UPDATE: Brunswick Bancorp, Brunswick, NJ (BRBW) -

Four hundred and fifty five days after my April 2017 Review of Brunswick Bancorp, head scoundrel Roman Gumina met his Maker.

In death there is hope! If Roman's successor Uncle Frank Junior can right side the bank's expenses, it's entirely plausible we could see a resurrection of BRBW share price to $14. Were Uncle Frankie to sell the bank, Brunswick stock could conceivably garner the same.

Question is, how much of Roman Gumina's greed is embodied in the bank's operational design and family management DNA? In his wake, is BRBW a bargain buy or a pile of dead money?


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


Prospective Buyers

Still true today: The $95M of deposits in Brunswick's Livingston Ave branch headquarters might be appealing to area institutions, but I doubt any buyer would be interested in the 4 out of 7 other branches struggling to manage less than $9M each.

Amboy Bancorp, Old Bridge, NJ (private)
Magyar Bancorp, New Brunswick, NJ (MGYR)
Provident Financial Services, Iselin, NJ (PFS)

Financial Snapshot
as of 06/30/2018

Total assets:
$187M
Tangible book value per share:     
$12.50
NPAs to assets:
4.6%
Price to book:
70%
Market cap:
$26.5M
Dividend yield:
0%
Trailing 12-month ROA:
0.3%
Trailing 12-month ROE:
1.7%

Scoundrels

Frank Gumina, Jr, Interim Chairman
Nicholas A. Frungillo, Jr, President and CEO
Frank J. Gumina III, Esq, Vice President, Bank Counsel

Red Flag

My concerns about Brunswick Bank & Trust are essentially unchanged since my April 2017 review.
  1. The bank's expenses are way out of line with industry norms or anything justifiable (see table below).
  2. Roman Gumina owned at least 10 unrelated entities, and money is still flowing from the bank to some of them.
  3. More than half the bank's branches are too small to be profitable, and should be closed.
  4. NPA's are 4x current industry average.
Here's what I'd love to see Management do (and, what fiscal responsibility requires):
  • Cut Occupancy and Other Expenses in half! That alone should add $450K to pre-tax earnings and produce triple last quarter’s earnings.
  • Cut the asking price of REO low enough to sell it, then put the proceeds into earning assets. That could add another $160K to the pre-tax income.
  • Don't spend the late Gumina’s $310,000/year salary on anyone or anything new. That's cash straight to the bottom line.
  • Do these three things, and watch earnings rise six-fold!
How Brunswick Bank's expenses compare to peers'.

Brunswick Bank & Trust Expenses are more than double what they should be!


not including rent charged for Bank use of Gumina properties
a Timyan Bank Alert favorite in NJ
in the two quarters prior to close of merger with SB One Bancorp (SBBX)

Sources

  • Confidential interviews with shareholders and analysts

United Bancorporation of Alabama, Atmore, AL (UBAB)

A Case of United Banking in Opportunity Zones


Remarkably, even in this political climate, politicians have crossed party lines to arm financial institutions with new tools for developing America's most distressed communities.  

United Bank of Atmore, Alabama is putting some of these tools to good work!

What's the opportunity here for investors? They could nearly double their money in three years. I see UBAB earning over $3 per share, having book value over $23 per share, and trading in the $30's.


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


Prospective Buyers

Non-interest bearing deposits spell opportunity for any enterprising bank. 43% of United Bank's deposits fall in this category and are free to lend in the community.

First Bancshares, Hattiesburg, MS (FBMS)
Home BancShares, Conway, AR (HOMB)
Trustmark, Jackson, MS (TRMK)

Financial Snapshot
as of 03/31/2018

Total assets:
$608M
Tangible book value per share:   
$15.65
NPAs to assets:
1.0%
Price to book:
113%
Market cap:
$43.3M
Dividend yield:
0.8%
Trailing 12-month ROA:
0.7%
Trailing 12-month ROE:
10.9%
TARP:
$0*

*Redeemed $10.3M 11/2016

The Crew

David D Swift, Sr, Chairman
Robert R Jones III, President and CEO
Gwendolyn Bailey Braden, Executive VP and COO

The Skinny

United Bank is lending in communities desperately in need of capital:
  • Five of United Bank's 18 branches (28%) are located in Opportunity Zones (see map).

United Bank uses a variety of contemporary tools for getting capital in the hands of area developers, entrepreneurs, and job creators:

United Bank may be in some economically distressed areas, but it is performing great!
  • The bank has #1 market share of deposits in 6 of the 15 towns where it has branches.
  • UBAB has paid uninterrupted dividends since 1983.
  • UBAB’s ROA and ROE are on a par with those of other banks in the country.

Sources

UPDATE: California BanCorp, Oakland, CA (CALB)

Terry Peterson resigns, a winner! Since my July 2014 Timyan Bank Alert review of California Bank of Commerce, a holding company was formed for the bank, the stock has performed as I'd anticipated, and the CEO in which I had so much confidence has resigned.

Updating my predictions for this bank, I'd say that within three years book value could approach $16 and earnings could be $2.00 or better making it likely the stock will trade at $30, presuming everything goes right without Peterson at the helm.

Since California BanCorp could garner $32/share in a sale today, that's what I'd consider the big win to shoot for now.


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


Prospective Buyers

An acquisition of California BanCorp would be accretive to book value and earnings for any of these three area banks, whose currencies are so strong they can afford to pay a significant premium.

Bank of Marin, Novato, CA (BMRC)
Heritage Commerce Corp, San Jose, CA (HTBK)
Westamerica, San Rafael, CA (WABC)

Financial Snapshot
as of 03/31/2018

Total assets:
$909M
Tangible book value per share:     
$12.21
NPAs to assets:
0.4%
Price to book:
164%
Market cap:
$136M
Dividend yield:
0%
Trailing 12-month ROA:
0.7%
Trailing 12-month ROE:
7.0%

The Crew

Steven A. Cortese, Chairman
Steven E. Shelton, President and CEO
Randall D. Greenfield, Executive VP and CFO

The Skinny

Terry Peterson is an all-star banker.

Few, if any, bankers in the US have had more success in building banks as Peterson has had in his career so far.
  • He has consistently attracted top banking talent to come to work with him.
  • He grew deposits at California Bank of Commerce from $281 million to $798M, including a whopping $321M in non-interest bearing deposits.
  • He increased the takeover value of the bank to 250% of today's book value (based on recent overtures from prospective buyers).
Peterson announced his resignation on May 7th, a winner.

California BancCorp's best prospect for a post-Peterson win is to sell.

On their own, surviving management can get CALB to a $30 share price in three years, assuming they can maintain Peterson's achievement levels.

Now that its star player is out of the lineup, I can't imagine California Bank of Commerce doing better without him than it was with him.

Sources