The Conservative Investor Digest

Last month, the stock I covered was from the healthcare industry and developed products that saved and facilitated lives, yet contained some anti-social elements in that it aggressively slashes costs and is unhesitant about raising the prices of life-saving goods. This month’s stock is a bank, and despite the industry’s stereotype, engages in the very pro-social mission of delivering loans to small and medium-sized private businesses that want a personalized touch that they cannot get from the big giants in the industry.

My favorite part? How conservatively everything is run. The company had zero quarterly net charge-offs last quarter. I’ve never seen a bank run that well before. Sure, the generally sunny economic conditions help, but no other bank is able to deliver such a strong risk performance as this one.

The other two goodies? The company actually grew its profits throughout the recession, which is something that only 18% of financial institutions were able to do. And since its IPO in 2004, it has delivered over 18% annual returns. The company is expecting 20% annual earnings per share growth in the next year, and the analyst consensus calls for five year growth of 18.6% annually. This bank has been a winner with a conservatively financed balanced sheet, and has gone uncovered because it is too small to get meaningful analyst coverage (think about how rare it is to see any financial news that doesn’t involve a bank in the Top 10 by market capitalization.)

Given that I think interest rates are going to rise in the coming years, the bank also stands to benefit from rate hikes as that will generate more net interest income. I hope you readers enjoy this bank I uncovered. It took me a while to find, but once I read the annual report, I was quickly impressed.

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