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(Editors' Note: This article covers a micro-cap stock(s). Please be aware of the risks associated with these stocks.)

On December 29, 2012 I wrote an article on 6 regional banks suggesting that investors should consider buying them on any dip in price. This article is a review on the status of the banks now and recommendations on what to do next for those who may have purchased these issues. The banks are Univest (NASDAQ:UVSP), Ohio Valley Banc Corp. (NASDAQ:OVBC), People's United Financial (NASDAQ:PBCT), Susquehanna Bancshares (NASDAQ:SUSQ), Fulton Financial Corp. (NASDAQ:FULT) and Wayne Savings Bancshares, Inc. (NASDAQ:WAYN).

UNIVEST

Univest was selling for around $17.00 per share in January. It is now selling for around $20.50 per share. There has been an increase in price of $3.50 per share, an upward movement of 20% over the last 6 months. See the graph below: (Graph from Interactive Brokers)


(Click to enlarge)

UVSP has paid dividends amounting to $.40 per over the past 6 months which increases the total return to almost $4.00 per share and close to 25%. This is a nice return on a boring dividend stock.

What should an investor do now, hold, sell or buy some more?

A review of the current numbers shows:

  1. Dividend of $.80 annually: a 3.9% yield.
  2. Price/Earnings ratio of 16.8
  3. First quarter earnings per share showed a 3% increase over the same quarter last year
  4. Net interest margin increased minimally from 3.80% to 3.83% from the last quarter
  5. Dividend payout ratio of 65%
  6. The Street Ratings maintain a buy while Jaywalk Consensus and Ford Equity Research have hold ratings on the stock.

My recommendation to those who own the stock now is to hold it if you bought the shares less than a year ago in a taxable account. If you purchased the stock in a non-taxable account such as an IRA the recommendation is to sell. I do not recommend any new purchases of the company at the present price.

OHIO VALLEY BANC CORP.

Ohio Valley Banc Corp. was selling for about $18.00 per share in January. It is now selling for $22.00 per share. There has been an increase of $4.00 per share which amounts to a 22% rise in the price. See the graph below: (Graph from Interactive Brokers)


(Click to enlarge)

The bank has also paid out $.52 in dividends over the past 6 months which increases the total return to $4.52 or 25%. This is another good return on a boring dividend stock.

What should an investor do now, hold, sell or buy some more?

A review of the current number shows:

  1. Dividend of $.84 annually: a 3.8% yield.
  2. Price/Earnings ratio of 11.64
  3. First quarter earnings per share increased nearly 21% over prior year
  4. First quarter return on assets grew year over year
  5. Net charge-offs were down considerably
  6. Eliminated annual interest expense of $530,000 by redeeming securities
  7. Dividend payout ratio of 52%
  8. The Street Ratings, Ford Equity Research and Jaywalk Consensus have buy ratings on the stock.

My recommendation is to hold if you already own the stock. Consider it a buy if you do not own the stock. The bank appears to have increased earnings momentum for the year and possibly a dividend increase is on the way.

People's United Financial

People's United Financial was selling for about $12.50 per share in January. The bank is now selling for about $15.25 per share. There has been an increase of $2.75 per share which amounts to a 22% increase. See the graph below: (Graph from Interactive Brokers)


(Click to enlarge)

PBCT has paid out a little over $.32 per share in dividends during the past 6 months which increases the total return to $3.07 or 24%. Not too shabby for a small dividend stock.

What should an investor do now, hold, sell or buy some more?

A review of the current numbers shows:

  1. Dividend of $.64 annually: a 4.3% yield.
  2. Price/Earnings ratio of 21.75
  3. Second quarter earnings per share increased 5% over prior year
  4. Company repurchased 22.4 million shares of stock at an average price of $13.63 per share
  5. Net charge-offs were down considerably
  6. Net interest margin decreased from 1st quarter 5 basis points
  7. Dividend payout ratio of 90%
  8. The Street Ratings rate it a buy, Ford Equity Research and Jaywalk Consensus have hold ratings on the stock.

My recommendation to those who own the stock now is to hold it if you bought the shares less than a year ago in a taxable account. If you purchased the stock in a non-taxable account such as an IRA, then the recommendation is to sell. I certainly do not recommend any new purchases of the company at the present price.

Susquehanna Bancshares

Susquehanna Bancshares was selling for about $11.50 per share in January. It is now selling for about $13.75 per share. This is an increase in price of $2.25 per share which amounts to about a 19.5% increase. See the graph below: (Graph from Interactive Brokers)


(Click to enlarge)

SUSQ has paid out $.15 in dividends per share during the past 6 months which increases the total return to $2.40 per share or close to 21%. Not as good as the banks above, but still a pretty respectable return.

What should an investor do now, hold, sell or buy some more?

A review of the current numbers shows:

  1. Dividend of $.32 annually: a 2.4% yield.
  2. Price/Earnings ratio of 16
  3. First quarter earnings per share increased 60% over prior year; from $.14 to $.23 per share
  4. Net interest margin decreased from 4th quarter last year 9 basis points
  5. Dividend payout ratio of 29%
  6. Book Value per share is less than the selling price of the stock. ($14.13)
  7. The Street Ratings, Credit Suisse, Ford Equity Research and Jaywalk Consensus all have buy ratings on the stock.

My recommendation is to hold if you already own the stock. Consider it a buy if you do not own the stock. The bank appears to have increased earnings momentum for the year and has plenty of room for dividend increases. It has increased the dividend 2 times in the past 12 months and should do the same over the next 12 months.

Fulton Financial Corp.

Fulton Financial Corp. was selling for about $10.75 per share in January. It is now selling for about $12.30 per share. This is an increase in price of $1.55 per share which amounts to a 14% increase. See the graph below: (Graph from Interactive Brokers)


(Click to enlarge)

FULT has paid out $.16 per share over the past 6 months which increases the total return to $1.71 or 15.9%. This bank was less profitable for shareholders than those above, but still returned over 15% in 6 months.

What should an investor do now, hold, sell or buy some more?

A review of the current numbers shows:

  1. Dividend of $.32 annually: a 2.7% yield.
  2. Price/Earnings ratio of 15.4
  3. First quarter earnings per share increased 5% over prior year; remained the same as the 4th quarter at $.20 per share
  4. Repurchased 4.2 million shares during the 1st quarter
  5. Net interest margin decreased from 4th quarter last year 10 basis points
  6. Dividend payout ratio of 38%
  7. The Street Ratings say buy, Ford Equity Research and Jaywalk Consensus have hold ratings, and Credit Suisse has an underperform rating on the stock.

My recommendation to those who own the stock now is to hold it if you bought the shares less than a year ago in a taxable account. If you purchased the stock in a non-taxable account such as an IRA, then the recommendation is to sell. I certainly do not recommend any new purchases of the company at the present price.

Wayne Savings Bancshares, Inc.

Wayne Savings Bancshares, Inc. was selling for $9.50 per share in January. It is now selling for about $9.90 per share. Only a $.40 movement or about 4% increase over the past 6 months. See the graph below: (Graph from Interactive Brokers)


(Click to enlarge)

WAYN has paid out $.15 per share over the past 6 months which increases the total return to $.55 or 5.7%. This bank was the least profitable for shareholders than all of the other 5.

What should an investor do now, hold, sell or buy some more?

A review of the current numbers shows:

  1. Dividend of $.32 annually: a 3.2% yield.
  2. Price/Earnings ratio of 13.4; lowest ratio of all 6 banks
  3. First quarter earnings per share tripled over prior year from $.05 to $.20 per share
  4. Provision for loan losses decreased $928,000 from last year because of improved local economic factors
  5. Dividend payout ratio of 36%
  6. Book Value per share is less than the selling price of the stock ($13.73)
  7. Ford Equity Research maintains a strong buy while Jaywalk Consensus has a hold rating on the stock.

My recommendation is to hold if you already own the stock. Consider it a buy if you do not own the stock. The bank appears to have increased earnings momentum for the year and has room for further dividend increases. The stock appears to be selling at a bargain to book value as well as having a P/E that is far below the other banks in this group.

Conclusion:

All of the banks recommended in the article at the end of December had positive returns. Most of these banks still have positive momentum in their earnings. The stock prices of most of them are nearly fully valued at the present time except for SUSQ and WAYN. These 2 banks still have plenty of room for expansion in their stock price. If your personal research suggests that you buy them, be sure to use limit orders since these issues only trade in the thousands and not the millions of shares per day.

Source: Follow-Up On 6 Regional Banks: Buy, Sell Or Hold?