Despite being a big resource investor, Sprott U.S. Holdings Chairman Rick Rule also finds the U.S. small to medium-sized community bank sector attractive. In fact, he says “it’s a game that’s just getting underway again now.”
Sprott U.S. Holdings Chairman Rick Rule, in a recent video interview with SmallCapPower, mentioned that he thought the U.S. small to medium-sized community bank sector looked very attractive from an investment perspective.
“If you have a bank that’s well capitalized, that operates in a locale where it has a very strong regional franchise. And, in particular, small banks that stick to one or two areas of expertise. Banks that don’t try to compete with the financial supermarkets but rather compete in sectors where they can out-compete the big banks in regions where they have very strong franchises,” he said.
Mr. Rule added that the community banking business in the United States goes from strength to strength, and the way that usually resolves itself is that they build themselves up to a large enough asset base where they get bought by a bigger competitor.
“So buying a very strong regional bank at book or 125% of book, letting it build book for five years so that book doubles or triples and then being bought at twice book has been a three or four decade pathway to success, and I think it’s a game that’s just getting underway again now.”
