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

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