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Summary

  • Community bank stock prices have not recovered like Big Banks, but will as the market recognizes their value.
  • Many one-branch bank stocks like CABC, CPBO, and PZBW are particularly undervalued and poised to outperform the KBW Bank Index.
  • Americans can reduce risks associated with reliance on "Too Big to Fail" Banks by doing more banking in community banks like these.

Those of you who follow my Timyan Bank Alert™ blog or tweets may have noticed that I have developed quite a passion for one-branch bank stocks, which I believe offer some of the most compelling investment opportunities available today.

There's no shortage of feel-good reasons to support community banks. They're the ones supporting charities and sustainable and green businesses, giving small businesses a chance, making the world a better place. Their managers aren't drawing $14M annual salaries like Bank of America's (NYSE:BAC) Brian Moynihan.

But, as an investor, the real reason I'm excited about these stocks is that one-branch banks tend to be more inherently valuable than their multi-branch peers, boasting much higher deposit levels than the average bank's $45M per branch. Some are even bigger than the microcap bank stocks analyst Tim Melvin considers the "trade of the decade." They're also easier to manage, easier for other banks to acquire, and generally have lower cost structures.

And since community bank stock prices are still lagging behind those of our nation's bigger banks despite equal or better operating performance, it's reasonable to expect that the prices of the top performing one-branchers will recover, too.

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In the table below, are 12 one-branch banks I believe are particularly well poised to outperform the KBW Bank Stock Index. Among these, 7 are operating in communities dominated by America's "Too Big to Fail" banks, presenting a really neat opportunity for locals to capitalize on these bargain stocks.

For example, within one mile of Seattle, Washington's Plaza Bank (OTCQB:PZBW), "Too Big to Fail" banks control a whopping $25B in deposits. Within a mile of Los Angeles, California's 1st Century Bank (NASDAQ:FCTY), they control $16B. Within a mile of Portland, Oregon's Capital Pacific Bank (OTCQB:CPBO), they control $10.7B. Ironic, considering how vehemently people seem to be against Big Banking in America.

The more I think about it, the more surprised I am that people aren't voting with their feet and moving their business to community banks like these! Especially when you consider how much they might personally enrich themselves and their communities in the process.

Imagine: What if even a small percentage of the "Too Big to Fail" bank customers in these communities were to buy shares of stock in their local one-brancher, move their loans and deposits there, and take the "Melvin-Timyan Challenge" launched recently in Real Money. The profitability and stock prices of these one-branchers would grow exponentially, making each of the new shareholders a far prettier penny than they're getting from their Big Banks now, given today's paltry interest rates, and probably get treated a whole lot better along the way, to boot.

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One-Branch Bank Beauties

Mkt Cap

Price

P/E

P/Book

NPAs

Assets

1st Century Bank

$77M

$7.61

11.9x

130%

0.2%

$555M

Bank of Utica (OTCQB:BKUTK)

$121M

$485

9.2x

71%

0.5%

$969M

Birmingham Bloomfield Bancshares (OTCQB:BBBI)*

$13M

$6.95

9x

89%

0.1%

$194M

California Bank of Commerce (OTCQB:CABC)*

$46M

$10.80

11.5x

105%

1.2%

$373M

Capital Pacific Bank *

$24M

$9.19

12.3X

107%

1.6%

$232M

Foundation Bancorp (OTCQB:FDNB)

$27M

$7.75

12X

81.6%

6.1%

$367M

Grand River Commerce (OTCQB:GNRV)

$11M

$4.51

NM

86%

0%

$123M

New Resource Bank (OTCQB:NWBN)*

$25M

$4.44

19x

87%

0.1%

$221M

Northern California National (OTCQB:NCNB)*

$14M

$10.00

16x

89%

0.5%

$172M

Plaza Bank *

$14M

$1.10

NM

80%

2.9%

$79M

Puget Sound Bank (OTCQB:PUGB)

$42M

$14.35

18x

116%

0.2%

$357M

Truxton, Inc (OTCQB:TRUX)*

$48M

$19.50

11.8x

136%

0.2%

$333M

*Located in highly populated urban areas dominated by "Too Big To Fail" banks

Editor's Note: This article discusses one or more securities that do not trade on a major exchange. Please be aware of the risks associated with these stocks.

Source: 7 Beautiful One-Branch Bank Stocks Entire Communities Can Bank On