Today’s financial melt-down continues to find investors running for the sidelines. Some, however, say that the time may be near to start thinking about getting back into the finance sector. As with any downturn, quality does exist if a closer look is taken. Larger institutions, that were the darlings of the mortgage banking system in the past, may not be the right play at the moment, but smaller banks with the tried and true main street “neighborhood banker” tag may be. Prudence and solid financial values define this type of bank.
Allegiance Bank of North America., a full service commercial bank based in Bala Cynwyd Pennsylvania, offers a full range of personal and commercial banking services. Chartered in 1998, the bank has five branches and a non-active subsidiary taking the form of Paramount Mortgage & Capital LLC.
From a general point of view, the company is weathering the banking crisis in solid fashion, as compared to other similarly sized banks. On its banking side, the company has very little exposure to non-performing assets and has dealt with those assets that have not performed to a reasonable result in the third quarter. Given the current standing of the banking system, Allegiance Bank appears to be in a solid position. Its capitalization is currently well above the Federal Reserve’s definition (10%) of “well capitalized” at 15.8%, its net interest margin is comparable with similar institutions at 3.84% and core deposits grew from 30% to 40% over the last year.
The company, however, has had some exposure to the current financial condition of the country through its non-active Paramount Mortgage & Capital subsidiary. In typical fashion, however, it has dealt with the issues and currently sees no need for increasing loan loss provisions. As of September 30, 2008, the company currently carries loan loss provisions of 2.6% of total company loans or $3.5 million. As a comparison, and to demonstrate the swift action and attention that management has paid to the current banking situation, non-performing assets of the company as a whole dropped from 4.8% to 3.9% from June 2008 to September 2008.
Allegiance Bank of North America is a prime example of a bank that pays attention to its balance sheet and acts prudently and quickly to maintain a solid foundation. Its loan growth appears sound. If dipping a toe into the financial markets is a thought, Allegiance Bank may be a good option.
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