7/1/2007

1. CENTURY BANCORP (CNBKA $21.64) the parent company of Century Bank and Trust Company, operates 22 branches in the greater Boston area with over $1.5 billion assets and $1.2 in deposits. They just announced a 300,000 share buyback after the stock fell sharply last week. They also just announced an OK quarter, with non-performing loans going up like everyone else. They are in great markets, insiders own a ton and they should sell for a 50% premium one day. They have a book value of almost $20.00 a share and with the Bank buying back all that stock this should be the bottom, we are in fully now. They have 5.5 million shares outstanding. Some days this trades a lot, some days nothing, use limits. Downside limited to $16.00 in a crash. Headquartered in Medford, MA.

Follows ups:

1. HARLEYSVILLE SAVINGS (HARL) announced a 5% stock buyback. Hold.
2. MERCANTILE BANK (MBWM) announced a so/so quarter with non-performing loans up, net charge offs holding at low levels and a charge for the top man retiring. Buy more under $24.50 now/today. They have loan growth, so no buyback is in the cards today.
3. K-FED BANCORP (KFED) announced a second step get back in heavy under $15.25, a sale is coming in 1-2 years at $26+. Almost a 3% cash dividend now and management willing to buy back a lot of stock.
4. PENNSYLVANIA COMMERCE BANCORP (COBH) with CBH being in play with Vernon Hill being forced out, COBH should be rolled up into CBH sooner than later at $40+. Add under $27.00 all you can.
5. BROOKLINE BANCORP (BRKL) buy a lot more now under $11.15, make it a top holding, you do get paid to wait with a 6% yield.
6. ARROW FINANCIAL (AROW) continue to add now under $21.76 (don’t forget to minus out the big cash dividend each quarter of $0.24), and under $21 make it 25% of all your money. Worth $34, nothing else has to be said. Solid bank.
7. PARK NATIONAL (PRK) add now under $83.00 and all in at $77.00, management is the top.

Many banks continue to make new lows every day still, we are “shorting” FITB over $43, and looking to cover $35.50 or so, HBAN we are covering under $20.50, TCB covering under $25.50 and “shorting over $28.00, BPOP covering $12.55 or so and “shorting” over 17.10. You can also use options on all these names as a better hedge and more return and tie up less capital. The above, again, should only be done by a professional and /or as a hedge for any large leveraged accounts. Any accounts over $2 million in size, not having at least $100,000 in options/puts as a hedge or $400,000 of stocks “short”, is asking for trouble. We could have 3-18 months more to go in high priced names, with 30%+ downside risk still possible. All the names above to go long have 10% downside risk from our entry points.
They were still 3 more deals at very high prices this week, 2 were public banks.
FINB and MMIB both got huge premiums, one FINB in IN was a solid bank, it sold at 3.6 times book and MMIB had bad management and a ton of problems yet it still got a 30% premium wow! Sell both and buy the names above now. We are at a point were you are in or you are out I feel, this is a mix between 1987 and 1999-2000, prices are all over the place and top managements with perfect asset quality will sell or get through this fine like KFED and BRKL. Real estate will continue to tumble, but these banks above are as safe as they get with strong people and most own a lot of shares themselves and have been buying more, like GBTB insiders have, while this one has the most risk, they are in the best markets, someone wants them I am sure soon. If you are not borrowing money now at these low rates and loading up on select issues, you will never be rich, unless you are already.

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7/1/2007