UPDATE: Peoples Financial Corp, Biloxi, MS (PFBX)

I no longer have reservations about calling management of The Peoples Bank "scoundrels." 

When I reviewed Peoples Financial Corp back in 2015, Chairman and CEO Chevis Swetman had some handy excuses — Hurricane Katrina, the BP oil spill. But what's the excuse for being a bloated, non-performing bank to this day?

Clearly, Swetman's not going to do the work it takes to turn The Peoples Bank around. The only folks sweating in this scenario are shareholders. And the only way out of this hot mess is for Swetman to do the right thing and sell this bank.


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


Prospective Buyers

Peoples Financial Corp has the same prospects for selling The Peoples Bank that it had when I reviewed it three years ago.

Bancorp South, Tupelo, MS (BXS)
First Bancshares, Hattisburg, MS (FBMS)
Iberiabank, Lafayette, LA (IBKC)

Financial Snapshot
as of 12/31/2018

Total assets:
$617M
Tangible book value per share:   
$17.59
NPAs to assets:
3.0%
Price to book:
66%
Market cap:
$57.6M
Dividend yield:
0.17%
Trailing 12-month ROA:
0.1%
Trailing 12-month ROE:
0.7%

Scoundrels

Chevis B Swetman, Chairman, President, and CEO
A Wes Fulmer, Executive VP and Chief Credit Officer
Laurie A Wood, Senior VP and CFO

Red Flags

Want me to explain how bad this bank is? No sweat!
  • Swetman's 92% efficiency ratio is in the bottom 5% of all US banks
  • His 3% NPAs to assets ratio is in the bottom 5%, too
  • Loans at The Peoples Bank are down 24% in the last five years
  • Book value per share has declined by $1 in spite of stock buybacks at 70%
  • PFBX shareholders have seen the value of their holdings drop by $110M since 2000
Meanwhile...
  • Among the people who suffered this 70% decline in the value of their holdings since 2000 are the clients of Peoples' Trust Department, who collectively own 5% of PFBX
Enough already. In three years, Swetman has barely budged. He's now 69. The bank's not working and neither is he. Every stakeholder in PFBX and the bank's geographic area will be better served by new operators who will put some muscle into The Peoples Bank.

Sources

Highlands Bankshares, Abingdon, VA (HLND)

A Case of Time's Up


My shot clock expired for Highlands Bankshares.

This team has failed to perform under the auspicious conditions of the most recent banking cycle, so I don't see them improving enough to justify remaining independent.

If Highlands Union Bank steps up its game, HLND could earn 60 cents per share, have a book value of $7, and trade at $10 in three years. If the team sells sooner, they should be able to get close to that now and spare us the wasted time.


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


Prospective Buyers

Three banks have a small presence in HLND’s markets that would grow to a meaningful size with the acquisition of Highlands Union Bank.

Carter Bank & Trust, Martinsville, VA (CARE)
First Citizens BancShares, Raleigh, NC (FCNCA)
United Community Banks, Blairsville, GA (UCBI)

Since mergers of equals are sporty now, I should add: an MOE between Highlands Bankshares and New Peoples Bankshares (NWPP) could cut costs and produce an even more attractive $1.3 billion bank earning a decent return.

Financial Snapshot
as of 12/31/2018

Total assets:
$592M
Tangible book value per share:   
$6.02
NPAs to assets:
2.9%
Price to book:
95.5%
Market cap:
$47.4M
Dividend yield:
0%
Trailing 12-month ROA:
0.6%
Trailing 12-month ROE:
6.6%

The Crew

Robert W Moser Jr, Chairman
Timothy K Schools, President and CEO
Samuel L Neese Jr, Director, Consultant, and Former CEO

The Skinny

Highlands Union Bank has had ample time to perform.

It's been nearly five years since Highlands Bankshares raised capital to shore up its balance sheet and grow.

TNH Financial Fund alone put up $8.7M for that purpose, and holds a 24.4% stake. Their representative serves on the bank's board and waives his board fees.

As of today, the bank's assets are down, loans and deposits have barely moved, and profitability remains inadequate.

In fact, deposits in Highlands' home town of Abingdon are $30M lower than before the recap, while neighboring First Bank & Trust's have grown by $40M.

Highlands Bankshares' ROE in the 6% range and ROA in the 0.6% range are simply not enough to justify giving this team a new shot clock.

Typically, funds like TNH Financial are looking for a liquidity event within five years, so I have to presume I'm not alone in thinking along these lines.

Sources

A Stock Pick for (Almost) Every State

A Stock Pick for (Almost) Every State


2019 is a year to break the mold.  Deliver and obtain more value per effort and minute. So I'm giving myself "literary license" to step out of my review-one-bank-stock-at-a-time format.

This month, I took inventory of my current community bank stock holdings "by State" to let others "in" on my portfolio and research a bit more.

If you've been following me, you know I believe America and Americans would be well served to invest in our community banks. Hopefully this exercise will help everyday investors across the country to see opportunities close to home.


Disclosure: As of this posting, I own shares of all the bank stocks reviewed in the Timyan Bank Alert except $TBBK, $CDAB, $MELR, $CESO and $PUB, and I may subsequently either dispose of them or purchase more. For full disclosure, please note, I personally own many other bank stocks that are not represented in the Timyan Bank Alert portfolio or record.

Timyan's Top Community Bank Stock Pick(s) Per State as of January 2019

Some of these I have reviewed previously. Just click the stock symbol to access its most recent Timyan Bank Alert review.

State
Stock
Why It’s My Favorite in The State
Yield
P/B
P/E
AK
DENI
Denali Bancorporation — stock is cheap and directors own over 20%.
5.7%
104%
12x
AL
United Bancorporation of Alabama – has high returns, low price and does good in local Opportunity Zones.
0.7%
117%
6x
AR
OZK
Bank of the Ozarks — stock is cheap from being overly punished by the market for two bad loans.
3.3%
93%
8x
AZ
MPHX
MetroPhoenix Bank — not great, but the only one I own since State Bank $SBAZ got too expensive.
0%
128%
15x
CA
Northern California National — stock in Chico's hometown bank is undervalued, earns good money, and has high takeover appeal.
1%
125%
12x
CO
Solera National – Marty May expertly runs this one-branch bank and it’s fair to assume Chairman Michael Quagliano will want a return on his investment in 22% of the stock.
0%
110%
15x
CT
BWFG
Bankwell Financial Group — Larry Seidman is the largest investor and he makes things happen for shareholders.
1.7%
129%
13x
DE
TBBK
Bancorp, Inc — I don’t own this or any other Delaware-based bank, but board members Shiv Govinden and John Eggemeyer are savvy bank directors.
0%
121%
8x
FL
FCIT
First Citrus Bank — I love the team Jack Barrett has put together in Tampa and especially love recent results:1.3% ROA and 15% ROE.
0%
132%
11x
GA
CCF Holding Co — my largest holding. I love Leonard Moreland’s turnaround, have high hopes for the amalgamation of the two Heritage Banks and Providence Bank, and trust largest shareholder and Chairman, Ken Lehman.
0%
110%
15x
HI
OHPB
Ohana Pacific Bank in Honolulu — it’s ugly, but cheap. I’m hoping they sell to someone who knows what they’re doing.
0%
87%
13x
IA
MOFG
MidWestOne Financial — it’s selling nearly 30% below their last stock offering. I hope they’ll either get their returns in line with peers or sell the bank.
3%
89%
9x
ID
CDAB
Couer d’Alene Bancorp — earnings like these plus a slight discount to book make it hard to resist this tiny gem.
2.7%
98%
12x
IL
RYFL
Royal Financial — DISCLOSURE: I own 9.99% and have been a director since 2011, but I like Royal’s footprint in the backyards of serial acquirers FMBI and WTFC.
0%
105%
9x
IN
MFSF
MutualFirst Financial — attractive takeover target owned by two activist investors, PL Capital and Ancora Advisors.
2.93%
121%
10x
KS
BVBC
Blue Valley Ban Corp — a tad pricey, but very valuable branch network near Kansas City, with an ace director, Tony Scavuzzo of Castle Creek.

SOLD 01/16/2019
0%
142%
9x
KY
KFFB
Kentucky First Federal — returns are inadequate, so I hope they one day do a full conversion and sell three years later.

*Price to book would be 60% under full conversion scenario
5.8%
111%*
20x
LA
CTUY
Century Next Financial Corp — it’s undervalued and the perfect acquisition candidate for First Guaranty Bancshares.
3%
107%
11x
MA
MELR
Melrose Bancorp — only buy this if you believe activist investors Seidman and Maltese will be successful in pressing for a sale.
3%
105%
28x
MD
Delmar Bancorp — earnings are improving rapidly and Chairman Ken Lehman is heavily invested in turning a profit on his 41% ownership.
1.4%
112%
9x
ME
KTHN
Katahdin Bankshares — it’s cheap and has a branch network that should be appealing to acquirers.
2.6%
96%
9x
MI
EFIN
Eastern Michigan Financial of Crosswell — Michigan has many great publicly traded community banks, but this 127 year old has the cheapest stock.
2.94%
82%
9x
MN
Merchants Financial Group of Winona — my hands down favorite for the State, big enough for the Russell Index and trades for a fraction of its true value.
2.1%
107%
10x
MO
LBCP
Kansas City’s Liberty Bancorp — I’ve owned it since its conversion in 2005, because it has stayed too cheap to sell.
1.1%
115%
9x
MS
CIZN
Citizens of Arkadelphia — nice dividend, but Citizens never earns enough to justify its independence. 
4.7%
125%
14x
MT
EBMT
Eagle Bancorp — pickings are slim for cheap bank stocks in Montana. This is it. 
2%
107%
13x
NC
UWHR
Uwharrie Capital — if this one sells, it’ll pay off. If not, I’ll be stuck holding a cheap bank stock with crummy returns.
0%
103%
20x
ND
BNCC
BNCCORP — could more than double if sold, and many activists and unhappy shareholders are pushing for just that.
0%
101%
13x
NE
FINN
First National of Nebraska — an undervalued, high performing, 150 year old family run bank.
0%
109%
10x
NH
Northway Financial — expertly run by the energetic Bill Woodward for the past 43 years.
2.4%
102%
12x
NJ
PKBK
Parke Bancorp — started in a trailer by one of my favorite bankers, Vito Pantilione. Now it has $1.3B in assets in seven branches making it the envy of acquisitive banks in the area.
3%
135%
11x
NM
None
Unfortunately, there are no community bank stocks in New Mexico that I want to own.
-
-
-
NV
None
Sadly, there are no publicly traded community banks headquartered in Nevada.
-
-
-
NY
GLDT
Gold Coast Bancorp in Islandia — a valuable franchise, 22% management owned, but it doesn’t earn enough to remain independent. I’m hoping it sells.
0%
93%
25x
OH
CBKM
Consumers Bancorp in Minerva — steady insider purchases at higher prices are a clue that this stock will soon be worth more.
3%
108%
9x
OK
CESO
Central Service Corp — a nice 100-year old institution to own a stake in, if you can find shares near a $30 bid price.
0%
46%
8x
OR
CLAT
Clatsop Community Bank — cheap for a reason. It’s ten years old and still doesn’t make enough money to be independent. Original shareholders are still under water. Needs to sell!
2.1%
94%
19x
PA
First Resource Bank, Chester County PA — I'm not alone in rating it the best bank in the wealthiest county in the state (PRN Newswire 10/30/2018)
0%
100%
11x
PA
Embassy Bank — David Lobach built it from scratch, it's been a wonderful stock for ten years, and I expect it to keep performing.
1.2%
130%
10x
PA
Franklin Financial Services — instituted a share buyback and is listing on NASDAQ. I anticipate the stock will be added to the Russell Index in June.
3.4%
123%
10x
RI
WASH
Washington Trust Bancorp — a bit pricey, but the only community bank headquartered in Rhode Island. 
3.6%
212%
13x
SC
SFDL
Security Federal — Chairman Timothy Simmons' 22% ownership stake gives me confidence this bank's value will keep growing.
1.3%
107%
13x
SD
GWB
Great Western — has done a great job building this bank organically and via acquisition.
2.9%
109%
11x
TN
IBTN
Nashville’s Inscorp — it’s the cheapest thing in a great market, but I wish they would improve their deposit mix.
1.2%
117%
12x
TX
CADE
Cadence — the stock has been punished too much for its purchase of State Bank of Georgia.
3.3%
107%
9x
UT
PUB
Peoples Utah Bancorp — Utah's one and only publicly traded community bank, but it is a beauty! I just wish it were cheaper...
1.5%
204%
14x
VA
MNSB
MainStreet Bancshares — this bank is in a great market, growing, and likely to sell sooner or later.
0%
126%
11x
VT
MDVT
Middlebury National Corp — going strong for 188 years and holds 60% of the deposits in its home town.
2.7%
96%
11x
WA
PPBB
Peoples Bancorp — a valuable franchise with superior returns and good prospects for selling.
0%
145%
10x
WI
S.B.C.P Bancorp —  it's in a great market and run by a great banker, Jim Tubbs.
2%
103%
8x
WV
PTBS
Potomac Bancshares — good things usually happen for shareholders in Mike Voinovich's deals and he just raised capital here. 
2%
121%
13x
WY
CRZY
How could I not pick Crazy Woman Creek Bancorp? Especially with Joe Helmer on their board.
1.9%
85%
12x