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Posted by: harison (IP Logged)
Date: November 26, 2010 10:07AM

I'm long PEOP, a recently demutualized bank based out of my hometown of Brookline, MA. The company trades around .7x book value (as of this writing), and has about a 20% TCE/TA ratio. The bank was profitable as a mutual, hopefully this continues. Although there is minimal disclosure available about the loan portfolio, the Boston economy is pretty good and its real estate market did not have nearly the downturn that other parts of the country experienced. Also, mutuals tend to be pretty conservative in their underwriting, as they don't chase product to earn profits that may ultimately prove ephemeral. Finally, the CEO purchased 6,000 shares of stock Wednesday, which is always nice to see.

Hopefully the company can intelligently put some of this excess capital to work in the form of prudent loan growth and dividends, and force the valuation discount to narrow. Other local banks, BRKL and EBSB, trade for premiums to book. If PEOP trades up to their valuation, we can earn 45% or so, provided book value remains constant. Though not a total home run, this seems like a nice return given that I don't think there's much downside at all.

Stocks Discussed: PEOP,
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