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Some of you may remember the MGM Lion
While others may have more of a fondness for Clarence the cross eyes lion, from that smash hit Daktari:
But probably the most famous lion of all is Kimba the White Lion
However the LION with the greatest roar isn’t even a mammal at all. It’s a small bank in Georgia called Fidelity Southern Corporation (LION) and this lion has some real teeth.
On Friday, January 25th, 2013 I bought LION at 10.60. I will sell it in 4 – 6 weeks at 12.24. Here’s why I love LION:
Look at the chart. It is smoking!
LION’s stock is up 64% in the last 52 weeks, yet it’s PE is only 8. So what that means is that people have been buying up the stock – and it’s still CHEAP! People are going to buy more. The stock price is going to go up more.
Fidelity Southern Corporation operates as the bank holding company for Fidelity Bank that provides financial products and services for business and retail customers primarily in Georgia. The company accepts various deposit products, including savings deposits, noninterest-bearing demand deposits, interest-bearing demand deposits, money market accounts, time deposits, and brokered time deposits. It also offers various loan products comprising commercial and industrial loans, commercial loans secured by real estate, small business administration loans, construction and residential real estate loans, direct and indirect automobile loans, residential mortgage and home equity loans, and secured and unsecured installment loans, as well as provides credit card services and brokerage services. In addition, the company offers international trade services, such as letters of credit, foreign currency drafts, foreign and documentary collections, export finance, and international wire transfers; trust services; and merchant services through agreements with third parties, as well as investment services through an agreement with an independent broker-dealer. Further, it provides Internet banking services, which include online bill pay and Internet cash management services to individuals and businesses, as well as remote deposit services. Additionally, the company, through its subsidiaries, operates as an insurance agency offering consumer credit related insurance products; and issues trust preferred securities. As of April 20, 2012, it operated 28 branches in Atlanta, Georgia; 1 branch in Jacksonville, Florida; and 1 insurance office in Atlanta, Georgia. Fidelity Southern Corporation was founded in 1973 and is headquartered in Atlanta, Georgia.
Banks make money based on the total deposits maintained and loans issued. Consumers have many banks and credit unions to choose from, all competing for their checking, savings and lending needs. In highly competitive markets, banks must utilize strategies for acquiring and retaining assets from new and existing customers.
Banks range in size and capabilities. Small banks may only have one or two branch offices whereas large commercial banks may have thousands of branches across the nation. Regardless of the size of the bank, each branch needs to tailor local marketing strategies to serve the immediate community. Consumers bank in a place where they feel safe and comfortable. This means tellers and account representatives who speak English as well as any prominent language in the community. By having branch managers look at the local community needs, the bank can attract a larger percentage of the target market.
Bank tellers interact with the majority of the bank clientele. Tellers perform the day-to-day transactions, such as cashing checks, making deposits or transferring money. Successful banks consistently train tellers to look for opportunities to cross-sell bank products and refer customers to the right person. A teller may see a regular customer cash a dividend check and refer the person to the investment specialist. The teller may see a high savings balance and suggest a higher -earning time certificate. Smart banks reward top referring tellers to entice them to take the time to suggest a new product or service.
Bigger may not always be better, in fact the little guys seem to be where it’s at these days.
The Independent Community Bankers of America, which represents nearly 5,000 community banks throughout the United States through its "Go Local" campaign, is urging consumers to consider the benefits of switching to one of their banks.
You will have a relationship with a banker who cares about your success. They are vested in the local community. Their success depends on the success of the customers who live in the community. Community banks are focused on the people and those relationships.
Shares of small-cap bank stocks soared as they increased their assets and set aside less money for problem loans. They've also capitalized on the woes of their big bank brethren, picking up some of their dissatisfied customers and key lending teams.
Small losses of business for big banks can be big gains for smaller banks. Smaller banks have seen loan officers leaving bigger banks, bringing with them healthy customer relationships. That's real earnings growth at very little cost.
The outlook for the regional banks sub-industry for the next 12 months is positive, despite the many challenges facing the industry. Third quarter results were good, benefiting from home refinancings, gains on sales of loans and securities, and a small degree of reserve releases. Third quarter profits for a selection of 25 regional banks were up 18% from a year ago. The next 12 months for these banks will depend on the resolution of the debt ceiling, growth of the U.S. economy, housing prices, the low interest rate environment, and regulatory costs. All of these factors look very favorable right now.
So, now that we’ve established that the overall macro environment looks decent, how does LION fare compared to these boys?
• LION has a PE of 8 vs. the industry average of 18.9. You’re darn right it’s cheap.
• LION has a Price/sales of 0.8 vs. industry average of 2.0. You’re darn right it’s cheap.
• LION has a Price/Book ratio of 1.1 vs. industry average of 1.5. You’re darn right it’s cheap.
• LION has a Price/Cash Flow ratio of 5.7 vs. industry average of 14.7. You’re darn right it’s cheap.
• LION has a Gross Profit Margin of 83.6% vs. industry average of 72.4.
• LION has a Return on Equity of 16.2% vs. industry average of 11.0%. Maybe you should tape a cheetah to the industry’s back?
Now we get to the part that’s really kewl. We already established that this company was cheap and that it’s being run very well. But what about growth?
• LION has a Revenue Growth of 27.8% vs. the industry average of 3.3%
• LION has an EPS growth of 141.9% vs. industry growth of 18%
It’s cheap and sales and earnings are growing. Seems like this cake has all of the ingredients. So why do I think this LION will roar? Just like any other $$$MR. MARKET$$$ stock, it boils down to earnings earnings earnings.
Southern Corporation reported net income of $25.3 million for the year ended 2012 compared to $11.4 million for the year ended 2011. After accounting for the preferred dividend, earnings per share for the year ended 2012 were $1.34, respectively, which compared to diluted earnings per share of $0.56, for the year ended 2011.
So what’s coming up? If you ask the 3 ANAL-ysts who follow this stock, they say it will earn $1.15/share in 2013 and $1.09/share in 2014. That’s is preposterous. How can earnings possibly go DOWN for this bank?? LION has already beat earnings estimates in the first quarter of 2012 by 87%, in the 2nd quarter by 89%, by 12% in the 3rd quarter until they finally got it right last quarter. I guess they haven’t been paying attention to how this stock is doing. Let’s get one thing straight. This little bank will earn $1.55/share in 2013. That means, at even this meager PE ratio of 8, the stock price will become:
$1.55 x 8 = $12.40, which is way past my target price.
To top it off, LION pays a stock dividend regularly. So if you must sit on it, your number of shares will grow and grow over time! Like magic!! Here’s what the boss had to say about it.
Fidelity's Chairman, Jim Miller, said, "2012 was a record year with improvement in many areas. We experienced significant organic and M&A growth, and strong fee income in all lines of business. We also controlled expenses as a result of consolidations and the integration of our acquired banks. The year 2013 offers continued opportunities to grow, operate more efficiently, and improve our credit costs as the economy improves. We have stepped up our advertising and our hiring of seasoned, professional bankers to take advantage of the market. Two branches in Marietta were added from Security Exchange Bank, a de novo branch was opened in Cumming, and mortgage offices were opened in Savannah, Falls Church, Woodbridge and Fredericksburg. Further expansion in our footprint is planned.”
Ready set grow baby. Hot-lanta is bringing the LION to town, and it ain’t caged in no zoo. Sooo….let me know what you think of this write up!
I am HUGE!
$$$MR. MARKET$$$
While others may have more of a fondness for Clarence the cross eyes lion, from that smash hit Daktari:
But probably the most famous lion of all is Kimba the White Lion
However the LION with the greatest roar isn’t even a mammal at all. It’s a small bank in Georgia called Fidelity Southern Corporation (LION) and this lion has some real teeth.
On Friday, January 25th, 2013 I bought LION at 10.60. I will sell it in 4 – 6 weeks at 12.24. Here’s why I love LION:
Look at the chart. It is smoking!
LION’s stock is up 64% in the last 52 weeks, yet it’s PE is only 8. So what that means is that people have been buying up the stock – and it’s still CHEAP! People are going to buy more. The stock price is going to go up more.
Fidelity Southern Corporation operates as the bank holding company for Fidelity Bank that provides financial products and services for business and retail customers primarily in Georgia. The company accepts various deposit products, including savings deposits, noninterest-bearing demand deposits, interest-bearing demand deposits, money market accounts, time deposits, and brokered time deposits. It also offers various loan products comprising commercial and industrial loans, commercial loans secured by real estate, small business administration loans, construction and residential real estate loans, direct and indirect automobile loans, residential mortgage and home equity loans, and secured and unsecured installment loans, as well as provides credit card services and brokerage services. In addition, the company offers international trade services, such as letters of credit, foreign currency drafts, foreign and documentary collections, export finance, and international wire transfers; trust services; and merchant services through agreements with third parties, as well as investment services through an agreement with an independent broker-dealer. Further, it provides Internet banking services, which include online bill pay and Internet cash management services to individuals and businesses, as well as remote deposit services. Additionally, the company, through its subsidiaries, operates as an insurance agency offering consumer credit related insurance products; and issues trust preferred securities. As of April 20, 2012, it operated 28 branches in Atlanta, Georgia; 1 branch in Jacksonville, Florida; and 1 insurance office in Atlanta, Georgia. Fidelity Southern Corporation was founded in 1973 and is headquartered in Atlanta, Georgia.
Banks make money based on the total deposits maintained and loans issued. Consumers have many banks and credit unions to choose from, all competing for their checking, savings and lending needs. In highly competitive markets, banks must utilize strategies for acquiring and retaining assets from new and existing customers.
Banks range in size and capabilities. Small banks may only have one or two branch offices whereas large commercial banks may have thousands of branches across the nation. Regardless of the size of the bank, each branch needs to tailor local marketing strategies to serve the immediate community. Consumers bank in a place where they feel safe and comfortable. This means tellers and account representatives who speak English as well as any prominent language in the community. By having branch managers look at the local community needs, the bank can attract a larger percentage of the target market.
Bank tellers interact with the majority of the bank clientele. Tellers perform the day-to-day transactions, such as cashing checks, making deposits or transferring money. Successful banks consistently train tellers to look for opportunities to cross-sell bank products and refer customers to the right person. A teller may see a regular customer cash a dividend check and refer the person to the investment specialist. The teller may see a high savings balance and suggest a higher -earning time certificate. Smart banks reward top referring tellers to entice them to take the time to suggest a new product or service.
Bigger may not always be better, in fact the little guys seem to be where it’s at these days.
The Independent Community Bankers of America, which represents nearly 5,000 community banks throughout the United States through its "Go Local" campaign, is urging consumers to consider the benefits of switching to one of their banks.
You will have a relationship with a banker who cares about your success. They are vested in the local community. Their success depends on the success of the customers who live in the community. Community banks are focused on the people and those relationships.
Shares of small-cap bank stocks soared as they increased their assets and set aside less money for problem loans. They've also capitalized on the woes of their big bank brethren, picking up some of their dissatisfied customers and key lending teams.
Small losses of business for big banks can be big gains for smaller banks. Smaller banks have seen loan officers leaving bigger banks, bringing with them healthy customer relationships. That's real earnings growth at very little cost.
The outlook for the regional banks sub-industry for the next 12 months is positive, despite the many challenges facing the industry. Third quarter results were good, benefiting from home refinancings, gains on sales of loans and securities, and a small degree of reserve releases. Third quarter profits for a selection of 25 regional banks were up 18% from a year ago. The next 12 months for these banks will depend on the resolution of the debt ceiling, growth of the U.S. economy, housing prices, the low interest rate environment, and regulatory costs. All of these factors look very favorable right now.
So, now that we’ve established that the overall macro environment looks decent, how does LION fare compared to these boys?
• LION has a PE of 8 vs. the industry average of 18.9. You’re darn right it’s cheap.
• LION has a Price/sales of 0.8 vs. industry average of 2.0. You’re darn right it’s cheap.
• LION has a Price/Book ratio of 1.1 vs. industry average of 1.5. You’re darn right it’s cheap.
• LION has a Price/Cash Flow ratio of 5.7 vs. industry average of 14.7. You’re darn right it’s cheap.
• LION has a Gross Profit Margin of 83.6% vs. industry average of 72.4.
• LION has a Return on Equity of 16.2% vs. industry average of 11.0%. Maybe you should tape a cheetah to the industry’s back?
Now we get to the part that’s really kewl. We already established that this company was cheap and that it’s being run very well. But what about growth?
• LION has a Revenue Growth of 27.8% vs. the industry average of 3.3%
• LION has an EPS growth of 141.9% vs. industry growth of 18%
It’s cheap and sales and earnings are growing. Seems like this cake has all of the ingredients. So why do I think this LION will roar? Just like any other $$$MR. MARKET$$$ stock, it boils down to earnings earnings earnings.
Southern Corporation reported net income of $25.3 million for the year ended 2012 compared to $11.4 million for the year ended 2011. After accounting for the preferred dividend, earnings per share for the year ended 2012 were $1.34, respectively, which compared to diluted earnings per share of $0.56, for the year ended 2011.
So what’s coming up? If you ask the 3 ANAL-ysts who follow this stock, they say it will earn $1.15/share in 2013 and $1.09/share in 2014. That’s is preposterous. How can earnings possibly go DOWN for this bank?? LION has already beat earnings estimates in the first quarter of 2012 by 87%, in the 2nd quarter by 89%, by 12% in the 3rd quarter until they finally got it right last quarter. I guess they haven’t been paying attention to how this stock is doing. Let’s get one thing straight. This little bank will earn $1.55/share in 2013. That means, at even this meager PE ratio of 8, the stock price will become:
$1.55 x 8 = $12.40, which is way past my target price.
To top it off, LION pays a stock dividend regularly. So if you must sit on it, your number of shares will grow and grow over time! Like magic!! Here’s what the boss had to say about it.
Fidelity's Chairman, Jim Miller, said, "2012 was a record year with improvement in many areas. We experienced significant organic and M&A growth, and strong fee income in all lines of business. We also controlled expenses as a result of consolidations and the integration of our acquired banks. The year 2013 offers continued opportunities to grow, operate more efficiently, and improve our credit costs as the economy improves. We have stepped up our advertising and our hiring of seasoned, professional bankers to take advantage of the market. Two branches in Marietta were added from Security Exchange Bank, a de novo branch was opened in Cumming, and mortgage offices were opened in Savannah, Falls Church, Woodbridge and Fredericksburg. Further expansion in our footprint is planned.”
Ready set grow baby. Hot-lanta is bringing the LION to town, and it ain’t caged in no zoo. Sooo….let me know what you think of this write up!
I am HUGE!
$$$MR. MARKET$$$
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