Can Venture Financial Group Grow in a Slowing Industry?

| About: Venture Financial (VNBK)

Venture Financial Group, Inc. (VNBK) is the bank holding company for Venture Bank, a Washington state chartered bank established in 1979. The company currently operates 18 full-service financial centers located primarily along the Interstate 5 corridor in the Puget Sound region of western Washington. The company's market areas are in Thurston, Pierce, King and Lewis Counties.

As of June 30, 2007 the company had:

  • Total assets of $1.1 billion
  • Net loans of $738.0 million,
  • Total deposits of $838.5 million
  • Shareholders' equity of $84.8 million

Company/Market Area Opportunities/Growth

From December 31, 2002 to June 30, 2007 it have more than doubled its size by increasing:

  • Total assets from $474.5 million to $1.1 billion;
  • Total net loans from $361.6 million to $738.0 million;Total deposits from $384.2 million to $838.5 million; and
  • Trailing twelve months diluted earnings per share from $0.93 to $1.73.

According to available data, bank and thrift deposits in the company's current markets have grown at a compound annual growth rate of 9.8% since 2002, from $40.7 billion at June 30, 2002 to $59.1 billion at June 30, 2006.


  • Small size.
  • High concentration on real-estate sector in loan as well as investment portfolio: High concentration on single sector normally hold more risk than diversified portfolio and the sector (real-estate) in with company's current portfolio in invested is currently on a downturn.
  • Intense competition: In the banking sector competition is intense and many of its competitors are much bigger in size and much more recognized with costumers.
  • Slow industry growth rate: The banking industry is a mature industry and is expected to grow in tandem with economy and no exceptional growth is expected. Moreover after good strong in economy in recent years, the economy now is likely to cool down.
  • Highly regulated industry: Due to its importance for economy and involvement of public money, the banking industry is one of the most regulated industry and most regulation are made to take care of depositor interest rater than banks.


  • Healthy capital adequacy ratio (Over 10 as on June 30, 2007)
  • History of successful acquisitions.

Disclosure: This article reflects personal view of the author about the company and one must read offer prospectus and consult its financial adviser before making any investment decision