WVFC - West View Savings

[indythinker85]

http://www.oddballstocks.com/2013/11/west-view-savingsa-sleepy-bank-ripe-for.html No position but nice read overall.

[Guest wellmont]

stilwell gets involved when he's sees marginally profitable low return banks that don't have big blocking ownership positions. Very good summation of this situation. he will probably file a 13-d if he can get hold of some more stock. this bank is not being managed for shareholders. it's being run  for the benefit of the CEO, who is enriching himself.

[oddballstocks]

Thanks for posting this, I am long shares.

 

Wellmont, I agree, Stilwell hones in on banks like this.  The biggest issue I see for WVFC is whether an activist can acquire enough shares on the open market.

 

If management were smart they would be buying back shares like crazy right now.  That would increase book value and earnings as well as fend off potential activists.  This was brought up at the meeting, the CEO said they do this from time to time with no plans on buying them back now.  They're more focus on paying a dividend which keeps their retired shareholder base happy, well, somewhat happy, most shareholders are frustrated about the dividend cut from a few years back. 

 

Nate

[mikazo]

I've been researching this bank and here's what I've noticed so far:

 

• 0.92 Price/Book
  
• Very low ROE (1.5%)
  
• Very low non-performing loans
  
• Improving efficiency ratio (66% in November 2016, 56% in November 2017) due to decreasing expenses and increasing net income
  
• 70% of total assets are investment securities (corporate debt of large companies) and mortgage-backed securities
  
• Rising interest rates probably explains the increase in investment security income
  
• Only 22% of total assets are net loans receivable
  
• 52% of liabilities are short-term FHLB loans
  

 

It seems to me like this bank is in the business of taking deposits and FHLB loans and investing them in corporate debt and MBS's, rather than loaning out the money. I don't know whether this is because of low demand for loans in their market area, or too-strict lending standards, or what.

 

The only value I can see here is a potential acquisition target for the bank's deposit base, which has stayed consistent for years.

 

I'm new to analyzing banks, so I'm curious what others think about this.

[oddballstocks]

Mikazo,

 

This is correct.  I sold most of my position, my wife might still have shares, I'm not sure.

 

They are running a mini bond fund, growth constrained (because they refuse to lend) and earning a small spread.  I think at most they're probably worth 1x book, or where they're at now.

[mikazo]

Mikazo,

 

This is correct.  I sold most of my position, my wife might still have shares, I'm not sure.

 

They are running a mini bond fund, growth constrained (because they refuse to lend) and earning a small spread.  I think at most they're probably worth 1x book, or where they're at now.

 

Thank you for your input, much appreciated! Your book has taught me well, apparently ;)