Newspaper article THE JOURNAL RECORD

Some S&l Stocks a Good Value despite Industry Woes

Newspaper article THE JOURNAL RECORD

Some S&l Stocks a Good Value despite Industry Woes

Article excerpt

among savings and loan institutions and the consequent shunning of the industry by many investors, several select thrift industry stocks continue to offer good value, according to some industry experts.

``Investors have not separated the wheat from the chaff among thrifts and, as a result, some higher-quality issues are sharply undervalued,'' said Jerome Baron, senior thrift industry analyst at Prudential-Bache Securities.

A number of quality savings institutions, he said, have declared or increased dividend payments to attract investors.

Many of these companies, most of them traded over the counter, offer a strong return on assets, or ROA, and return on equity, or ROE. A return of 0.75 to 0.80 percent on assets is the generally accepted benchmark for a solid performance by a savings institution, while a return on equity of 10 to 13 percent is considered healthy. Most of the following institutions fall within these ranges.

In the New York area, analysts are recommending a number of dividend-paying thrift institutions, including the Rochester Community Savings Bank of Rochester, the Dime Savings Bank of Wallingford, Conn., and the Prospect Park Financial Corp. in West Paterson, N.J.

Rochester Community Savings, holding a dominant share of deposits and mortgage originations in Rochester, has about $3 billion in assets. In March, it announced a 50 percent increase in its quarterly cash dividend. On an annual basis, the dividends now total 36 cents a share.

James Carter, an analyst at Merrill Lynch, estimates that Rochester Community will earn $1.45 to $1.65 a share in the fiscal year ending Nov. 30, up from last year's $1.11 a share. The stock closed Monday at $13.125 a share.

Dime Savings of Wallingford, a strong lender to builders, has benefited from soaring property values in its area. Dime is also insured by the Federal Deposit Insurance Corp. and thus avoids financial problems of the Federal Savings and Loan Insurance Corp., which some experts say could be a drag on future earnings in the thrift industry.

Dime has paid a dividend every quarter since it went public in July 1986, and the annual dividend rate of 80 cents a share represents a yield of 5.8 percent.

According to Samuel J. Beebe of the Williams Securities Group Inc. in Tampa, Fla., Dime's earnings should rise to $1.35 a share in 1988 from $1.27 in 1987. The shares closed Monday at $13.625.

Prospect Park Financial, with assets of more than $500 million, has developed a strong niche in local residential real estate development on a small scale. …

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