UPDATE: Merchants Financial Group, Winona, MN (MFGI)

My assessment of MFGI hasn't changed much in the three and a half years since my first Timyan Bank Alert™ review of Merchants Financial Group (November 2013): it still looks to me like "all Merchants Bank Management needs is to be left alone to keep doing what they do."

This community bank stock has largely performed as I had expected — the price has nearly doubled from 2013's $32.50, and stated book value has reached $55. Therefore, I'm updating my expectations: over the next three years, I anticipate that book value will approach $70, and MFGI will trade above $100.

In other words, Merchants Financial stock is still a "winner" in my book.

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

Prospective Buyers
As in 2013, I'd prefer to see Merchants Bank remain independent. Strongly positioned within the footprints of these banks though, it certainly has attractive options.
Associated Bank, Green Bay, WI (ASB)
Bank of Montreal, Toronto, Canada (BMO)
Bremer Financial, Saint Paul, MN (private)
Financial Snapshot
as of 12/31/2016
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:
Scott Biesanz, Chairman
Greg Evans, President and CEO
Susan M. Savat, Senior VP and CFO
Gold Stars
Let me count the ways I still love this bank!
  1. Excellent value. At 11.4x earnings, and 108% of book value, MFGI is still exceptionally cheap, especially when you consider that the bank ranks in the top quartile of US banks in both ROA and ROE.
  2. Healthy insider ownership. The ESOP together with officers and directors still hold about 23% of the stock. and local Fastenal Founders Slaggie and Kierlin own another 16%.
  3. Conservative bankers. Thanks to the sound underwriting practices of Merchants Bank loan officers, NPAs are a low 1.2% of loans.
Since my last review, it has also occurred to me that Merchants Financial Group has another winning card it could play:
With its market cap of $161M, were MFGI to list on Nasdaq, it would be eligible for inclusion in the Russell 2000 Index. Given its thin trading and float, the stock could then exceed my expectations pretty fast. 

Brunswick Bancorp, New Brunswick, NJ (BRBW)

A Case of Appeal to Family Interest

There's no indication that the scoundrels at Brunswick Bancorp care about their shareholders, but maybe we can appeal to their greed.

Given that Chairman and CEO Roman Gumina owns 27%, his mother 5.5%, and other Guminas 4.2% or more, the family has two great options for making out good without further shareholder shake down:
  1. Were the Guminas to sell the bank outright, they would increase the value of their own holdings by $10M. Outside investors would score a similar amount.
  2. Alternatively, the Gumina family could use a quarter of the bank's excess capital to buy stock back from those of us who want out, make Brunswick Bank & Trust even more of a family operation, and still increase the value of their holdings by $10M.
In any event, if you don't own BRBW, consider yourself lucky! Even at 58% of book value, the stock only "looks" cheap.

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

Prospective Buyers

The $88M in deposits in Brunswick's Livingston Ave branch might be appealing to area institutions, but I doubt any buyer would be interested in the 5 out of 6 other branches struggling to manage less than $10M each.

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

Financial Snapshot
as of 12/31/2016
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:


Roman Gumina, Chairman and CEO
Nicholas A. Frungillo, Jr., President
Louis Foulke, CFO, Secretary and Treasurer

Red Flags

Ask around and you'll hear all sorts of unsettling rumors about the Gumina family — real gangster stuff, complete with death threats and people suddenly going "dark" after daring to voice their concerns. In the interest of self-preservation, I'll step around all that here.

Performance at Brunswick Bank & Trust hasn't improved in decades. In 1989, under the-now-deceased Carmen Gumina's watch, the bank earned $1.1M. It hasn't come close since. NPAs were 10% as recently as Year End 2012, and are still high at 6.5%.

Meanwhile, current Chairman and CEO Roman Gumina has been "rewarding" himself pretty handsomely:
  • Over the past seven years, Brunswick Bancorp has suffered a cumulative loss of $501K while Roman skimmed off $2,266,000.
  • In 2010, the bank lost $1.2M and NPAs reached 12%, but that didn't stop Roman from taking a $96K bonus on top of his $310K base pay.
  • Even as the bank started reporting income — net of $283K, $406K, and $677K in 2014, 2015, and 2016, respectively — Roman's $310K a year salary is beyond what you'd call "commensurate with performance." 
  • In spite of his high compensation and the bank's screaming need for stronger management, Gumina doesn't appear to consider his responsibilities or pay grade worthy of full-time attention.

10 Other Entities in which Roman Gumina Owns a Controlling Interest 
  1. Aaron Road Associates
  2. Cardal Associates
  3. Cranbury Station LLC
  4. Applegarth Associates
  5. Carmine Investments
  6. Brunswick Management LLC
  7. Englishtown Realty LLC
  8. Mullica Hill Management
  9. Mantec Associates
  10. Franklinville Plaza Management Associates LLC


UPDATE: AmeriServ Financial, Johnstown, PA (ASRV)

Remarkably, everything I said in the intro to my January 2014 Timyan Bank Alert™ review of AmeriServ Financial is still true: AmeriServ is no "five star performer." Nor is it a "mismanaged underperformer." It is still, however, a pretty good bank that is trading below book value with not a single Wall Street analyst following it. Which makes it a great "seize the moment," no-brainer kind of buy for the enterprising investor.

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

Prospective Buyers
Although AmeriServ's #1 market share position in six Pennsylvania towns is attractive, its status as a unionized bank makes it unlikely another bank will seek to buy it.
F.N.B. Corp - Pittsburgh, PA (FNB) - relocated from Hermitage
Northwest Bancshares, Inc - Warren, PA (NWBI)
Financial Snapshot
as of 12/31/2016
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:
*Repaid $20M in 2011
The Crew
Craig Ford, Chairman
Jeffrey Stopko, President and CEO (promoted from CFO)
Michael Lynch, Senior VP, CFO, Chief Risk and Investment Officer
The Skinny
This is still a pretty good bank. AmeriServ has reported profits in 24 out of the last 25 quarters.

Insiders know what an opportunity they have here. Insider ownership of ASRV remains pretty high at 8.8% and growing. There have been numerous insider buys in the open market in the past year alone, and only one sell.

Thankfully, AmeriServ Management is also shareholder friendly, as evidenced by their recent decision to buy back up to 5% of ASRV stock in the open market.

Investors can still make money here. ASRV is the cheapest billion dollar bank stock in the U.S. I believe that within two years, AmeriServ will be reporting quarterly earnings of 10¢ per share, book value will have hit the high $5 range, and ASRV will trading near book value. If I am right, that portends a healthy 50% gain over today's share price. 


  • Confidential interviews with Management, shareholders and analysts

UPDATE: HopFed Bancorp, Hopkinsville, KY (HFBC)

Since my June 2012 Timyan Bank Alert™ review of HopFed Bancorp / Heritage Bank, book value has fallen to $12.87 per share, a 25% reduction since the economic recovery began in 2009 and most of the nation's banks have materially increased their value. NPAs still linger above 2%. HFBC's ROA and ROE are shamefully low.

Disappointingly, there is no longer any reason to invest in HopFed unless Management sells the bank. It is too mismanaged. If you already own the stock like I do, I highly recommend letting HopFed management know you agree that the ethical thing to do is to sell the bank.

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

Prospective Buyers

Independence Bank, Owensboro, KY (private)
Old National Bancorp, Evansville, IN (ONB)
WesBanco, Inc, Wheeling, WV (WSBC)

Financial Snapshot
as of 12/31/2016
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:
*Redeemed $18.4M 12/19/2012


Harry Joseph Dempsey, Chairman (New!)
John Peck, President and CEO
Billy Duval, Senior VP, Treasurer, and CFO
Michael L. Woolfolk, Executive VP, Secretary, and COO 

Red Flags

(See HFBC Performance Timeline, below)


  • Confidential interviews with shareholders and analysts

HFBC Performance Timeline since 2012 review in Timyan Bank Alert™

AUG 20
HFBC CFO Billy Duvall sells 1147 shares for $13,704
FEB 03
HFBC pays greenmail to investor Maltese Capital. Buys back 534,943 shares at $13.50

FEB 09
HFBC Chief Credit Officer Michael Fokey buys 31 shares of HFBC stock for $412.00

JUL 31
HFBC reports a Q2 loss of 2 cents per share

AUG 17
HFBC COO Michael Woolfolk buys 79 shares for $908.50
MAR 29
HFBC revises compensation plans and decides to pay its executives’ personal income taxes

JUN 01
HFBC CFO Billy Duvall sells 1500 shares for $18,165

JUL 29
HFBC reports a 130% increase in non-accrual loans

HFBC attempts to pay greenmail to investor Stilwell Group, which would hurt all other shareholders
JAN 26
HFBC issues misleading 8K, which failed to disclose the real reason its largest investor didn't meet with HFBC management. In reality, Stilwell did not refuse to meet, but merely asked for an agenda in advance, anticipating another greenmail offer to go away

FEB 06
Stilwell Group’s Megan Parisi sets the record straight about HFBC's false and misleading 8K in a letter to HFBC CEO John Peck

UPDATE: New Resource Bank, San Francisco, CA (NWBN)

In the three years since my February 2014 Timyan™ Bank Alert review of New Resource Bank, the bank has inarguably "blossomed" — just not in quite the fashion I had hoped. This one-branch San Francisco institution is a much bigger tree now, having grown footings by 52% and built a fancy new headquarters, but it is nowhere near bearing fruit for its shareholders.

Personally, I think it's fine if Management and some shareholders would like to run this bank as a non-profit. (I can even get excited about their focus on "impact lending" to promote clean energy, green building, and sustainable commerce!) But if that's what they are up to, they should be honest, and offer outside shareholders a way off the farm at a fair price.

Given the looks of things today, I'd be happy to take $10/share for NWBN, even though the stock could garner $12/share were the bank to be acquired.

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

Prospective Buyers
New Resource Bank's CEO Vince Siciliano has been clear that he has zero intentions of ever selling the bank.
Bank of Marin, Novato, CA (BMRC)
First Republic Bank, San Francisco, CA (FRC)
SVB Financial, Santa Clara, CA (SIVB) 
Financial Snapshot
as of 12/31/2016
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:
The Crew
Mark Finser, Chairman
Vince Siciliano, President and CEO
Stephen Rossi, CFO
The Skinny
For me, New Resource Bank's May 2016 Investor Presentation really says it all...

  • Confidential interviews with shareholders and analysts

Baraboo Bancorporation, Baraboo, WI (BAOB)

A Case of a Circus Cleaning Up Its Act

After a few bozos pushed Baraboo Bancorporation into a many-year freefall, it looks like the bank is finally back on its feet. BAOB stock recovered 85% last year, and is still a bargain at $3.15.

I foresee book value growing to over $5 per share by 2019 and stock trading at 125% of that, nearly double today's price. If 74-years young Chairman Merlin Zitzner were to sell the bank, shareholders could enjoy this performance even sooner. Given that he owns 47% of the stock, Merlin certainly has both the power and incentive to do so.

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

Prospective Buyers

Knowing that Baraboo National holds more than half the deposits in Baraboo, Wisconsin, any of these higher-performing, better-capitalized banks could be in line to buy Merlin's show.

Bank of Montreal, Toronto, Canada (BMO)
Bank of Prairie du Sac, Prairie du Sac, WI (private)
Bank of Wisconsin Dells, Wisconsin Dells, WI (private)
National Exchange Bank & Trust, Fond du Lac, WI (private)

Financial Snapshot
as of 9/30/2016
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:
*Technically, no longer TARP, but Preferred Stock: 
The Bank received $20.7M in TARP 01/16/2009 
The Government auctioned it all off 12/03/2012 
The Bank redeemed all but $5.1M on 01/05/2017

The Crew

Merlin Zitzner, Chairman, President, Treasurer
Greg Linder, VP and Secretary
Jeff P. Blada, "acting" CEO, COO

The Skinny

Baraboo National Bank has weathered many challenges since its founding in 1857 — including both the Civil War and the Great Depression. It's probably safe to say, now, that it has survived the Great Recession, too, in spite of a 16-year sideshow that cost the bank over half its assets.

That clumsy act in the bank's history began in 1999 when ringmaster Merlin Zitzner appears to have fallen under the spell of two ding-a-ling lenders, who proceeded to spend the next six years making unsafe, unsound, and self-dealing loans. That stunt left Baraboo National teetering on a tightrope before the Great Recession even came to town.
  • By year end 2008, Baraboo was scrambling to get a TARP safety net in place. 
  • By January 2013, the circus was such that Regulators put the bank under a 27-page Cease and Desist order (most are 3-5 pages).
  • By New Year's Day 2014, BAOB tangible common equity had fallen to 3.5% and NPAs had skyrocketed to 13.5%.
To their credit, Merlin and his troupe have worked some magic since. To pull off the turnaround they had to perform a major disappearing act on bad loans, foreclosed assets, and out-of-market branches. In the process, nearly half of the bank's assets went "poof!"
  • Baraboo National is now operating solidly in the black.
  • The bank earns 1% on assets and is achieving close to 10% ROE.
    • Total equity is a healthy 13.7%
    • Tangible common equity is still light at 8.3%, but is a leap above the 2013 low point of just 3.5%
  • NPAs are down to 2.8% and NPAs less TDRs to only 1.4% assets.
Backstage, Merlin has a few more tricks up his sleeve that may be less visible to the average investor: 
  • Wonderful deposits! Although Baraboo National is half its prior size, its total cost of funds is only 30 basis points, which means it can lend money very profitably.
  • Low loan to deposit ratio! Nearly $92M of the bank's $347M in deposits is still available for lending.
  • Deferred Tax Assets! Sooner or later, the bank will recognize an $11M DTA, which could add over $1 per share to book value.