GBI Note: format on this post is a little different from prior posts. I’m trying to find the appropriate blend of blog post and research report. Any/all feedback welcome.

QNB Corp. (OTC Pink: QNBC) is a bank holding company headquartered in Quakertown, Pennsylvania. QNB Corp. Through its wholly owned subsidiary, QNB Bank has been serving Upper Bucks, Northern Montgomery and Southern Lehigh Counties in Pennsylvania since 1877. QNB has been helmed by seven presidents over its 142-year history, a impressive feat and one of many examples of the stability and consistency QNBC has delivered to its shareholders over the years.


Shares of QNBC are currently trading at a trailing P/E multiple of 11x and a P/TBV ratio of 125%. Both the EPS-based and TBV-based valuations are attractive levels to take an ownership stake in a banking franchise that is strategically and operationally positioned to deliver double-digit returns on equity over a full credit cycle. Likely key drivers of the current discount versus peer banks appears to be the OTC Pink listing status of QNBC’s shares as well as management’s stated desire to remain a standalone, independent franchise.

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Eastern Michigan Financial Corporation (EFIN)

Liquidity/size disclaimer (sorry): this name is illiquid, boring, and unlikely to fit anything but a retail position size. But I like the bank so I’m going to write it up.

Eastern Michigan Financial Corporation (EFIN) is based out of Croswell, MI and its bank subsidiary Eastern Michigan Bank currently operates nine banking offices and a loan production center, primarily in the Sanilac and St. Clair County, Michigan communities (northeast of Detroit).  Originally chartered as the State Bank of Croswell in 1895, Eastern Michigan Bank continues to service the region with a broad range of deposit services as well as loans for commercial and consumer purposes. Shares of EFIN currently provide a nice entry point to invest alongside a capable management team operating a highly-capitalized bank positioned to deliver attractive compounded ROE to its shareholders.

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