Speaker 1 (00:00):
Hi guys, I’m Tim Melvin. And welcome back to a better way to
Speaker 2 (00:03):
Wealth yesterday. I told
Speaker 1 (00:05):
You that I would have one stock pick for each of my three bank stock strategies. So rather than go back and rehash the whole thing. If you missed yesterday’s video, go watch that first and then come back here and get the three picks. So write these down. They’re fantastic stocks that meet all the criteria that I laid out yesterday, and I think can make a meaningful difference for your portfolio returns. Now the first one is the small bank strategy. What I have here for you is FF BW incorporated. The symbol is FF BW. This is the holding company for first federal of Wisconsin in beautiful downtown Brookfield, Wisconsin, which is a suburban, a suburban area of Milwaukee. The bank is ridiculously cheap. They were thrift conversion years ago. I think 2017, if I’m not mistaken. And they’ve kind of hung onto a lot of the capital that they raised in that offering the stock is currently trading at 80% of tangible book value. They have an equity to assets ratio. Remember I told you, it’s gotta be at least 10. There’s this 21.79. They have a ton of excess capital to buy back stock, make acquisitions, do all the fun things that help grow the bank.
Speaker 1 (01:20):
So the loan portfolio, this is primarily commercial real estate with some single family home. They have ridiculously low non-performing assets. It’s insane. It’s just 0.1. Oh, percent of all the assets of the bank are non-performing loans or repossess real estate or anything like that. That’s a fraction of the industry average. So this is a well-run bank they’re really knows their business. They’re doing a great job of underwriting. Their loans loan portfolio is virtually risk-free at this point in time. And again, as I said, they’re in the Milwaukee area, they did their due their conversion to 2017. So the three-year waiting period is up. They can be acquired. Eventually. We think somebody is going to look at this bank and say, you know what? Milwaukee’s a decent market. We want to expand into that market. Here’s a bank that we can buy at a good price.
Speaker 1 (02:10):
That’s going to add capital to our bag that we can immediately begin to use to buy back our stock and make acquisitions and other things that will make the bankrupt sort of trading 0.8% of book value. 80% of book, most takeovers are happening around 150% of book. So there’s a, built-in almost arbitrage to owning this bank stock. Speaking of buybacks, they have been buying back stock of the last couple of years at a very steady pace. That’s going to be very supportive of the stock price. When I look at the shareholder list, they also have a couple of guys in there that are known activists who if the bank board doesn’t do the things that they need to do to get the stock price higher over time, these guys will step in and try to push management into doing the right thing. Possibly even pushed them as I’ve seen several times into the entire bank. So F F BW, it’s currently trading right around oh 1150, $12 a share. Yeah, $11 and 75 cents today. That’s going to be fantastic. It’s a long-term investment for the small bank strategy that I outlined yesterday. Now for the bank
Speaker 2 (03:17):
Speaker 1 (03:19):
I’m going to give you a BCB. Bancorp that’s up in Bayonne, New Jersey. They have 29 branches in Northern New Jersey. And then they’ve got three over in the greater Staten island area in New York. It’s not an enormous bag. They’ve got $2.8 billion in assets. So long runway for these guys. They could be an attractive, good for candidate for some somebody, everybody by them away guys with under 250 billion in assets has to be considered in play as a potential takeover candidate. Those were under 10 billion. They are absolutely on the table, takeovers, never off the table with these guys. So we’re only going to pay about 10 times earnings for this bank, where to collect a 3.6, 7% yield. It’s pretty diversified loan portfolio, lots of commercial real estate, some residential. And again, they’ve done a nice job with very low non-performing assets ratio of just about 0.4, 7%.
Speaker 1 (04:16):
Last time I checked it. So yeah, BCB backward symbols. BCBP very simple, straightforward story, nothing fancy 10 times earnings 3.7% dividend yield fits in perfectly with the bank stock, high yield dividend strategy that I outlined that has earned 29% a year over the last decade. Now finally is thrift conversions. Guys. I love thrift conversions. Thrift conversions have made, right? A lot of people rich, very rich. The reason Peter Lynch outperformed with fidelity Magellan fund, as much as he did back in the 1970s and 1980s. So I’m going to give you a pic. It’s going to be the same pick that I gave you. Last time I talked about thrift conversions, cause I think it’s a bank that you really should own. It’s William Penn bankrupt. They’re in the Philadelphia and Trenton, New Jersey markets. They completed their conversion back in back in March of this year, but guys, 80% of book value was our original purchase price is creeping up a little bit.
Speaker 1 (05:17):
It’s an 85% of book value right now. I think this bank is point you’re going to get taken over. As I said, probably one and a half times book or more. This is a pretty high quality bank. What really has me excited about it is insider’s bought a a hundred, 6,000 shares when the offering was done back in March, they have been consistently buying more stock as recently as last week in the open market. They’re writing checks for it from their own bank accounts to buy stocks in the bank that they manage. I find that really exciting. And this fact is mostly residential lending. And again, it’s a 0.6, 5% nonperforming assets, way lower than most banks. So they’re doing a great job of underwriting, their loans. There’s little to no risk in loan portfolio at all. So cheap well-run bank, lots of insider buying several wellness activist investors in the stock.
Speaker 1 (06:14):
So they did just pay point a 30 cent special dividend. They are going to pay a regular quarterly dividend, but they have not yet established exactly what that’s going to be. It was 3.4% total dividend yield before the conversion. They did the second step conversion in March. So I think it’s going to be somewhere around that. And by the way, I expect to see the stock get a little pop higher when the dividend is finally announced sometime later this year. So William Penn bank Corp, recent FIPSE thrift conversion, symbols, Gebbie MPN fits in beautifully with our, with our thrift conversion strategy. So three strategies, three picks. Those would be to take advantage of them are going to do extraordinarily well and make a lot of money with the three stocks ideas I’ve given you here today. Anyway, I’m Tim Melvin. That’s a better way to wealth and thanks for watching.
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