As one of Australia's two remaining regional banks, Bendigo and Adelaide Bank (ASX: BEN) has positioned itself firmly in Australian banking due to its brand, customer loyalty, a unique community branch distribution model and niche businesses.
Bendigo and Adelaide Bank provides a range of banking and other financial services, including retail banking, margin lending, mortgage distribution through third parties, business lending and funds management. It is represented in all states and territories with almost 900 outlets, including more than 190 company-owned branches, approximately 295 locally owned community bank branches, 240 Elders (ASX: ELD) branches and other agencies.
Bank of Queensland (ASX: BOQ), the other remaining regional bank, has less than half the number of outlets, 198 branches, of which 115 are in Queensland, 71 corporate branches and 8 transaction centres.
Bendigo and Adelaide Bank funds management business is vested in Sandhurst Trustees and the company's margin lending business in leveraged equities. Sandhurst Trustees provides wealth management products and services, including managed funds, common funds, cash management accounts, superannuation and wills and estate management. Sandhurst Trustees products are distributed to customers by third party financial advisers, with selected products available to customers through Bendigo and Adelaide Bank's retail arm. Leveraged equities operates margin lending firms.
Bendigo and Adelaide Bank represents only 1.2% of the market capitalisation of all major banks. Commonwealth (ASX: CBC) is 31.2%; Westpac (ASX: WBC) is 25.1%; ANZ (ASX: ANZ) is 22.1%; and NAB (ASX: NAB) is 20.4%. So Bendigo is a minnow amongst whales. However, it can be argued that it is easier to double the price of a small stock compared with a large one, so the potential to double the price of Bendigo and Adelaide Bank is better than for any of the major banks over the long term. Of course, on a fundamental basis, it all depends on how well Bendigo and Adelaide Bank grows its profit. Over the last 10 years the bank has grown its net interest income from $253.6 million to $1,027.5 million with an increase every year.
Foolish takeaway
At the 2013 Annual General Meeting, the Managing Director, Michael Hirst said that,
"We have the highest customer satisfaction, brand advocacy, brand trust and loan growth among all the nationally operating banks. On any assessment, that is a fantastic result and one that we can all be very proud of. Our customer-centric values, ability to innovate and a culture of doing things differently have carved out a position for our Bank that continues to be unique."
Bendigo and Adelaide Bank has plenty going for it, and should definitely be considered a buy at current prices.
