Given that the current share price is just slightly above $116, are you at all concerned about your investment? I understand that you think the next quarter’s results will be much better, in light of the taxi medallion issue, but are you that confident that this will turn out to be a good investment for you in the foreseeable future?
Hi Speedy, In looking at all my purchases, my average price seems to be about $130 give or take a little, which puts me down about 10.6% at the current price on this investment. That doesn’t seem like a huge percent to me. As to my expectations for the future, look, medallion loans were only 4% of their loans 6 months ago, and as they grow their business every quarter, those loans become even less. Even as they took a write-off, they didn’t show a loss, they didn’t even show a decline in earnings, they just grew more slowly for the quarter. Meanwhile, book value per share was up 22.6%! The efficiency ratio was 31.3%! You just can’t imagine how incredibly good those numbers are!
Efficiency ratio is very simplistically non-interest expenses (SG&A, etc), as a percent of revenue, the inverse of operating margin. This means that SBNY has an operating margin of about 69%…Operating Margin! An ordinary large bank like Bank of America had an efficiency ratio of 88% in 2014 and 66.5% in 2015. That means that their expenses were 88% of their revenue(!) in 2014 and 66.5% in 2015. SBNY’s was 35.1% in 2014, 33.6% in 2015, and 31.3% last quarter.
No, I may turn out to be very wrong, but I’m really not worried at all about my SBNY stock.
Hope this helps.
Saul