FMB Equibanc, Statesboro, GA (FMBE)

A Case of Being in a Better State

Economically speaking, FMBE is in the best state it's been in since the Great Recession. Geographically speaking, Georgia is a great state to be a bank in these days. So I find it linguistically satisfying that Georgia's Farmers & Merchants Bank is in a vibrant Georgian town named Statesboro.

Of course, now I have to state my case: I see FMBE's earnings reaching 70¢ a share and book value surpassing $7 in three years, making it likely the stock will trade at $10 and deliver a healthy return for today's investor. Were FMBE to sell today, it could get $9-10.

When holding out a few years doesn't get the stock to a much better state than it can obtain today, I say management should sell.

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

Prospective Buyers Farmers & Merchants Bank has more great options for a mutually lucrative M&A transaction than any community bank I have seen in quite some time. All five of these banks have holes in their branch networks FMBE would fill nicely:

Bank of the Ozarks, Little Rock, AR (OZRK)
Fidelity Southern, Atlanta, GA (LION)
South State Corp, Columbia, SC (SSB)
State Bank Financial, Atlanta, GA (STBZ)
United Community Banks, Blairsville, GA (UCBI)

Financial Snapshot
as of 12/31/2017

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:

*Adjusted to exclude one-time Deferred Tax Asset (DTA) charge Q4 2017

The Crew

Gary Davis, Chairman
Charles Ricky Nessmith, President and CEO
William Brett Morgan, Bank President and CEO

The Skinny

Why I'm pleased with FMBE's current state:
  1. It presents a "heads we win, tails we win" situation. Shareholders get a much higher share price whether management sells or keeps improving operations. It's just a matter of sooner or later.
  2. The state of leadership is great. CEO Brett Morgan has presided over one of the greatest bank turnarounds of this economic cycle. He brought FMBE's NPAs down from 17% in 2011 to 1% today!
  3. The bank's marketshare is in a strong state. Farmers & Merchants Bank is the only bank in Brooklet and controls 15% of the deposits in Bulloch County—an economically vibrant area anchored by Georgia Southern University and its 30,000 students and staff.
  4. The state of the bank's deposit mix is getting better and better. 36% of FMBE's $171M are in checking accounts, 15% more than in 2012 and well above the 25% most investors are happy to see.
  • Confidential interviews with shareholders and analysts

Glen Burnie Bancorp, Glen Burnie, MD (GLBZ)

A Case of Bad Guys but a Good Buy

Glen Burnie Bancorp's history is sordid. However, GLBZ stock is undervalued and there is a new sheriff in town.

If new CEO John Long can earn a respectable ROA of even 1% in three years, that would equate to $1.50 in earnings per share. Book value would approach $15 and GLBZ could trade in the low $20s, giving shareholders a chance to double their money.

Long is 21 months into his plan. If he is unsuccessful, Chairman Demyan should sell the bank in keeping with the bank's mission statement.

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

Prospective Buyers

In my perfect world, one of these three banks with cleaner pasts and stronger performance would acquire The Bank of Glen Burnie.
Howard Bancorp, Ellicott City, MD (HBMD)
Old Line Bancshares, Bowie, MD (OLBK)
Southern National Bancorp of Virginia, McLean, VA (SONA)

Financial Snapshot
as of 09/30/2016

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:


John Demyan, Chairman
F. William Kuethe, Jr, former President and CEO (deceased)
F. W. Kuethe III, Director and VP

The Skinny

There's too much to tell about the history of Glen Burnie Bancorp's bad board behavior to fit in a single blog post. But prospective investors should know it, so please, before you go buy GLBZ, see Infographic: Glen Burnie Bancorp (GLBZ).

In any event, I believe GLBZ is a good buy today. The Bank of Glen Burnie has six strengths in particular that give me confidence.
  1. Leading market share. The Bank of Glen Burnie dominates banking in Severn, Crownsville, and Riviera Beach. It also owns a solid 7% of the market in Glen Burnie.
  2. Quality deposits. $105M of the bank's $334M in deposits is non-interest bearing, and the bank has many long-time, loyal customers.
  3. Strong loan portfolio. Glen Burnie's loans are clean and low risk with highest concentration in residential mortgages. Even at their worst point in the Great Recession, the bank's NPAs did not get much above 2%.
  4. Healthy dividends. GLBZ’s relatively high 3.4% dividend has been paid for 102 straight quarters.
  5. Room to grow. If the team at The Bank of Glen Burnie can tap into even a fraction more of the $12.6B of deposits in Anne Arundel County, GLBZ would earn a great return.
  6. A new CEO.*  If John Long, who only arrived in 2016, proves able to transform the bank's historically criminal culture, he could get GLBZ’s returns up to acceptable levels or better.
*For a sense of the difference that an effective and ethical CEO could make here, see this Infographic: County National Bank (CNBE) about a prior Bank of Glen Burnie CEO.


  • Confidential interviews with shareholders and analysts