A Volunteer Bank

Written by GSCR Staff   
Friday, 08 February 2013 13:13

Good morning!  Today’s pick is a voyage into the regional bank universe.

Jefferson Bancshares, Inc. (NASDAQ – JFBI - $3.75) is the operational holding company for Jefferson Federal Bank.  It operates nine full-service branches and two drive-through limited service facilities located in four counties surrounding Knoxville, TN, providing deposit and loan services to consumers and businesses.

The company recently announced quarterly financials, and while there was no earth shattering news, it did reverse the losses suffered in the comparable period in 2011.  Management remains tepid on 2013 loans and net interest margin, but JFBI continues to meet and exceed new regulatory capital ratios.  On December 31, 2012, the Bank’s total risk-based, Tier 1 risk-based, and Tier 1 leverage capital ratios were 14.10%, 12.85%, and 9.01%, respectively, compared to 13.42%, 12.17%, and 8.23%, respectively, at June 30, 2012.

Why do we like this?  The stock has been under steady accumulation (albeit on low volume) since reaching a low of $2.48 on December 27th and seemingly records a new 52-week high every 10 days or so.  As a result, the charts indicate a very bullish signal in the short-term.

Is the stock in play for a takeover?  Unlikely. With only $400M+ in deposits, this is still a small savings bank. Still, the bank is continues to be well-capitalized under regulatory requirements and has 4 consecutive quarters of profitability under its belt. We believe the risk-reward trade off on this one is worth it, especially since the company turned the corner from an operational stand point.  A bounce to the $5 range by the end of 2Q13 is possible if trends continue.

Have a great weekend.

Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.

Disclaimer:

This Market Monitor blog was prepared for informational purposes only. Goldman Small Cap Research, (a division of Two Triangle Consulting Group, LLC) produces research via two formats: Goldman Select Research, which typically highlights small cap companies, and Goldman Opportunity Research, which features micro cap companies in a sponsored research format. Thus, the Select product reflects the Firm’s internally generated stock ideas while the Opportunity product reflects sponsored research reports.

It is important to note that while we may track performance separately, we utilize the same coverage criteria in determining coverage of all stocks in both research formats. Please view the company’s individual disclosures for each engagement, which can be found in each company-specific report. All information contained in this blog, newsletter and in our reports were provided by the Companies or generated from our own due diligence. Our analysts are responsible only to the public, and are paid in advance to eliminate pecuniary interests, retain editorial control, and ensure independence. Analysts are compensated on a per report basis and not on the basis of his/her recommendations.

The information used and statements of fact made have been obtained from sources considered reliable but we neither guarantee nor represent the completeness or accuracy. Goldman Small Cap Research did not make an independent investigation or inquiry as to the accuracy of any information provided by the Company, or other firms. Goldman Small Cap Research relied solely upon information provided by the Company through its filings, press releases, presentations, and through its own internal due diligence for accuracy and completeness. Such information and the opinions expressed are subject to change without notice. A Goldman Small Cap Research blog, report, note, or newsletter is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed.

This blog does not take into account the investment objectives, financial situation, or particular needs of any particular person. This blog does not provide all information material to an investor’s decision about whether or not to make any investment. Any discussion of risks in this presentation is not a disclosure of all risks or a complete discussion of the risks mentioned. Neither Goldman Small Cap Research, nor its parent, is registered as a securities broker-dealer or an investment adviser with FINRA or with any state securities regulatory authority.

ALL INFORMATION IN THIS BLOG, REPORT OR NEWSLETTER IS PROVIDED “AS IS” WITHOUT WARRANTIES, EXPRESSED OR IMPLIED, OR REPRESENTATIONS OF ANY KIND. TO THE FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE FOR THE QUALITY, ACCURACY, COMPLETENESS, RELIABILITY OR TIMELINESS OF THIS   INFORMATION, OR FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES THAT MAY ARISE OUT OF THE USE OF THIS INFORMATION BY YOU OR ANYONE ELSE (INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, LOSS OF OPPORTUNITIES, TRADING LOSSES, AND DAMAGES THAT MAY RESULT FROM ANY INACCURACY OR INCOMPLETENESS OF THIS INFORMATION). TO THE FULLEST EXTENT PERMITTED BY LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE TO YOU OR ANYONE ELSE UNDER ANY TORT, CONTRACT, NEGLIGENCE, STRICT LIABILITY, PRODUCTS LIABILITY, OR OTHER THEORY WITH RESPECT TO THIS PRESENTATION OF INFORMATION.

For more information, visit our Disclaimer: www.goldmanresearch.com  

Add comment
  • No comments found