There are many thousands of community banks from which an analyst can create a statistical sample. The quantity of small banks allows an analyst to become familiar with the typical valuation relationships that banks display.
Southern Missouri Bancorp (NASDAQ:SMBC) appears to be selling out of line with its peers -- particularly considering its credit quality, its efficiency, and its historical ability to grow assets and deposits. The bank has a strong position and has demonstrated improvement over the last few years. As for an earnings yield, an investor would be wise to expect a 10% to 11% earnings yield and a 2.25% dividend. But, considering the quality of the bank, it seems likely that the bank will sell...
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