Yesterday I bought what I think will be my last position in small bankers–of course market action could tempt me to adding to current positions.
In keeping with what I have been doing with my portfolios – and the small bankers in particular, I bought a 1/2 position in the CNB Financial 7.125% Fixed Rate Non Cumulative Preferred (CCNEP) issue @ $21.50. Current yield of 8.27%. I will add this to my ‘laundry list’ of holdings.
CNB is a small banker located in Pennsylvania – just $5 billion in assets. I reviewed their most recently available financials and didn’t find anything startling–similar to most bankers where year over year earnings have tailed off a bit as net interest margins fall off. Most bankers have some higher expenses as FDIC assessments have risen to pay for the failed bankers.
So with that I will hold on small bank purchases – will see what CD rates do in the next 10 days as we go through another Fed Funds rate hike next week. CD Rates should move 1/4% higher which would likely tempt me to add more if we get in that 5.7-5.8% area. We’ll see – CD rate increases are not a certainty, but high odds they will increase.
Vs fdic insured for 5.6. Risk it all to earn 1% more? What I don’t especially like about that is the call option.
RIV-A…..A1 rated as of 5/21/23
RiverNorth Opportunities Fund, Inc. 6.00% Series A, Perpetual Preferred Stock https://www.quantumonline.com/search.cfm
$23.53USD MARKET OPEN (AS OF JUL 20, 12:58 EDT) 6.3748% / 7.91% YTC
Distributes on the rare 2/5/8/11 months.
Hi Tim
Would really appreciate your opinion on ASBA
apatel –
As a former banker, I felt pretty comfortable with ASBA.
Bought it in the March slump, then watched it dive again in May.
Finally took my loss early July.
Still am comfortable that it is a solid institution, but am of the opinion that Mr. Market is never going to like it in today’s environment.
My opinion – the dividend is probably safe, but the market price will continue to be vulnerable if/when anything bad happens to any other regional bank. With all the commercial real estate exposure out there, that is not an if, but a when.
As we always say, DYODD
Thank you Westie, I am thinking you are talking about the equity stock, which is good too, however I was planning on buying the sub-notes
Associated Banc-Corp 6.625% Fixed-Rate Reset Subordinated Notes due 2033, redeemable at the issuer’s option on or after 03/01/2028 at $25 per note plus accrued and unpaid interest, and maturing 03/01/2033.
Ticker Symbol: ASBA CUSIP: 045487600 Exchange: NYSE
Competition for 1 year CD : Toronto Dominion Bank new 4 year 6.15% bond A1/A rated Callable in 1 year Pays quarterly . cusip 89114XAW3 Available in Fidelity
Nikolas,
Yes, I see good rates for Canadian bank bonds on Schwab also, but I worry that taxes will be withheld even though they shouldn’t be if bought in an IRA. The thought of straightening that mess out keeps me from going for the extra .25% or so.
Canada doesn’t withhold interest on bonds..
I had the same worry, worry no longer, I can verify (along with some good folks on these pages) that no taxes taken out on Canadian Bonds for IRAs.
offering doc is here.
https://www.sec.gov/Archives/edgar/data/947263/000114036123033953/0001140361-23-033953-index.html
Justin,
Thanks for the link. Looks ok, I see these bonds are subject to a bank bail-in where they would be swapped for common shares. Not a likely scenario, but explains why Canadian banks have to offer slightly better interest rates.