Description

Norwood Financial is a bank holding company for Wayne Bank, a state chartered bank with 8 offices in Wayne and Pike Counties in PA. Total assets now over $300 million and total loans over $200 million and growing at a 9% clip. Non-performing loans are very low at 0.25%, with total loan reserves at a strong 1.62%, net interest margins are solid at 4.36% and return on equity approaching 15%. They pay a 4% cash dividend and have a book value of $16.50 a share. Their p/e is under 8x and they should earn 2.40+ a share in 2001. Buy a full position now under $17 and look for a double in 3-5 years on fundamentals or sooner in a takeout. Limited downside risk at these levels. They are also closing their auto-lending division this year which should add another $2.50 a share to book value. All the smaller banks in their marketplace have been sold in the past few years. It looks like a win-win if they sell or stay on their own they win. They are located in Honesdale, PA.

doug67

Catalyst