This California bank is a Top Pick for its “hot” growth area and its prospects for a takeover.
Avid Bank Holdings, Inc. (AVBH)
from Hughes Investment Management
Avid Bank Holdings, Inc. (AVBH) is a small commercial bank located in red hot Palo Alto, California, with just over $450,000 in assets.
Loan growth has been very strong and net charge offs for bad loans almost at zero! Book value is $11.50 a share, and a bank of this quality would fetch 2 times book in this market area.
At just 11 years young, insiders own 16% plus of the shares, and when the bank did a private placement a few years back, they bought about 20% of that deal alone.
Avid should earn about $1.00 a share in 2015 and a sale will come—someone will want to be in the bank’s strong markets.
It’s hard to get a lot of detail from this bank, other than it is strong, safe, and growing fast.
The shares are worth $18-21 in a deal next year, we think. The stock is thinly-traded, so use limits as always, and it does trade plenty on some days.
Douglas Hughes, Hughes Investment Management, www.banknewsletter.com, 888-814-7575, December 22, 2014