Contributor Since 2018
money manager and newsletter writer in the small-cap stocks and small-cap bank stocks space for high net worth clients. Published the guide to investing in small bank stocks in 1999 and 2018. Over 23 years following the smaller community and regional bank stocks. We work hard and deal only with trustworthy bankers.
I was featured in Forbes last year about bank stocks and already 2 of my 3 picks were merged this year.
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GNB Financial Services ( $ 54.00 GBNF) this bank earned almost $5.00 a share in 2018. Earnings will be more than $5.50 a share in 2019 yet trades, at only a P/E of 10. That will drop in 2020 to a P/E 9 or less.
One of the most profitable banks I have ever followed yet it trades at a low P/E and just over their $54.00 a share, in book value. So it is trading at book value!
The bank started in 1934, and they waited 72 years to open the next one, all in East central, PA.
They love to pay stock splits the last one was a 25% stock dividend in 2016, so don’t let the stock price fool you it is moving.
Loan growth is robust at 8.5% in this market; they do a great job and always seem to make good money.
In 1996 they had $24 million in loans, today they have over $233 million.
They show one of the best return on average assets that you will see in today's world.
Compared to any of its peers it is 35% cheaper today and yet a better bank.
With banks, you are buying people, and they are some of the best.
GNBF is a money machine.
I have followed hundreds of banks over the past 20 years; this one is run the best hands down.
Stock can usually found at one of the specialists if you need size.
Insiders own a bunch.
They are in the sweet spot for earnings today and could fetch at least two times book maybe 2.20 times with their stellar earnings power.
Banks like this also usually get a P/E of like 20 in a deal, so you get to a $95 to $105 price, a 100% premium from today's levels.
The book value should also grow by about 5%-10% per year, depending on the dividends paid out.
Sites like Yahoo have the current P/E at 23 and book value at $41, don’t always trust what you read on that site; it is not up to date information.
While we know such thinly traded stocks can be bought and sold at discounts, this one is just so miss-priced.
It has a 2% downside risk and 90% or more upside odds we will take all day long.
If it is not up by 50% or more in the next three years, we will give all our newsletter members their money back for all three years, no questions asked. We have never offered something like this in 20 plus years, that’s how strong we feel about this bank.
We have a new friend at the Fed to make this happen.
Insiders own about 25% of the stock and should be ready to retire.
They just raised their cash dividend to $.028 up from $.025, a 12% move up a stable 2% yield.
They just earned $1.21 a share in the latest quarter out this week a 9% increase from the same period last year.
Net interest margins at 3.85% and earnings would have been much higher, but they bumped up loan reserves due to the strong loan growth.
But if they don’t sell the bank this year, you will make 15% on your money year in and year out to they do sell it, and then you get paid big.
I would put this stock away for any non-trading account and hold it till they sell.
You never have to watch, keep buying it any time you see shares for sale at a fair price.
The new tax laws to boot, make this stock so cheap.
It is our Second largest and has the best risk-reward, I have seen in the past five years.
Assets up to $344 million, loans at $233 million, and deposits at $295 million, as of 3/31/2019.
Capital ratios at safe levels.
Just 777,543 shares outstanding so please buy slowly and use limits.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: very safe and cheap bank stock just no followed