A Bank Turnaround in Michigan (DEAR)

The shareholders’ equity was listed as $43,180,000.00, which the company says comes to a book value of $5.62 per share.  Not bad when you consider that the market closing price was $1.11 on March 31, 2010. and was merely $1.50 yesterday.

Its individual metrics are as follows:

• total assets were $970,669,000, a 9.6% drop;
• total deposits fell 6.12% to $852,017,000.00;
• total loans were $813,961,000.00, down 9.57%;
• charge-offs were $4.9 million;
• allowance for loan losses now stands at $30.3 million, or 3.72% of loans.

This is not a growth story.  This is a managing through hard times story.  The bank’s press release noted, “Strong emphasis is being placed on collection and maintenance of the existing loan portfolio and new lending has been curtailed to conserve capital.”

This one is still in the works.  The core operations are said to continue to produce enough income to offset “the high cost of FDIC insurance and the holding costs of other real estate owned.”  The level of charge-offs will remain the determining factor over whether profitability in future quarters can be maintained. The primary concerns this year are still the local Michigan economy, credit quality, and the stability or improvement of the underlying collateral values of its loan portfolio.

At 9:40 AM EST this one is up 86% at $2.78 on over 1.2 million shares.  The 52-week trading range is $0.35 to $3.00 and the average daily volume here is only about 500,000 shares per day.  Here is how it traded pre-market:

• At 9:28 AM EST this one was up 88% at $2.82 on 360,000 shares.
• At 8:15 AM EST this one was up about 110%.

JON C. OGG