Not Citi, But City Bank: An Attractive Stock

| About: City Bank (CTBK)

Not Citi, but City Bank (OTCPK:CTBK). City Bank is based in Linnwood, WA with a total of 8 branches and assets of just over $1 billion. In my search for profitable small cap stocks this one really fits the bill, and the recent market turmoils that have especially affected financial stocks has knocked the price down to a level not seen for two years and 30% off the recent high.

Here are some of the facts that I find attractive about the stock:

  • Growing dividend: Currently at a 2.5% rate and growing. Also the company has paid special dividend on almost an annual basis. Dividends have been paid for at least 10 years.
  • Return on assets in the 3.5 to 4% range historically vs. competitor average of 1.3%.
  • 97% of loans are commercial or real estate construction. Only 3% are real estate mortgages.
  • Loan losses have been 10% of the peer average and loss reserves exceed the peer average.

This company has show strong growth of both assets and profits throughout its 30 year history. The current credit “crisis” will probably slow the growth for a couple of quarters, thus affecting the stock price negatively. The return to more typical growth should cause the stock price to do very well.

I have long been a fan of small well run banks. If they are well run they can be extremely profitable and it appears City Bank is such a bank. Also, when these small banks break the $billion asset mark, as City Bank did in 2006, they often become buyout candidates at very nice premiums. I am adding City Bank (OTCPK:CTBK) to my 20 Stock Portfolio.

I currently do not own any stock in CTBK.