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Banker To The Silicon Swells


Inside Wall Street

BANKER TO THE SILICON SWELLS

No doubt about it, says money manager William Astrop, the bull market in technology stocks "will be long-running." But he isn't loading up on tech issues. An "offbeat way to play the tech upswing," he says, is through SJNB Financial (SJNB), a community bank in San Jose, Calif. Astrop thinks that "as technology goes, so will SJNB." A booming Silicon Valley will enhance SJNB's allure as a takeover target, argues Astrop, who runs Astrop Advisory in Atlanta.

From its single headquarters location, the bank serves prosperous San Jose and nearby Santa Clara. San Jose, now California's third-largest city, has seen its land prices more than double in the past year.

"In a takeover deal, SJNB would fetch a price in the mid-40s," says Astrop. Some banks have sold at three times their book value. He estimates SJNB's book at $13. SJNB competes with three independent banks: Silicon Valley Bank, Heritage Bank of Commerce, and Cupertino National Bank. Any of them, or one of the big banks, figures Astrop, could be a potential buyer.

Even without a deal, Astrop thinks "the stock will double in two to three years." The total assets of SJNB--$321 million--should grow at 20% for a number of years, he says. Also, the bank has a minuscule share of nonperforming assets (0.2% vs. the typical 2.5% to 3%), adds Astrop.

Also upbeat on SJNB is Van Kasper, a San Francisco investment firm. The bank's lean structure, its management experience, and a strong lending environment should boost earnings growth, says a Van Kasper analyst.BY GENE G. MARCIALReturn to top

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