The media is full of news and opinions nowadays about how financial services should be managed. None of the top brands in the world banking industry have escaped opprobrium for poor loan decisions and bad asset management. The U.S. Federal Reserve has had to intervene directly to arrange and to guarantee loans as well. How can any stock investor think of the Financial Sector with stock purchases in mind within this context?

Perhaps small is better in banking. Here is a small capital stock from the S&Ls/Savings Bank Industry. It is based in Madison, WI and has served some 150 thousand households. It has been in business since 1919. Quality housing and commercial realty are its focus areas though it does not fall short in any way in terms of full service banking products and services for its clients.

The bank has a subsidiary which holds and develops real estate, and another that looks after foreclosed properties. These must be the defining differences between its unblemished record and those of larger international banks that have fallen into disrepute of late.

The Price to Earnings Ratio over the last four quarters has remained below 10. The Dividend Yield is nearly 5 and the Payout Ratio on a Trailing Twelve Months basis has been 44.47. It has clearly outperformed the Financial Sector on all these parameters. The stock price, at less than $15 at the end of the second week of May 2008, against a 52-week high of just over $29, seems to be affected by the general market sentiment against the Financial Sector. However, careful appraisal will show that the stock stands apart from its peers, and is worthy of investment.

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