent price of $10.75, shares trade for 55% of book value.  They are modestly profitable and have a clean loan book with NPAs to total loans of 0.84% as of September 30, 2014.

 

Shares trade over the counter and are very illiquid.  It took me over a month to purchase a small position.  I know this one won’t be for everyone because of the illiquidity and low profitability, but I think a basket of similar banks will produce reasonable and safe returns over time.

 

[oddballstocks]

 

Shares trade over the counter and are very illiquid.  It took me over a month to purchase a small position.  I know this one won’t be for everyone because of the illiquidity and low profitability, but I think a basket of similar banks will produce reasonable and safe returns over time.

 

 

mjohn707,

 

You nailed it, love QRRY, part of a basket of banks that all trade like this.  I purchased right after the IPO when some liquidity existed, seems to have dried up.  This is another buy at 55% of BV, hold for 3-5 years and sell at 1-1.3x book.  I believe they will probably initiate a buyback this year, a dividend the next and then claim they're not interested in selling before selling out in a few years.

[mjohn707]

Hmm, any chance we're going to get you to disgorge the names in that basket?

[wknecht]

This looks pretty interesting. I like the insider ownership.

 

Their loan mix concerns me a little bit though. They have a very large percentage in C&D loans (11.5% of loans; 96th percentile in their peer group). I guess they would still be at around 80% of BV even if they lost half their money on these.

[Guest Schwab711]

Hmm, any chance we're going to get you to disgorge the names in that basket?

 

Completebankdata.com is really worth the price, I've had the trial subscription and it had a ton of information. Compare the price to contracting out a college student to compile all the data on OTC banks (pretending they could get info on dark companies) and Oddball's db provides significant excess value. I like enough other stuff at the moment that I don't see the need in paying for his data but if ideas dried up I would definitely purchase and re-allocate some savings to a basket. A basket of small banks, similar to what I think Oddball holds, pretty much guarantees market-beating results over the long-run; it also means a smaller range of expected returns than I feel I can get presently. I would bet volatility is extremely low as well. Now is the time for many investors as the next few years may not lift as many ships as recently.

[mjohn707]

This looks pretty interesting. I like the insider ownership.

 

Their loan mix concerns me a little bit though. They have a very large percentage in C&D loans (11.5% of loans; 96th percentile in their peer group). I guess they would still be at around 80% of BV even if they lost half their money on these.

Good point, construction loans are always scary.  During the financial crisis one of my local banks, which was the longest continually operating bank in the state and had survived the great depression and the 1980s oil glut, got themselves in trouble making construction loans in an out of state market they obviously didn't understand too well. 

 

I tend to have a little more faith in small banks that operate in just a few branches in markets they've been in for a while.

[mjohn707]

Hmm, any chance we're going to get you to disgorge the names in that basket?

 

Completebankdata.com is really worth the price, I've had the trial subscription and it had a ton of information. Compare the price to contracting out a college student to compile all the data on OTC banks (pretending they could get info on dark companies) and Oddball's db provides significant excess value. I like enough other stuff at the moment that I don't see the need in paying for his data but if ideas dried up I would definitely purchase and re-allocate some savings to a basket. A basket of small banks, similar to what I think Oddball holds, pretty much guarantees market-beating results over the long-run; it also means a smaller range of expected returns than I feel I can get presently. I would bet volatility is extremely low as well. Now is the time for many investors as the next few years may not lift as many ships as recently.

 

I thought about subscribing too but I have the same problem, I'm more constrained by money than available ideas.  I always have a couple of these things in my portfolio though it seems like

[oddballstocks]

Thanks for the kind words on the site guys, really appreciate it.  This is off-topic slightly.  I've run into a number of investors who have a similar problem, they want access to data but don't necessarily want a year-long subscription.  Would something like a monthly-pass make sense?  You only pay for the number of months you want?  Or how about the ability to download PDF reports for certain banks on a one-off basis.  You find three banks you like and for $xx can buy financials on just those?

 

Trying to create some sort of business model around this limited use model.

 

Back to banking:

 

I believe I own somewhere between 30-40 banks.  I buy most anything that matches my cheap bank criteria.  I buy most mutual conversions if they come out at 75% of less than BV.  For the most part these positions are small, very small, but as a total they are a large part of my portfolio.  I do own some larger bank positions as well, I have done more research and have a higher conviction (if you can call it that) with those.

[nodnub]

Thanks for the kind words on the site guys, really appreciate it.  This is off-topic slightly.  I've run into a number of investors who have a similar problem, they want access to data but don't necessarily want a year-long subscription.  Would something like a monthly-pass make sense?  You only pay for the number of months you want?  Or how about the ability to download PDF reports for certain banks on a one-off basis.  You find three banks you like and for $xx can buy financials on just those?

 

Trying to create some sort of business model around this limited use model.

 

Back to banking:

 

I believe I own somewhere between 30-40 banks.  I buy most anything that matches my cheap bank criteria.  I buy most mutual conversions if they come out at 75% of less than BV.  For the most part these positions are small, very small, but as a total they are a large part of my portfolio.  I do own some larger bank positions as well, I have done more research and have a higher conviction (if you can call it that) with those.

 

Would you mind sharing what % of your portfolio is allocated to banks and financials? 

[oddballstocks]

Thanks for the kind words on the site guys, really appreciate it.  This is off-topic slightly.  I've run into a number of investors who have a similar problem, they want access to data but don't necessarily want a year-long subscription.  Would something like a monthly-pass make sense?  You only pay for the number of months you want?  Or how about the ability to download PDF reports for certain banks on a one-off basis.  You find three banks you like and for $xx can buy financials on just those?

 

Trying to create some sort of business model around this limited use model.

 

Back to banking:

 

I believe I own somewhere between 30-40 banks.  I buy most anything that matches my cheap bank criteria.  I buy most mutual conversions if they come out at 75% of less than BV.  For the most part these positions are small, very small, but as a total they are a large part of my portfolio.  I do own some larger bank positions as well, I have done more research and have a higher conviction (if you can call it that) with those.

 

Would you mind sharing what % of your portfolio is allocated to banks and financials?

 

Without looking 15% or greater.  Most of what I've been purchasing recently has been financials so this amount is increasing.

[AJDelphi]

Thanks for the kind words on the site guys, really appreciate it.  This is off-topic slightly.  I've run into a number of investors who have a similar problem, they want access to data but don't necessarily want a year-long subscription.  Would something like a monthly-pass make sense?  You only pay for the number of months you want?  Or how about the ability to download PDF reports for certain banks on a one-off basis.  You find three banks you like and for $xx can buy financials on just those?

 

Trying to create some sort of business model around this limited use model.

 

Back to banking:

 

I believe I own somewhere between 30-40 banks.  I buy most anything that matches my cheap bank criteria.  I buy most mutual conversions if they come out at 75% of less than BV.  For the most part these positions are small, very small, but as a total they are a large part of my portfolio.  I do own some larger bank positions as well, I have done more research and have a higher conviction (if you can call it that) with those.

 

I would be interested in just a one month subscription or just being able to download pdf reports on a one off basis. Seems like a good idea to me that might get you more subscriptions. I usually find myself looking at a whole bunch of banks at the same time, not really off and one throughout the year. There really is no rhyme or reason for that...

 

I haven't used your site but I am sure it is very good.