Harleysville Savings Financial Corp. (HARL) is a holding company for a small bank in Bucks County, PA. The bank is selling a little over book value and pays a 4.8% dividend. Since my family of origin lives in the area, I know that the county is relatively prosperous and has weathered the recent financial crisis relatively well. Institutions own less than 10% of the float. Officers and directors own a greater percentage of the company than institutions do.
Good Reasons to Investigate HARL
- Bank is selling slightly over book (Book $15.56)
- Bank is paying 4.4% dividend
- This dividend represents a little over 50% of earnings
- Bank has negotiated the downturn well
- Bank is selling around 18 which is a good entry point
Recent Events at HARL
- Net income for 2nd quarter was 10% greater than same quarter last year
- Regular quarterly dividend was raised from $.19 to $.20 which was ex-dividend on May 9, 2012
- Net interest margins are rising over the past 3 years
- S&P Investability Quotient is 76%
Historical Data at Harl (S&P data)
- ROE has increased from 6.8 in 2007 to 9.8 in 2011
- Book value has increased from 12.65 in 2007 to 15.19 in 2011
- Value of $10,000 invested 5 years ago - $14,199
- 5 year annualized return 7.3% (compared to -43.5% for industry)
The company offers an easy way for a larger bank to enter the Bucks County area. A buyout or merger price could be 20 to 40% higher than the current price. Even if there is no buyout, the dividend and relatively low valuation of the company offer room for appreciation in the price of the stock.
Disclosure: I am long HARL.