LETTER: Pacific Enterprise Bancorp, Irvine, CA (PEBN)

There's no review of Pacific Enterprise Bancorp in Timyan Bank Alert.

But since other investors seemed to appreciate my sharing last month's letter to Peoples Financial Corp, I figured I could let you "in" on this aspect of my work more often.

Pacific Enterprise is a good bank that can sell for 50% higher than its last trade price, and I hope it does!

Below is a letter I am sending to the Chairman of Pacific Enterprise Bancorp.

See also
Pacific Enterprise Bank website
Q2 2019 Quarterly Report

Disclosure: As of this posting, I own shares of PEBN and may subsequently either dispose of them or purchase more.

My Letter to Pacific Enterprise Bancorp

Dennis H. Guida Jr. Chairman
Pacific Enterprise Bancorp
17748 Sky Park Circle
Suite 100
Irvine, CA 92614

Dear Mr. Guida,

I own 2% of Pacific Enterprise Bancorp. Thank you for your fine stewardship of the bank. Thanks to your team, too, for their fine execution of the business plan. Since its founding in 2007, Pacific Enterprise has had a fine run.

I was happy to hear you tried to sell the bank last year, but found your unrealistic expectations for what you'd get in a sale disappointing. Your board should know that you have shareholders, including me, who would prefer you sell Pacific Enterprise to the highest bidder, instead of holding out for a magical number.

Please share this letter with the board.


Philip J. Timyan
PEBN Shareholder

LETTER: To Peoples Financial Corp, Biloxi, MS (PFBX)

Time step up the heat on Swetman.

It's not just the July weather that has me hot and bothered. Since my February 28, 2019 update on Peoples Financial Corp, new information has come to light revealing a serious lapse at the Board level and an urgent need to clean house at The People’s Bank.

Hence, I have decided to take a more proactive approach on behalf of all shareholders invested in PFBX.

Below is a letter I am sending to the Independent Directors of The People's Bank. If you are a shareholder who agrees with my assessment, I encourage you to send your own letter, too.

Letters may be emailed to gbatia@thepeoples.com

Disclosure: As of this posting, I own shares of PFBX and may subsequently either dispose of them or purchase more.

My Letter to Peoples Financial Corp

To the “Independent” Directors of Peoples Financial Corp

  • T. Dan Magruder, Vice Chairman
  • E. A. "Drew" Allen
  • Rex E. Kelly
  • Jeffrey H. O'Keefe Sr.
  • George J. Sliman III

Howard and Lameuse Avenues
Biloxi, MS 39533

Dear Directors,

I am a long-term shareholder in Peoples Financial. I own more shares than any director not named Swetman.

It has been painful to witness the abysmal performance of the bank.

You owe shareholders the fiduciary duty to explore a merger. Your results will not justify a stock price anywhere near what you could obtain in a sale in any of our lifetimes. If you want Peoples to remain independent, you should pass the hat in the community, pay the outside shareholders a fair price, and go private.

Given recent prices paid for your neighbors, Charter Bank and First Florida Bank, and in spite of your lousy 0.06% ROA and 0.4% ROE, I believe you could garner as much as $30 per share in a sale, due to the cost savings an acquirer could achieve.

The recent SunHerald article highlighting loans The Peoples Bank made to crooked lawyers demonstrates the Board’s complete lack of control and failure to oversee inept management. And this is only what the reporter was able to find out. What other improper loans are there that we don’t know about? Further, what malfeasance did you commit to incur the June settlement payout of $200,000?

Since April 3, 1996 (the first date for which I can find a trade in PFBX stock), the value of PFBX — including dividends reinvested — has DECLINED by 8%. In contrast, the S&P has advanced by almost 600%. All on your and Chevis Swetman’s watch. In my opinion, the Board should fire Swetman for cause. What other publicly held bank CEO has made nefarious loans like this, spent 40 years destroying shareholder value, and still has a job? As “Independent" Directors, you are personally liable for your failure to properly govern Peoples Financial.

In conclusion, you have not earned the right to maintain control of this bank, and you are not abiding by your own corporate Code of Conduct. Please exercise your fiduciary duties to shareholders and sell The Peoples Bank to the highest bidder before any more value is dissipated.


Philip J. Timyan
PFBX Shareholder

Merchants & Marine Bancorp, Inc, Pascagoula, MS (MNMB)

A Case of an Undervalued Vessel

Merchants & Marine Bank has been sailing way under the radar and is way undervalued.

MNMB wasn't even listed until January 2015. It doesn’t look like the bank has any institutional shareholders. Its largest reported shareholder — Director Paul Moore — owns a mere 2.8%.

If M&M Bank would use its earnings and excess capital to buy back shares, the stock could easily reach book value of $80, earnings of $7, and trading value of $100 by 2022.

Alternatively, given neighboring Charter Bank’s recent sale for 140% of book value, Merchants & Marine Bancorp could and probably should sell the ship now for $80 per share.

Disclosure: As of this posting, I own shares of MNMB and may subsequently either dispose of them or purchase more.

Prospective Buyers

M&M Bank’s 33% marketshare in Pascagoula presents an attractive acquisition opportunity for these better performing peers.

First Bancshares, Hattisburg, MS (FBMS)
Home BancShares, Conway, AR (HOMB)
Bancorp South Bank, Tupelo, MS (BSX)

Financial Snapshot
as of 03/31/2019

Total assets:
Tangible book value per share:   
NPAs to assets:
Price to book:
Market cap:
Dividend yield:
Trailing 12-month ROA:
Trailing 12-month ROE:

The Crew

L. Royce Cumbest, Chairman and CEO
Clayton Legear, President and COO
Paul Moore, Director, largest inside shareholder

The Skinny

As far as marine vessels go, M&M’s ship has proven to be sturdy. 

The bank has stayed afloat, held its deposit cargo intact, weathered some storms, and carried a fair share of passenger-customers since it was founded almost 90 years ago.

As far as mercantilism goes, however, M&M Bank hasn’t produced profit levels consistent with its name or industry for at least the past ten years.

Back in 2011, Merchants & Marine Bancorp tried to grow by expanding its fleet. They spent $3M to acquire $55M in assets held by Heritage First Bank.  Sounded great! Except eight years later, the combined entity is only $8M in assets larger.

That’s some hole in the deck to let $47M leak out, don’t you think? I’ll never understand why companies like M&M Bank go pay full price for a ship that’s in no way needed to deliver their goods, when spending the same amount to increase ownership of their own ship would produce far greater returns and plug holes like this.

Stranger still, Merchants & Marine insiders seem to be missing the opportunity right before their eyes. Of the top seven of the bank’s officers, five own zero shares. Eight directors out of eleven own less than 1%. Two own zero shares. One owns just 50 shares ($1950 worth).

Attention on deck: MNMB is undervalued. You're sailing under the radar. Look at the horizon! We need you to adjust course now.