FISI
Brought Some FISI today in the low 17's. here is what I like.
Dividend Yield: FISI pays you while you wait. In fact it yields right around 7% where I brought it, and I believe the divy is very safe.
Valuation: FISI Earned .11 on the face, begs the question why are you buying it. I see fraud events are rare and generally can happen to any bank, sometimes there is no good defense to it either. Hence I see the almost 19.1 Million that needs to be exed out. To be fair they also booked a reversal or gain on a provision of roughly 5.5 million so that need to be exed out too. Given that Earning were about .86 this quarter, which means the bank is trading at just 5 times earnings based on q1 annualized.
Loan Growth: Although loan growth was essentially flat sequentially I do expect it to pick up in future quarters.
Asset Quality: Asset quality remains in very decent shape overall, which is another plus.
Book Value: FISI trades at a decent discount to tangible book which is north of $23 right now. Hence another reason why it i attractive.
Other Info: FISI will also book a gain from selling the insurance operation in q2, now I will definetely ex that out. But it should also provide a nice comp for q2, and add to both book value. As a after tax gain of 11 million or so is expected.
Deposit Growth: FISI also had deposits grow nicely which is yet another plus. Showing the bank is healthy in my opinion.
NIMS: After declining quarter after quarter. NIMS Stabilized in q1 versus q4. And given annual guidance of 2.85%-2.95% for the year, in coming quarter that should increase which will be a boost to net interest income and ultimately profitability going foward.
What Do I expect in future quarter on the earnings front? Based on guidance we know NIMS is going higher probably around 2.90% on average the rest of the year easily. We know Non interest income will be about 9 million, and non interest expense will be about 33.5 million. Given actually take a provision of say 2 million a quarter to be conservative, saying a modest rise in interest earning assets over the course of the year. I say we should see earnings average slightly north of $1.00 a quarter from q2 -q4. if you believe like me that those are the number than we are looking at say somewhere between $4.00-4.25 annulized based on the average of the next three quarters. A 10 PE would get us to $40, but even like a 7 pe get us back to around $30. Hence why I feel this is the most attractive bank out there right now.
Conclusion: Why do I like FISI (1) Trades at steep discount to tangible book value. (2) Nims has bottomed and should start increasing sequentially, which should be helpful to net interest income and earnings per share. (3) Deposit growth is here, Loan Growth should pick up, and Asset quality looks solid. (4) The sale of the insurance operation should provide a nice gain in q2, which wlll add to book value, and make a impressive comp in q2, not that I wouldn't ex that out, but it can't hurt the stock price I would assume. (5) Dividend Yield of 7% essentially you get paid while you wait. Always a plus. (6) Cheap based on current earnings of .86 for q1 after making the adjustments. (7) Even cheaper if you think the guidance from the company is gonna occurs I could easily see $1.00+ on average for the next 3 quarters. of course we never know with earnings. I will buy more on weakness. All is just my opinion, and I could always be wrong though.
