Greer Bancshares, Inc, Greer, SC (GRBS)

The Case of a Greedy Grip on Greer

Grrrrrr! The guys at Greer Bancshares have me growling.

Even if they stopped their money grubbing today and all else goes well, I have trouble seeing how the market price of GRBS could reach much over $15 — not a terrible return, but also not optimal, especially considering the risks involved. In a sale, GRBS shares could garner $17, more than 40% above today's stock price.  

I agree with C Don Wall, a former Director and Greer's largest shareholder: the Board has a fiduciary responsibility to loosen its grip on the bank and let shareholders sell it if they wish.

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

Prospective Buyers

BNC Bancorp, High Point, NC (BNCN)
First Citizens BancShares, Inc, Raleigh, NC (FCNCA)
United Community Banks, Inc, Blairsville, GA (UCBI)

Financial Snapshot
as of 6/30/2016
Total assets:$378M
Tangible book value per share:$10.89
NPAs to assets:1.7%
Price to book:105%
Market cap:$28M
Dividend yield:1.7%
Trailing 12-month return on assets:0.74%
Trailing 12-month return on equity:11.3%
*Redeemed $10M 7/23/2014


Gary M. Griffin, Chairman
J Richard Medlock Jr, Secretary, President, and CEO

Red Flags

The Greed. These greedy guys (and gals)...
  • paid shareholders a paltry $248,669 in dividends over the past eight years (2007-2015) while they stuffed 8x that into their own pockets, reporting $2,007,693 in Board fees
  • have been paying themselves 10% interest for deferred Directors compensation (right up until last year), 20x the 0.5% rate they pay customers for 1-year CDs 
  • recently cut their deferred compensation interest rate by half, but it's still 10x the rate they pay their customers 
[No wonder that a full third of Greer's directors don't even own an amount of stock equal to a year's worth of board fees!]

The Grip. These same greedy guys are...
  • misusing an outdated requirement that 70% of the Board agree to a change of control, when the norm is 50%*
  • refusing to hand over corporate records shareholders have requested to inspect, in open defiance of their obligations under South Carolina law
  • persisting on a self-serving path of independence at the expense of the bank's core shareholder base
*Until this is changed, that aforementioned third of the Board that owns next to no GRBS stock can effectively block the interests of shareholders who own 99% of it.

Other Gripes. While their hands are busy grabbing profits and maintaining their grip on the bank, these guys are dropping the ball:
  • From 2011 to 2015 both loans and deposits declined. (Deposits have meagerly improved over the past few months.)
  • Instead of taking in deposits and lending them out, Greer is borrowing money from the FHLB and taking on debt to invest in the bond market — a risky wager given that interest rates are at record lows. (A 2% interest rate increase could wipe out more than half of the bank's equity.)
  • The bank's efficiency ratio increased from 69.9% in 2011 to 72.5% in 2015, in a game where the target is a healthy 60% or less.
- - - - - - - - - - - - - - 
My Gratitude to fellow shareholders C Don Wall, Dennis Hennett, and Paula Lawrence — who launched a proxy fight last year — for their shareholder advocacy and stand for right behavior.


  • Confidential interviews with shareholders and analysts

CCF Holding Co, Jonesboro, GA (CCFH)

A Case of Southern Revival

The Heritage Bank resurrection story warms my heart. Of the 12 banks that were headquartered in Georgia's Clayton and Henry Counties in 2008, Heritage is the only one that survived the Great Recession.

The Heritage Bank franchise lost a huge percentage of its equity at the time, but clearly it did not lose faith! Since then, asset quality, growth, and scarcity value have all risen to such a glorious degree that I can see CCFH stock trading at 150% of book value within the next two years. And if the bank's board decides to sell, the stock could deliver twice book.

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

Prospective Buyers

Wrapping Heritage Bank into its fold would fill a real need for any one of these organizations that suffer from lack of marketshare in the area:

Ameris Bancorp, Moultrie, GA (ABCB)
State Bank Financial, Atlanta, GA (STBZ)
United Community Banks, Inc, Blairsville, GA (UCBI)

Financial Snapshot
as of 06/30/2016
Total assets:$415M
Tangible book value per share:$1.08†*
NPAs to assets:2%
Price to book:88%*
Market cap:$37M*
Dividend yield:0%
Trailing 12-month return on assets:5.6%†**
Trailing 12-month return on equity:64.2%
*Tangible book value per share, price to book, and market cap adjusted for exercise of warrants and conversion of preferred shares.
**ROE and ROA numbers are misleading due to the bank's DTA recapture.


David Turner, Chairman
Leonard Moreland, President and CEO
Katherine Zovlonsky, Senior VP and COO

Gold Stars

The Heritage Bank resurrection story in a nutshell:

NPAs to Loans
Over 24%
Texas Ratio
20% and falling
Net Loans
* YE 2012, 2013


  • Confidential interviews with shareholders and analysts

UPDATE: Northern California National Bank, Chico, CA (NCNB)

In the two and a half years since I first reviewed Northern California National Bank in the Timyan Bank Alert™, assets are up 45%, book value has grown by 21%, loans have grown by 33%, deposits by 40%, a dividend has been instituted, NPAs have remained negligible and the value of the franchise has grown by $10 per share in my estimation.

And since the stock is only up 20% since then, NCNB is an even better bargain for bank investors today. It's conceivable that an acquirer could and would pay $28 per share to own this beautiful one-branch bank.

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

Prospective Buyers
Banner Corp, Walla Walla, WA (BANR)*
TriCo Bancshares, Chico, CA (TCBK)
Umpqua Holdings, Portland, OR (UMPQ)

* I had listed SKBHC here in my original post, but Banner Corp has since acquired it. Banner's lone Chico branch has a paltry $9M in deposits, so I'd say BANR should either buy NCNB or leave Chico to bankers that care more about it.
Financial Snapshot
(as of 06/30/2016)

Total assets:
Tangible book value per share:
NPAs to assets:
Price to book:
Market cap:
Dividend yield:
Trailing 12-month return on assets:
Trailing 12-month return on equity:
John Lucchesi, former Chairman, President, and CEO (deceased)
Stephen Gonsalves, Chairman
Todd Lewis, President, CEO, and CFO
Gold Stars
I am sad to report that since I first reviewed Northern California National Bank in the Timyan Bank Alert™, its Founder has died. I had hoped to trek out West to meet him and to acknowledge him personally. Banking needs more folks like John Lucchesi! And life really is short.

John Lucchesi is one of my favorite bankers of all time. He grew up in Chico, went to Chico State University and returned to his hometown after a 25-year career with Bank of America that took him to Asia. Back in Chico, Lucchesi ran North State National Bank until he sold it to Tri Counties Bank in 2002. 

Apparently, Lucchesi was one of those ambitious guys who just couldn't retire, so in 2006, at the young age of 67, he started Northern California National. When other banks were reeling from bad loans in the Great Recession, Northern California National was growing without loan problems due to Lucchesi's careful stewardship. 

Lucchesi's Northern California National is a case study in how to build a great community bank from the ground up. Today, months after he left us, it may be the sturdiest bank in Chico and a highly coveted franchise.

I know this updated blog post is a small tribute, unworthy of the man and his end-of-life's work.  I had hoped to at least be able to shake his hand...

    • Confidential interviews with shareholders