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

Willamette Community Bank, Albany, OR (WMCB)

A Case of a Bank on Fertile Ground


The pickings for bank stocks investors are definitely getting slim, but that makes the few that have been overlooked more fun to find!

Surveying the field in Oregon, I can easily see Willamette Community Bank delivering earnings of 80 cents per share, book value approaching $12, and a stock trading at $14-$15 over the next three years.

In the event WMCB doesn’t produce the returns I'm anticipating on today's $9.25 share price, I’d expect new shareholders will push for a sale that would garner the same results or better.


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


Prospective Buyers

Willamette Community Bank's 27% non-interest bearing deposits and total cost of deposits of 0.28% make it an attractive property.

Citizens Bancorp, Corvallis, OR (CZBC)
Oregon Bancorp, Salem, OR (ORBN)
Washington Federal, Inc, Seattle, WA (WAFD)

Financial Snapshot
as of 03/31/2018

Total assets:
$130M
Tangible book value per share:      
$9.90
NPAs to assets:
0.5%
Price to book:
94%
Market cap:
$17.1M
Dividend yield:
0%
Trailing 12-month ROA:
0.4%
Trailing 12-month ROE:
3.8%

The Crew

Kerry Johnson, Chairman
Joan Reukauf, President and CEO
Robert Moore, Senior VP and CFO

The Skinny

WMCB is one of the most fertile bank stocks in the country for investors looking to plant some cash.  

The original seeds were purchased in 2003 at $10/share when the bank was founded.

In last two years, Willamette Community Bank has grown faster than all but one other bank in Oregon.

Today, you can buy WMCB for $9.25/share — 94% of book value.

WMCB should naturally produce a more bountiful crop than other Oregon bank stocks, which are trading at 130% on average.


Willamette Community Bank is in an expanding, business-friendly market, where climate conditions are conducive to growth.  

In Willamette Valley there are no local business, sales, or inventory taxes. Real estate is cheap, and the local labor pool is both low-cost and high quality.

All three Willamette Community Bank branches are within 90 miles of Portland, which offers area businesses easy access to a major airport.

Mergers in the Valley — namely Bank of the Cascades (CACB) and Pacific Continental (PCBK), which both sold in the past two years — have made it easier for Willamette to gain customers and talent.


All three local markets where Willamette has its branches are strong, too!

The newest Willamette Community Bank branch is in Oregon's capital city of Salem, where Amazon just built a new facility anticipated to employ 1000 people.

Willamette's biggest branch is in Albany, where median income was up 12% in 2016.

And the bank's thriving Lebanon branch benefits from a population that has grown at an average of 25% in each of the past four decades.

Sources

  • Confidential interviews with shareholders, management, and analysts

Best Hometown Bancorp, Collinsville, IL (BTHT)

A Case of a Rantoul Rerun


At the end of the day, this is the story of the man who once ran Rantoul and now runs Best Hometown—Ronnie R Shambaugh.

Ronnie's stats have me anticipating a home run for BTHT shareholders.

Best Hometown Bancorp converted to public ownership in March 2016. If I'm right to suspect the bank could be sold for $16-$18 per share over the next year, investors who buy BTHT today at $11.20 have a fair swing at getting a 50% return.


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


Prospective Buyers

Interestingly, First Mid-Illinois Bancshares is currently buying First BancTrust (FIRT) which bought Rantoul First Bank (RFBK) when Ronnie was its CEO.

First Busey, Champaign, IL (BUSE)
First Mid-Illinois Bancshares, Mattoon, IL (FMBH)
Town and Country Financial, Springfield, IL (TWCF)

Financial Snapshot
as of 12/31/2017

Total assets:
$110M
Tangible book value per share:   
$14.99
NPAs to assets:
0.1%
Price to book:
74.7%
Market cap:
$9.3M
Dividend yield:
0%
Trailing 12-month ROA:
- 0.5%
Trailing 12-month ROE:
- 4.7%

The Team

LaMont K Doctor, Chairman
Ronnie R Shambaugh, President and CEO
David W Ganser, Executive VP, Chief Loan Officer

The Game

A proven player has stepped up to the plate at Best Hometown Bank.

This isn't the first time that Ronnie Schambaugh has taken an unprofitable mutual savings bank public and effected a successful turnaround.

Ronnie Ran Rantoul First!

Shambaugh was CEO of Rantoul First Bank (RFBK) in Rantoul, IL from 2001 until its sale to First BancTrust (FIRT) in 2005. He converted that cellar-dweller of a thrift in October 2002, raising money from investors at $10 per share.

He then sold it for over $22 per share as soon as the three-year post-IPO moratorium on selling expired.

Ronnie's up to bat again with BTHT.

Best Hometown Bank was another loser of a thrift before Ronnie joined the team, and it will never earn enough to have a shot at the Big Leagues. When Ronnie took it public two years ago, fans familiar with his game anticipated he'd make some successful turnaround moves next, and he has — increasing loans by 25% and practically eliminating NPAs.

Ronnie's not the spring chicken he was when he ran Rantoul. When this moratorium expires, he will be 69 years old, with a 3-year change of control in hand to carry into retirement.

I predict a rerun: we'll see a sale of Best Hometown Bancorp after the three-year window expires in March 2019. 

Sources

  • Confidential interviews with shareholders and analysts