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BKMU
Strong Buy 
 62.50%
5 members
Buy 
 37.50%
3 members
Hold 
 0.00%
0 members
Sell 
 0.00%
0 members
Strong Sell 
 0.00%
0 members
 
Average rating: 1.38 (Strong Buy) 1.00 - 5.00 (Strong Sell) Total: 8 members

Annual growth of BKMU:

NOTE: areas highlighted in blue indicate that this user is sharing the highlighted information with their private group ONLY

Jun. 27 2004, 11:07 AM ET
Nearest price: 11.00 (06/28/04)
by sturmdrang (profile)
(all of sturmdrang's ratings)
rating:
Buy
BKMU's Profitability in a Rising Interest Rate Environment

The following is an evaluation of the impact of rising interest rates on BKMU Bank Mutual's profitability (figures are as of Dec 31, 2003) using interest-rate sensitivity criteria, discussed in the June 2004 SNL Thriftinvestor issue.

1) Investment securities: The higher the percentage of investment securities to total assets, the greater the risk from an increase in interest rates (liability sensitive).
- BKMU has 33.8% investment securities to total assets at year-end 2003, up from 21.7% at year-end 2002.
- Conclusion: BKMU shows a high amount of liability sensitivity in this category.

2) 1-4 family loans: Since these loans are often fixed, the higher the percentage of these loans to total loans, the greater the liability sensitivity.
- 46.3% of BKMU's total loans are in this category, the largest other types are: Consumer loan fixed equity: 14.9%, Commercial real estate: 12.2%, Multifamily: 7.2%, Construction: 7.1%, others: 12.3%
- BKMU states in its 2003 proxy: "Currently, we sell all of our 30 year fixed rate mortgage loan originations and some of our 20 and 15 year fixed rate mortgage loan originations in the secondary mortgage market."
- Conclusion: BKMU exhibits a moderate amount of liability sensitivity risk in the 1-4 family loans category.

3) Commercial and industrial loans: Since these loan types generally have adjustable rates and are of shorter duration, they are asset sensitive in a rising interest rate environment.
- BKMU states that it is increasingly focusing on this loan category. However, at year-end 2003 they had only about 26.5% in this category.
- Conclusion: BKMU's portfolio of commercial and industrial loans could help to improve earnings modestly in a rising interest rate.

4) Mortgage servicing rights: Since mortgages are less likely to be paid off by borrowers in a rising interest rate environment, MSR values should tend to rise, i.e., they should provide an asset sensitivity benefit.
- Conclusion: With only $ 4.7 million of MSRs at year-end 2003 and given its $3.1 billion size, even a large percentage increase in the value of its MSRs will make little difference to BKMU.

5) Non-interest bearing deposits: Obviously, deposits which do not re-price ever when interest rates rise are asset sensitive.
- Although BKMU has 42.2% of its deposits in checking and savings accounts, only 5.4% are in non-interest bearing accounts.
- Conclusion: BKMU will not benefit greatly from rising interest rates in this category.

6) Tangible equity: The higher the tangible equity percentage to tangible assets (or earning assets), the greater the asset sensitivity.
- Conclusion: With $ 731 million in equity (23.5%) and only $52.6 million in goodwill, BKMU is well positioned to benefit from rising interest rates in this category.

7) Net interest margin trends: This is viewed historically, i.e., how has the bank's net interest margins reacted to changing interest rate environments.
- BKMU shows a Net interest margins as follows:
1999: 2.4%
2000: 2.8%
2001: 2.7%
2002: 2.9%
2003: 2.6%

- It appears that BKMU profited slightly due to falling interest rates the past several years and that Net interest margins of, say, 2.4% (1999 level) could be expected for 2004.
- Conclusion: using Net interest margins as an indicator, BKMU's portfolio is liability sensitive.

8) Non-interest income: as we know, non-interest income is directly neither asset nor liability sensitive. Significant levels of non-interest income allow a bank to show income no matter what interest rates are doing.
- Of the $19.6 million in non-interest income in 2003, $7.0 million was due to Gain on sales of securities and loans.
- Conclusion: Expect BKMU's non-interest income to decline for 2004.


Summary comments: The greatest risk posed by rising interest rates to BKMU's earnings (and equity) is its Investment Security/ MBS portfolio. To reduce interest rate risk, BKMU needs to continue to grow its own loan portfolio and "unpark" its temporary investments in these mortgage-related securities. A positive aspect, compared to other thrifts with significant MBS positions (e.g., CFFN), is that BKMU did not borrow funds to buy MBS's, rather it used its high level of capital, raised in the second step offering, to purchase them.

Depending on how significant the interest rate increases are, BKMU may or may not sail through the shoals unscathed. On the other hand, with its 110% to 120% MV/ BV ratio, the fear of interest rate hikes should not be a reason to avoid owning these attractively priced shares of the 4th largest financial institution in Wisconsin. I rate BKMU a Buy.

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Currently: 
 6 said yes (of 6 -- 100.00%)

 
Mar. 28 2004, 01:23 AM ET
Nearest price: 11.05 (03/29/04)
by sbguy (profile)
(all of sbguy's ratings)
rating:
Buy
(Previous rating: Hold,
on Mar. 28 2004, 01:19 AM ET)
different view depending on time frame.short term it is vulnerable to sector collapse and overhang of stock from offering in weak hands. med term, probably not a lot of downside or upside- weak mgt but not a lofty valuation after recent selloff. long term it is a definite buy given likelihood the crowley dynasty will not be able to hold up to the pressure to sell. great branch net in a good depositors environment. real question is how long before they decide to take the $ and run from deer tick to sunny fla. mix it all together and for me it spells a hold- don't need more STG in '03.....................................................just reviewed my comments from earlier post. stock now at $10.95 on 3/28. while there might be more vulnerability, based on possibility of sector collapse, this thing starting to look attractive. will start to nibble with any cash freed up as i sell some of the KFED and NABC i get in those IPO's. i have more than equilibrium amounts of those two.

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Currently: 
 4 said yes (of 4 -- 100.00%)

 
Jan. 14 2004, 4:05 PM ET
Nearest price: 11.40 (01/14/04)
by traveler (profile)
(all of traveler's ratings)
rating:
Strong Buy
[ Comments shared with private group only ]
 
Jan. 12 2004, 09:27 AM ET
Nearest price: 11.20 (01/12/04)
by tedk (profile)
(all of tedk's ratings)
rating:
Strong Buy
[ Comments shared with private group only ]
 
Jan. 11 2004, 08:25 AM ET
Nearest price: 11.20 (01/12/04)
by Cliff (profile)
(all of Cliff's ratings)
rating:
Strong Buy
I think the double dip to the 10.9 range will have created a decent floor. With all of the hugh orders filled from the conversion, it is reasonable that BKMU has experienced all of this selling pressure. On a long term basis, <$11 offers good value. If the institutional funds would just wake up, I see $12 easily achievable over the next month or two. I believe FBR and RB has somehing like a $14 price target currently. It's definitly not a small shop, but nevertheless a sleeper. (Disclosure:I own shares from the conversion and intend to hold them)

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Currently: 
 6 said yes (of 7 -- 85.71%)

 
Jan. 8 2004, 8:58 PM ET
Nearest price: 11.11 (01/08/04)
by belowbookvalue (profile)
(all of belowbookvalue's ratings)
rating:
Strong Buy
Rating it on a $11.11 close 1/8/03. This is the time to buy BKMU surge of January tax selling has peaked. Look for a nice move into February. Jan 27 will be 90 days since conversion.

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Currently: 
 1 said yes (of 4 -- 25.00%)

 
Nov. 17 2003, 12:10 PM ET
Nearest price: 11.18 (11/17/03)
by SV40 (profile)
(all of SV40's ratings)
rating:
Buy
Cheap at 10.85 today.

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Nov. 10 2003, 10:39 AM ET
Nearest price: 11.60 (11/10/03)
by buildingnloan (profile)
(all of buildingnloan's ratings)
rating:
Strong Buy
[ No comment ]

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