Another Friday...

Weiss

MARCH 12, 2010, 6:38 P.M. ET
Three Failed Banks Closed Friday; 2010 Total At 30
DOW JONES NEWSWIRES

State regulators on Friday closed banks in Louisiana, Florida and New York, bringing the total number of financial institutions that have failed in the U.S. this year to 30.

http://online.wsj.com/article/BT-CO-20100312-713304.html?mod=WSJ_latestheadlines

derryb

17 branches total

CaptHenway

From the Chicago Tribune (Friday):

link

Weiss

Wow. That's pretty frightening for us in Illinois, CaptHenway.
I loaded up on more stock from our biggest local bank. They hit rock bottom recently. I figure either they're done for, and I've got little to lose, or they've gotten their ship back in order (which they claim), so their stock could triple or quadruple.

mhammerman

Similar things here, Weiss. I have a small stock stake in a small local bank where I grew up, it was passed down to me. I called my guy at the bank a couple of weeks ago and asked him what the value of the stock was. Since it's privately held by us stockholders and it is only traded via my guy as buy requests and sell requests that he may or may not fill, everything goes through him. He said that he had only buyers, no sellers and the stock is spitting off a little less than 4% a year as dividends and the stock is expected to appreciate in response to steady growth around the town. He told me what the buy numbers were and it was good. These guys are optimistic. Then he asked me if I wanted to sell. No.

That old, small town banking model works quite well with a growing population and the conservative deployment of cash into the local economy where you know your clients and you can help them get to where they need to be. It would be interesting to see all the high flying go-go banks get crushed and the small town, James Stewart, "It's a wonderful life" type banks flourish...and the stock turns into a cash machine. Woah, Mamma...DO IT! It would be kind of ironic if my little bank started printing their own currency for local use (I know this is already being done) and we slowly devolved to colonial America. Read, "A Nation of Counterfeiters".

Noted the comment last week that when it's announced that a bank was closed and the insight that a bank closing also means all the branches and many banks may actually be getting closed with each announcement...as derryb notes.

Weiss

Mine is not quite as cool, mhammerman, but it's similar. They've been the blue chip, conservative bank that really founded the town 130 years ago. About 10 years ago they decided to chase after the Florida market (lots of Farmers here in central Illinois are snowbirds, so it's not as far-fetched as you might think). Anyway, the Florida market tanked, and their stock tanked. But they've gotten rid of the people behind that Florida drive, have wholesaled much of their Florida nonperforming business, and have come back to basics. Stock in the $3-$4 range over the last year when it had been $15 to $20 for more than a decade. Nice run-up of almost 10% in the last week, and they're @4% dividend, too.

I figure it's like this: Would I have bought a few thousand oz of silver at $4 an ounce in mid 2001 if I'd had the cash, suspecting it would eventually get to $10 or $15 an ounce? Yep. Well I can't do that now with silver. But I can do it with this stock. And since I don't need the income, I'll just keep pumping those dividends back into more stock.

CaptHenway

Another story from the Chicago Tribune on troubled banks in Illinois:

link

I had never heard of this "Texas ratio." You might want to do a search for it in your own states.

TD