First Citrus Looking Forward To A Bright 2020 And Beyond – First Citrus Bancorporation, Inc. (OTCMKTS:FCIT)

First Citrus Bank (OTCQB:FCIT) recently raised its annual dividend by 60%, a much more substantial raise than last year, suggesting management’s confidence in the bank’s performance this year. With the bank’s stock having moved little in the past year, the stock is still reasonably valued, and with the upcoming expansion into St. Pete, the company looks primed to perform even better this year.

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Dividend Raise

First Citrus raised its annual dividend for the fourth straight year in a row, this time from .25 to .40 dollars per share; an increase of 60 percent. This dividend increase should not come as a surprise to shareholders as the bank had a strong 2019 and management seems optimistic about their future prospects as they announced the bank’s expansion into St. Pete, which looks to grow their deposit base and loan prospects. This dividend raise brings their forward yield to 1.48%.

Though this is a relatively low yield, the company’s consistent raises and strong earnings growth leave plenty of room for future growth, and the dividend remains safe with a low payout ratio of 18.96% based on trailing earnings of $2.11 per share. This is below the average for Florida banks of 23.84% and the national average for regional banks, which is around 30%. This is a substantial increase from their payout ratio of 11.26% before the raise and suggests that the company will raise their payout again in the future to be more in line with the regional average.

Outlook for 2020

First Citrus recently branched out of its home county to open its first branch across the bay in St. Petersburg. This is expected to be a full branch by the end of 2020 and begin originating loans before that, through its temporary loan production office. Though this may not produce significant material impacts on the company’s balance sheet for a few years yet, according to management, it is a signal of the company’s optimism and cautious growth mindset.

The company’s strong earnings growth history can be expected to continue, especially if predictions for continued strength in the Tampa and St. Petersburg real estate markets hold up. The company has also projected that it will reach $500 million in assets within the year, continuing a trend of adding approximately $50 million in assets each year for the past five years.

Valuation

The company’s valuation remains below other community and regional banks at 12.80, while Florida banks average 14.40 and banks in the Atlantic coast region average 14.50. Though this valuation has grown from the last time I wrote about the company, it is still relatively low and the company’s shares are supported by a strong growth history and increasing underlying book value.

Thesis

First Citrus remains a reliable bank for investors, and though it is unlikely to see any huge increases in its share price within the next year, its valuation is likely to continue to grow as the company’s growth shines and more expansion occurs. Furthermore, at its reasonable valuation, the company’s stock has room to grow as its valuation comes more into line with the industry average, which could occur as it’s dividend and the increase thereof becomes more regular. With the new branch in St. Pete, the recent 60% dividend increase, and the overall sunny outlook for the Tampa area, 2020 looks to be a good year for First Citrus and its shareholders.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: This article is for informational purposes only and should not be regarded as investment advice. This article should not be the sole basis for a financial decision, including the purchase or sale of stock. Any personal financial decision should be made on the basis of your own research and consideration of your unique financial goals and investing ideals.

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