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Strategies & Market Trends : Value Investing

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To: Lazarus who wrote (57320)	8/13/2016 7:56:57 PM
From: Graham Osborn	Read Replies (3) of 78730

Hi Lazarus, I've been studying TBNC the past few days. Perhaps you can fill in some color on this bank's history - was the dental loan portfolio born out of the lessons of the real estate crash and, if so, how do you feel about the real estate portfolio exposure if the market was to cool off in the Dallas area? That's a big exposure and looks to be growing particularly in construction/ residential. Having just read Fooling Some of the People All of the Time, my comfort level with the unguaranteed part of the SBA loans is not great, and that exposure has grown. I imagine their review committee is being reasonably conservative though. My first impression is the mix looks fairly robust and dentists should be creditworthy borrowers, but I have an underlying discomfort with the business model of banks which needs to be overcome. Loan portfolio growth, growth in tangible equity, returns on capital, assets/ equity, capital reserves look great. Seems like a prime acquisition target with the trust business providing a nice bolt-on opportunity. Management's goals seem shareholder-aligned beyond question.

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