Monthly Archives: May 2016

River Valley Community Bank- Growing Bank Selling For A Quality Price

River Valley Community Bank (RVVY) is a two branch bank located in California. Despite the non-public nature of the company, River Valley Community Bank continues to break new records. With asset and deposit growth, net income growth and trading near book value, River Valley Community Bank should be on the radar of any investor interested in small hidden banks.

Record Breaking Year(s)

Twenty-fifteen was a record breaking year for River Valley Community Bank. In 4Q15, net income increased to $508,070 a 54.3% increase YOY. Furthermore, FY net income increased 55.8% to $1,729,848 from $1,111,000 YOY. Also, in Q2, their Grass Valley Branch had its first profitable quarter ever. Profitability has continued to sustain thereon forth.

The year 2015 wasn’t just a record breaking for income growth either. Total assets increased 12.4% to $237,472,669 and total deposits increased 12.6% to $213,232,980. Furthermore, deposit market share grew to a 10% record in the Yuba/Sutter market, an increase from 8.8% YOY.

Deposit marketshare stats for the Yuba/Sutter market are shown below:

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Management appears to be shareholder friendly. In 4Q15 they enacted a five-for-four common stock split. This move has potential to increase the company’s visibility, liquidity and accessibility for their stock. Further shareholder friendliness can be seen from their $0.35/share special dividend announcement in 2Q15. John Jelavich, the CEO stated the following…

“We are very pleased to be in the position to return capital to our shareholders with the special cash dividend announced today. Our continued profitability has positioned us with substantial capital and this dividend, in addition to the one we paid in 2012 represents over $1.1 million we will have returned to our shareholders.”

Twenty-fifteen wasn’t an anomaly either. In 1Q16, net interest income increased 23.5% YOY and 2.1% QOQ. In addition to net interest income growth, total assets increased 9.7% to $246mm. Finally, net interest margin increased to 3.07% from 2.78% YOY. In a low interest rate environment, growth in NIM is a good suggestion of the competence of management and growth of the California market.

1Q16 report

Source: 1Q16 Report

In light of the 5.16% increase in book value per share, ROE and ROA took a heavy hit. The reason for the rampant decline was due to a $480,000 provision for loan losses. The borrower of this monetary amount closed its business in 1Q16, thus reporting insolvency. The loan is deemed as secure, but the collection still remains uncertain.

The great thing about using CompleteBankData’s software is that accessibility of asset quality is at your fingertips.

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Source: CompleteBankData RVVY Asset Quality

The historical data on asset quality, shows that the recent $480,000 loan provision was an anomaly and should not be recurring. Jelavich stated the following in regards to the loan loss…

“Our first quarter results reflect continued growth achieved by the Bank. Total assets and deposits achieved record levels, and our top line interest income also achieved a record quarterly high for the Bank.” Jelavich continued, “Unfortunately, we experienced a loan loss of $480,000 at the end of the quarter; and while our decision to charge off the loan effectively puts this behind us, we will continue to pursue full recovery.” Jelavich concluded, “The fact that we were able to absorb this loan loss and still generate $247,600 in after tax net income for the quarter speaks to the earnings strength we have established. The credit quality of the Bank’s loan and investment portfolios remains strong, with no nonperforming assets and only $166,000 of classified loans as of quarter-end.”

River Valley Community Bank has also been awarded top ratings for its financial strength for over 30 consecutive quarters. Top ratings have been awarded by BauerFinancial, Inc. and BauerFinancial, Inc. has awarded River Valley Community Bank Five-Star Superior rating for its 31 consecutive quarters financial strength. Additionally, has earned an A+ rating for the past 32 consecutive quarters.

Furthermore CompleteBankData’s risk model has deemed the bank to be a “Moderate Risk” institution.  Banks are ranked from “Low Risk” to “Severe Risk” with “Moderate Risk” being the second safest level of classification.  Investors and depositors can rest assured that River Valley Community Bank is on firm footing.

These strong historical financial ratings show the company’s financial and loan portfolio strength before, during and after the Great Recession.


River Valley Community Bank is a quality bank selling for a decent price. RVVY has shown investors that it can growth deposits and increase its bottom-line without taking on risky loans. Furthermore, the low amount of non-performing loans during the Great Recession shows management’s quality and competence as a whole.

If the trend in income and asset growth continues, the book value of the company should further increase. Finally, management’s intent on getting River Valley Community Bank more investor visibility may severe as a catalyst this hidden bank needs. In short, River Valley Community Bank is a great example of a small, quality, community bank growing under the nose of the investment community.


Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Nick Bodnar

CIB Marine Bancshares: growth obscured by overhead

CIB Marine Bancshares (CIBH) is a small town branch bank located in Illinois, Wisconsin and Indiana. In the face of a low interest rate environment, the company has continued to grow their assets, reverted to profitability, and is trading significantly below book. Finally, with the recent up-listing to the OTCQB and discount to book, we believe that CIBH could make for a decent acquisition target and/or mean reversion to book value.

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Assets growing with the bulk in Loans

CIB Marine Bancshares continues to grow their assets quarterly. What’s even better is that the bulk of their asset growth comes directly from an increase in loans or leases.

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Backing up the story a bit, in the year of 2009, CIB Marine Bancshares hit an inflection point, in which total assets continued to fall from a high of $696,018m in 2009, to a low of $454,468m in 2013. In further context, net loans and leases fell from a high of $457,607 in 2009 to a low of $306,337 in 2012.

Moving forward, despite the historical low asset and loan portfolio, 2012-2013 was an inflection point in it of itself. Since the bottomed out low, total assets and net loans and leases have grown by 11.98% and 13.57% annualized, respectively.

Using our data at CompleteBankData, we can easily look at the historical loan summary, to determine where the bank’s growth is coming from.

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From the picture above, we can see that a large portion of their loan growth is from 1-4 family loans. From 2012-2015, 1-4 family loans has increased at an annualized rate of 28.96%. This above average growth in 1-4 family loans suggests that the economic environment for the average middle class family is improving in the Illinois area.

A further suggestion that the economic environment is improving is when we take a look at their commercial real estate loan portfolio. From 2013-2015, their commercial real estate loan portfolio has grown at an annualized 13.44% rate.

As the economic environment they operate in continues to improve, CIB Marine Bancshares should directly benefit from consumer lending growth. In addition, banks looking to easily grow their assets in a recovering economic environment may look into the market in which CIBH operates, or look at how CIB Marine Bancshares operates differently from peers.

Profitability is anything to ‘Pound the Table’ about

While it’s great that CIB Marine Bancshares has been growing their asset base and loan portfolio at an above average rate the banks current profitability situation may be what is holding the bank back from trading at book value.

The company has an unimpressive ROE and ROA ratios of 0.48% and 0.05%, respectively. Furthermore, CIB Marine Bancshares’ expense structure isn’t optimized, which has pushed their efficiency ratio to 98.20%.

When comparing the company to its local peers, we can see that they have some of the lowest profitability ratios in their operating area.

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Despite their absolute and relative low profitability ratios, the company has a respectable loan portfolio and has continued to de-risk itself in the past few years.

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Given the company’s growing asset base, non-risky loan portfolio and sub-par profitability ratios, it’s possible that the company could make for a great acquisition target. In addition with a P/B ratio of 0.17x, a P/TBV ratio of .81 and the majority of their expenses classified as non-interest expense, a company focused on four-wall cost control could easily revert CIB Marine Bancshares back into a better state of profitability.


According to CompleteBankData, CIB Marine Bancshares is a cheap and growing bank. The bank trades for 81% of tangible common equity has a growing asset base and sub-par profitability ratios (weighted down by an overly burdened cost structure), another bank focused on profitability could swoop in, cut costs, grow their asset base and make a great return.

In short, we believe that CIB Marine Bancshares is a compelling investment case, which should get more investor visibility from the recent OTCQB up-listing. Finally, their undervaluation to their book value should grab the attention from an acquiring bank.

-Nick Bodnar (Analyst)