Mid January: Conversion targets, a recent 50x,
Also Interactive Brokers, the expert market, and rent-stabilized loans
Good afternoon,
In this note:
Conversions since 2019: any sale candidates?
The expert market: find a way in
Signature bank shares - looking at a 50 bagger
Interactive Brokers has mastered efficient banking.
Rent-stabilized apartment loans and NYCB; parsing if shares are a donut, “Strong Buy” or other.
Brief note:
5 Points is changing to the more clever Net Interest format
My friend Marc Rubinstein writes the thoughtful and well-researched Net Interest substack, in which each edition begins with a free preview segment, followed by paid subscriber portion.
Rather than confuse people and flip every edition paid / free the way 5 Points has done, I believe Marc has the better structure, so 5 Points will begin following it.
1. Conversions for sale?
We all know the game - a mutual thrift converts to stock, management repurchases shares, and the company sells in three years.
Recently that formula has hit a snag, because:
a) Some mutual management teams came up short on repurchasing shares, as they waited for underwater bonds to mature and free up liquidity.
and
b) Acquirers are more selective. As they close their own rural branches, there is limited demand to pay a premium for some three branch, CD-funded pile of assets breaking even in rural Ohio.
But FFNW recently sold to a credit union at a large premium (see prior edition for credit union active states, which include WA, IL, FL, GA and AL among others). FFNW reminds us that like largemouth bass, credit unions will eat almost anything that can fit in their mouths.
Below are the conversions since 2019. Recall that regulations require 3 years public before sale. Keep an eye on large insider ownership and leveraged capital. On the list, ERKH has already sold. A few others stand out as good candidates to partner, perhaps including our friends in Texas who have made progess on capital. They have a lot of fixed rate loans however.
Not pictured are second steps. One is 2021 edition Cullman Bancshares (CULL). Insiders at Cullman seem excited about the potential:
