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Founded in 2008, we are the general partner of two private investment vehicles (closed to new investors) with a total of $83 million in assets under management. We are not an investment adviser; please do not contact us regarding investment advisory services. If you are an institutional investor... More
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  • Bank Of Utica, Do We Still Like It?  3 comments
    Oct 11, 2013 5:16 PM | about stocks: BKUT, BKUTK

    From time to time, I get asked whether or not we still like Bank of Utica (BKUT, BKUTK). Well...

    The non-voting shares (OTCPK:BKUTK) last traded $419.00.

    Tangible book value (not including unrealized gains on held-to-maturity securities) is $621.76.

    Tangible common equity to assets is over 17%. (!!!!!!)

    Non-performing assets and loans 90-days past due, as a % of assets, are 0.45%. (!!!!!!!!)

    In addition to trading for only 0.67x tangible book, being massively overcapitalized, and having very few non-performing loans as a % of its asset base, the stock trades for 8x earnings per share, and the dividend has increased every year since 1994.

    So, yes, we still like Bank of Utica very much.

    Stocks: BKUT, BKUTK
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Comments (3)
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  • Asafren
    , contributor
    Comments (4) | Send Message
    In his last letter to shareholders, The president of the bank said that at a “normal” interest rates environment he expact the bank to earn only 7 m a year. If he is correct, the stock isn’t that cheap.
    What do you think about it?
    4 Nov 2013, 09:28 PM Reply Like
  • Aristides Capital
    , contributor
    Comments (520) | Send Message
    Author’s reply » I don't have the letter in front of me, but if I recall the comment, I believe it was actually guiding more towards a 7% return on equity, not $7 million a year in earnings. I thought it was sandbagging. But then again, if the future really is completely bleak, then maybe the bank with a $420 share price and a $685 adjusted tangible book value should just go ahead and sell itself for $700 or so and just be done with it. What other small banks are trading at 0.6x - 0.65x book? Only severely impaired ones. There are many banks with a 4% rotce that trade 0.9x book or more. There is nothing else like Bank of Utica trading for the valuation it trades for. It's dirt cheap.
    5 Nov 2013, 03:05 PM Reply Like
  • User251533
    , contributor
    Comment (1) | Send Message
    As several have noted on Seeking Alpha and Value Investors Club and elsewhere, given Bank of Utica's low price to book coupled with its high equity to assets there is an easy path to increasing the share price: buy back shares.


    One could make the case that a properly executed buy back could double the share price. Assuming the family owns all 50k of the BKUT shares worth $20M today at the $400 shr price, that would be a $20M payday for the family. That's 20M reasons to do a buy back.


    Assuming management/ownership is aware of this option, the question is why do they choose not to do it?


    Do you know if this question has been posed to management/ownership?


    I can think of two possible answers:
    1) They have no intention of selling shares, are happy taking their payout in the form of dividends only, and simply don't care what the stock price is. Assuming they own all of the 50k BKUT shares with a dividend of ~$10/shr that's $500k/yr for the family in addition to their salaries. Not vast wealth, but more than enough for a comfortable life in Utica.
    2) They are extremely risk-intolerant and therefore not comfortable with a lower equity cushion than the one they currently have.
    6 Nov 2015, 01:20 AM Reply Like
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