Five Reasons To Like Temecula Valley Bank

Dec. 4.07 | About: Temecula Valley (TMCV)

A lot of my portfolio is in undervalued closed end funds now, but to make things more interesting I thought I would blog about a stock today.

I found a cheap, beaten down bank stock and bought some shares today. Temecula Valley Bank (OTC:TMCV) is based in California and specializes in guaranteed SBA loans. SBA lending can do well even in a weak economy and usually thrives in a low interest rate environment. I also think the bank has a pretty cool name.

Here are some things I like about TMCV:

  1. High return on equity (18.46%).
  2. Low price to book value (around 1.0)
  3. No subprime or alt-A exposure.
  4. Forward PE ratio= under 6
  5. Depressed by tax loss selling.

Mr. Market seems to be over-estimating the credit risk here, and tax loss selling is adding to the mix. I bought two lots in the 10.60 range, but I think anything under 11 is a good value.