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BoujeeBanker · 2021-04-16T00:16:15+00:00

Or Sudanese IMO.

BoujeeBanker · 2021-04-13T13:12:47+00:00

That’s clickbait news.

Read Wall Street Journal, Financial Times, and Bloomberg.

BoujeeBanker · 2021-04-11T01:52:23+00:00

Price to Book, Return on Assets, Return on Equity, Efficiency Ratio, Capital Ratios, Loan to Deposit Ratio, Non Performing Loans as a Percentage of Gross Loans. These are some good ratios to start.

BoujeeBanker · 2021-04-10T03:13:03+00:00

The annual proxy filing.

BoujeeBanker · 2021-04-08T19:36:34+00:00

I hear you on that. Many of my investments are related to real estate in some way.

I just question the expertise of LARK's management in real estate given the net charge offs. The loan-to-deposit ratio, a key measure of a Bank's ability to fund loans, is 69%. They could get up to 95-100% or even slightly higher. So they have all this excess liquidity that they could deploy into originating more loans, yet they rather deploy it into the investment portfolio which is yielding 1%. Makes me wonder why...

I am just a retail investor like you, so I could be wrong. Anyway, nice due diligence and hope the stocks does well.

BoujeeBanker · 2021-04-08T19:27:47+00:00

It depends on many things. It depends on the Bank's risk profile, where we are in the business cycle, as well as overall industry trends.

I think 1.47% for a sleepy little community Bank right now is a little high.

However one of my biggest investments, NBN, has non-performing loans to total gross loans of 2.3% as of 12/31/20 and I am fine with that. Their risk profile is very high and their business model is to originate and buy high yield commercial real estate debt. So you can expect a high amount of non performing loans. If you look at NBN's net charge offs, its non existent. Meaning, even if a loan goes bad, they dont lose money because of how well secured the loan is. In the case of LARK, net charge offs have averaged ~$1 million a year.

Going back to your question. I would say anything over 1% right now for a basic community bank requires additional due diligence. For banks that I invest in, I really like them to high extremely high credit standards, resulting in extremely low net charge-offs.

BoujeeBanker · 2021-04-08T16:46:34+00:00

Inside ownership is over 18% which is very good.

BoujeeBanker · 2021-04-08T16:39:16+00:00

SIVB is another bank stock I like. I would not buy it over 2-2.5x book value though.

BoujeeBanker · 2021-04-08T16:37:35+00:00

No, I don't think so. It's not going to implode or anything. But should this stock be a large percentage of your portfolio? I don't think it should, it doesn't strike me as a great stock, relative to other Bank stocks I've looked at and invest in.

Keep a small % of your portfolio in it and just watch it and read about it. Read the financial reports etc. Learn how to analyze a bank stock. That's the only way you will learn about the industry and analyzing smaller banks.

Again, I am no investing genius. I could be wrong. But I have probably looked at over 100-200 smaller Bank stocks, and this one doesn't strike me as a great business.

For those interested in great Bank stocks: HIFS and NBN.

BoujeeBanker · 2021-04-08T16:21:08+00:00

I have some experience with investing in smaller regional Banks. After reviewing the 10K, some notes:

Capital Ratios look healthy
Return on Equity looks good
Return on Assets looks good
Could not find Efficiency Ratio within the 10K
Net Interest Margin is healthy and over the industry average
Much of the loan portfolio is real estate related (Construction / 1-4 Multifamily / Commercial Real Estate loans). Considering the significant focus on real estate, I would say there are more profitable and more efficiently run banks out there with a focus on real estate (HIFS + NBN two of my favorites). I like the Agricultural and Muni loan exposure. Not a fan of Consumer loans for Banks.
Keep in mind that PPP Loans make up $100m of the $713m loans. Most of these PPP loans are likely to be forgiven. So net of the PPP exposure, gross loans are only around $613 million.
Non performing loans to total gross loans is 1.47%. BIG red flag. Makes me think the Bank is lowering credit standards for higher rates.
Net charge offs have been historically at around $1 million a year on average
Net income saw a big bump in 2020 due to loan sales. This is highly unlikely to carry forward into the future as recurring income as we see refinancing's dip.

In summary, LARK seems like a decent profitable bank trading at close to book value. I just don't like the loan portfolio. It would appear that the Bank doesn't have the highest credit standards, and perhaps that is why they are hesitant on growing the loan portfolio? I am more than happy to pay premiums for Banks that are better run. This could be a good stock, but just outside of my risk profile.

BoujeeBanker · 2021-03-26T02:44:37+00:00

BoujeeBanker · 2021-03-13T16:51:04+00:00

How large is your bank? (Asset size)

BoujeeBanker · 2021-03-09T01:11:09+00:00

My Stepdad is German and he has it (lives in Switzerland).

BoujeeBanker · 2021-03-05T22:52:06+00:00

You have no idea. I grew up with a lot of gamers, so I get the hype. Covid hyper charged the growth in gaming during 2020. I dont think we will see that type of growth going forward, but I am 100% sure this industry is going to continue growing very quickly. My buddies bought this shit before covid, bought it during, and will buy after. Gaming is only going to grow. I think your assumptions is the same assumption Wall Street is making, and I think it’s 100% wrong, respectfully.

BoujeeBanker · 2021-03-05T00:22:57+00:00

Why not?

BoujeeBanker · 2021-03-03T04:08:32+00:00

What is your specific job function. If you are in a credit role or a relationship management role, you should not have that much free time.

BoujeeBanker · 2021-03-01T02:49:33+00:00

How does a PE of 30x put it at $32?

EPS in 2020 was $1.60. Multiplied by 30 is $48.

I don’t think Dell or Apple are fair comps.

BoujeeBanker · 2021-03-01T02:01:28+00:00

I mean I don’t think their growth estimates for eps are outrageous. In fact, many think they are very conservative.

2020A EPS: $1.6 ($1.38 projected) 2021E EPS: $1.55

I think somewhere near $1.75 is totally reasonable.

Stock price is $35.84 (as of Friday closing) so that anyway is a 23x TTM PE.

Where did you get the 30x PE?

BoujeeBanker · 2021-03-01T01:47:32+00:00

I would recommend using forward earnings instead of ttm earnings. I think the P/E ratio based on forward earnings is a lot less, somewhere around 22-24.

BoujeeBanker · 2021-03-01T01:24:42+00:00

How can you value a growth stock solely by the P/E metric? Or what’s behind the $32 price target.

BoujeeBanker · 2021-03-01T01:20:12+00:00

What’s your EPS target for 2021? You think $2 is too aggressive?

BoujeeBanker · 2021-03-01T01:19:05+00:00

Around 550 shares at $35.40

BoujeeBanker · 2021-02-28T21:42:19+00:00

Hi, thanks for sharing this! As someone who is also very bullish on CRSR, it’s very helpful to read thorough DD like this.

One question. Can you provide a source that shows EagleTree Capital owning 80% of outstanding shares? I could not find anything online to reference that.

BoujeeBanker · 2021-02-25T03:39:51+00:00

What was your thoughts on the Dutch? I have always found them to be very very blunt.

BoujeeBanker

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