I do like FFDF management more than most bank management teams:
(1) Same CEO, Trent Troyer, for last 20+ years, which included the Financial Crisis years. The fact they remained profitable with limited loan losses says a lot. He also owns just under 3% of the company, which helps align interests with shareholders. Management + directors c…
I do like FFDF management more than most bank management teams:
(1) Same CEO, Trent Troyer, for last 20+ years, which included the Financial Crisis years. The fact they remained profitable with limited loan losses says a lot. He also owns just under 3% of the company, which helps align interests with shareholders. Management + directors combined own ~13% and employee ESOP owns ~10%, for ~23% combined insider ownership. Again, helps to keep everyone thinking about shareholder interests.
(2) No whole bank M&A - I worked previously as an investment professional focused on banks. I saw a lot of questionable deals occur by bank CEOs that were overly optimistic. Many times it made more sense to repurchase their own stock instead but repurchases do not “grow the kingdom”. The fact that they have not bought another bank during the CEOs tenure is very appealing. Investment bankers have surely shown them many potential transactions, so the ability to resist that temptation itself is impressive.
(3) share repurchase program announced in October of last year for $2mm. Although that does not amount to much on an ~$85mm market cap bank, it does show - to some extent - that they are shareholder-oriented. The stock is very illiquid so the small amount may have been a realistic sum they could buy in the near term.
There are some negatives, such as although they have a tiny securities portfolio, they did choose to buy longer-dated bonds, as many banks did. The fact that it that the securities portfolio is very small relative to assets makes it somewhat immaterial.
I do like FFDF management more than most bank management teams:
(1) Same CEO, Trent Troyer, for last 20+ years, which included the Financial Crisis years. The fact they remained profitable with limited loan losses says a lot. He also owns just under 3% of the company, which helps align interests with shareholders. Management + directors combined own ~13% and employee ESOP owns ~10%, for ~23% combined insider ownership. Again, helps to keep everyone thinking about shareholder interests.
(2) No whole bank M&A - I worked previously as an investment professional focused on banks. I saw a lot of questionable deals occur by bank CEOs that were overly optimistic. Many times it made more sense to repurchase their own stock instead but repurchases do not “grow the kingdom”. The fact that they have not bought another bank during the CEOs tenure is very appealing. Investment bankers have surely shown them many potential transactions, so the ability to resist that temptation itself is impressive.
(3) share repurchase program announced in October of last year for $2mm. Although that does not amount to much on an ~$85mm market cap bank, it does show - to some extent - that they are shareholder-oriented. The stock is very illiquid so the small amount may have been a realistic sum they could buy in the near term.
There are some negatives, such as although they have a tiny securities portfolio, they did choose to buy longer-dated bonds, as many banks did. The fact that it that the securities portfolio is very small relative to assets makes it somewhat immaterial.
Overall, I do like them more than most.