Manager: Cheng Yuan
Model: Value with Catalyst
April was another lethargic month for my model portfolio. The opportunity that I have been waiting for did not come. So I continue to hold on to cash.
Despite the inactivity, the portfolio rode the mild market ebb and flow to end up about 1% ahead of where it was at the beginning of the month. Nothing monumental. The S&P 500 was ended up with almost a 3% gain for the month of April.
On a more interesting note, West Coast Bancorp (NASDAQ: WCBO) is well on its way to return to profitability. WCB reported another profitable quarter. Net interest margin has improved to 3.8% while non-performing loans continue to decrease to 3.5% of total loans. More importantly, demand deposit grew to 29% of total deposits.
Demand deposits are non-interest bearing funds. Growth in core deposits – that is, deposits generally comprising of demand deposits, interest demand, money market and time deposits less than $100,000 – directly affect the value of a bank. Core deposits provide cheap and stable funding compared to high yield CDs, brokered CDs and wholesale funding.
In banking, the lowest cost operator typically comes out ahead. I expect WCB to continue to do quite well in this slow and long recovery of the housing market.
Sources:
“West Coast Bancorp Reports First Quarter 2011 Profits” Company press release, 4/25/11. https://finance.yahoo.com/news/West-Coast-Bancorp-Reports-prnews-1977773040.html?x=0&.v=1
