UPDATE: First Commerce Bancorp, Lakewood, NJ (CMRB)

A Case of Being Run Off the Road

Image of Young White Boy in Red Shirt with Skinned Knee beside Red Bike on the Ground
It's been five years since I reviewed First Commerce Bank, and I'm sorry to say it wasn't the good buy I thought it was. The Board's high ownership stake failed to incentivize doing the right thing the way it normally does. (See April 2019 Timyan Bank Alert post "A Case of Growing Too Fast.")

The photo I selected for the CMRB review series strikes me very differently today. This kid didn't fall off his bike. He was shoved.

Experts say the best way to deal with characters as self-serving and shameless as the folks running First Commerce is to Run The Other Way. Do Not Engage. Do Not Look Back. Someday I will learn.

CMRB is a Sell.

Disclosure: As of this posting, I no longer own shares of CMRB and definitely have no plans to purchase any ever again.

Prospective Buyers

This list has getting shorter and more paltry, because First Commerce squandered its best opportunities for a sale. The three remaining prospects listed here are overcapitalized underperformers that likely can't pay a premium:

Blue Foundry Bancorp, Rutherford, NJ (BLFY)
Columbia Financial, Fair Lawn, NJ (CLBK)
SR Bancorp, Bound Brook, NJ (SRBK)

Financial Snapshot
as of 03/31/2024

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:


Thomas P. Bovino, Chairman
Abraham M. Penzer, Vice Chairman
Donald Mindiak, President and CEO

The Skinny

Why I'm calling CMRB a Sell
  • The prospects for acquisition at a meaningful premium are bleak
  • Although First Commerce could still fetch an offer near today's book value of $8, I don't believe there's anything that would actually compel Management to take the franchise to market
  • No shareholder proposal has a prayer in this case, because Board ownership is still too high for it to garner enough votes
  • The stock is going nowhere due to mismanagement
Since my 2019 review of First Commerce 
  • The Board has waged two coups
    • First they ousted Chairman Abe Opatut, the bank's largest shareholder 
    • Then they voted successor Chairman Benedict Romeo and three other Directors off the board
  • Bank operations are suffering
    • Deposit costs are rising faster than loan yields
    • Reliance on office and other commercial real estate is too high
  • Nepotism is a likely factor
    • One of Director Gershon Beigeleisen's first moves upon joining the Board was to install his son on a speed-track from Teller to First Commerce Loan Officer
    • Per the rumor mill, there are more install-my-kid initiatives in the works
  • There's more self-dealing in the mix here than normal
    • Director Salvatore Alfieri bills the bank $200K per year for legal work through his firm
    • Vice Chairman Abe Penzer's only income is from title work he does on First Commerce Bank's loans, which has funneled $350K to $600K a year his way
    • New Chairman Thomas Bovino is allegedly campaigning hard to triple his own compensation


ES Bancorp, Staten Island, NY (ESBS)

Evading Shareholder Proposals, Non-SEC Filer Edition 

Photo of White Male in Black Suit Pulling Ace of Clubs from His Sleeve
For the most part, you can expect that a bank receiving a shareholder proposal will pull whatever tricks it can to avoid giving other shareholders an opportunity to vote on the proposal. That's the nature of the beast — banks deserving of shareholder proposals are by definition typically not run by Managers who naturally do the right thing by their shareholders.

Since my Timyan Bank Alert October 2023 post on the topic of SEC Rule §14a-8, I've delivered three shareholder proposals of my own, and am learning that the specific tricks a bank will pull can vary more than I had imagined.

My third shareholder proposal so far was to ES Bancorp / Empire State Bank. As a Non-SEC Filer, ES Bancorp had a special trick to pull, and has elected to withhold my proposal from the Proxy for their Annual Meeting this month. See below for The Skinny.

If you are an ESBS shareholder who isn't thrilled about being robbed of the opportunity to vote on Timyan's shareholder proposal, let Finkelstein and Guarnieri know.

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

Prospective Buyers

All four of these area banks have shown recent interest in growing via acquisition and would make better use of Empire State Bank's assets going forward than its current managers ever have, ever could, or ever will.

BCB Bancorp, Bayonne, NJ (BCBP)
Northfield Bancorp, Woodbridge, NJ (NFBK)
Spencer Savings Bank, Elmwood Park, NJ (private)
Unity Bancorp, Clinton, NJ (UNTY)

Financial Snapshot
as of 03/31/2024

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:


Andrew G. Finkelstein, Chairman
Philip Guarnieri, President and CEO
Michael P. Ostrow, Director 

The Skinny

Why Timyan Submitted a Shareholder Proposal to ES Bancorp

For a full quarter of a century, ES Bancorp's operators, Finkelstein and Guarnieri, have failed to earn even a modest return for shareholders. 

Management never lived up to its 1999 IPO projections, nor either of its later recap projections. Finkelstein and Guarnieri spurned a 2021 indication of acquisition interest by BCB Bancorp that was well above today’s ESBS stock price. And the pair is always chock full of excuses, blaming Covid, interest rates, local market forces — y'know, things every other banker in the nation faces.

In a merit-based world — which publicly held companies are supposed to be operating within — these guys should have been canned decades ago.

How ES Bancorp Got Around SEC Requirements to Publish Timyan's Proposal

SEC Filers that want to exclude your proposal from their proxy statement need to submit a formal No Action Request to the SEC and succeed in proving their case for exclusion. 

ES Bancorp is not an SEC Filer, so Maryland State Law dictates what's required and allowed in response to the bank's receipt of a Shareholder Proposal. 

Although Maryland State law on this matter is similar to SEC rules in most material regards, it requires no official ruling on grounds for exclusion of a proposal from the upcoming proxy statement. 

To enforce inclusion would require additional legal action, which is too late to pursue given the Annual Meeting is this month.

Word on the street has it that Finkelstein and Guarnieri are pretending the reason for excluding my shareholder proposal from the bank's proxy statement is that I allegedly withdrew it myself. On this matter, nothing could be further from the truth.

My shareholder proposal to ES Bancorp is neither deficient, nor withdrawn.

How to Determine Whether a Bank is an SEC Filer

The best way to tell whether a bank is an SEC Filer is to use the CIK Lookup page on the SEC Edgar website
  1. Visit https://www.sec.gov/edgar/searchedgar/companysearch 
  2. Enter the stock symbol for the bank to see if a record is found
All SEC Filers have a Central Index Key (CIK) tied to their stock symbol. Non filers don't, and won't show up in a CIK Lookup.


LCNB Corp, Lebanon, OH (LCNB)

Shareholder Proposal Shenanigans at LCNB

Image of Unmasked Male Burglar Climbing Fence into Back Yard
As an investor stuck owning shares of several banks that deserve a kick in the pants, I took my own advice and delivered a few shareholder proposals of my own, as recommended in Timyan Bank Alert's October 2023 post.

Sadly, one of my proposals wasn't sufficiently air tight. Bad faith actors look for loopholes and technicalities to exploit. In my shareholder proposal to LCNB Corp, I made it too easy for LCNB to do what was perfectly predictable it would do.

If you are a qualified shareholder looking to submit your own proposal to an underperforming bank, please read my summary below of the weak link in my LCNB proposal, so your own proposal has a higher chance of success.

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

Prospective Buyers

There's no shortage of competently managed, acquisitive banks that would happily and skillfully put LCNB's assets to better use for shareholders, customers, and communities. I'd be thrilled to see the bank sold to any of these three, in particular: 

First Financial Bancorp, Cincinnati, OH (FFBC)
Park National Corp, Newark, OH (PRK)
Peoples Bancorp, Marietta, OH (PEBO)

Financial Snapshot
as of 12/31/2023

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:


Spencer S. Cropper, Chairman
Eric J. Meilstrup, President and CEO
William G. Huddle, Director 

The Skinny

How Banks Respond to Shareholder Proposals

When you submit your shareholder proposal to a bank, the bank has a legal right to report any deficiencies it sees in your proposal via a No Action Request to the SEC. If you're submitting a shareholder proposal, you should be prepared for this possibility.

Banks operating in Good Faith won't bother. They'll put your proposal in the proxy for the next annual meeting and shareholders will get to vote.

Banks like LCNB will spend tens of thousands of dollars to find or invent "deficiencies" they hope will excuse them from legal obligation to allow the proposal to proceed to a shareholder vote.

Where Timyan's Shareholder Proposal to LCNB Went Wrong

Ultimately, one paragraph made it easy for LCNB to get around having to present my proposal for a shareholder vote.

The "deficiency" my proposal provided LCNB's outside counsel was a loophole that allowed the bank to pretend it had already met the Substantially Implemented Rule 14a-8(i)(10) by hiring an investment bank to – allegedly – "begin evaluation of the potential outcome of a sale or merger," rendering the need for a shareholder vote presumably unnecessary.

In reality, LCNB hired an investment banker to do exactly the opposite of what the bank represented to the SEC. LCNB has not begun and has no plans to begin "evaluation of the potential outcome of a sale or merger." It hired an investment banker only to pursue acquisition opportunities.

Two weeks after receiving my proposal, LCNB announced the acquisition of Eagle Financial Bancorp.

Remarkably, CEO Eric Meilstrup is now unabashedly broadcasting to reporters that his stated mission is decidedly NOT to pursue a sale of the bank as my proposal recommended and as he personally represented to the SEC, but to remain independent and to grow the bank via acquisitions. The scoundrel is quite gleeful to have deceived the industry's highest regulatory body and robbed LCNB shareholders of an opportunity to vote on the bank's strategic direction.

Stronger Language Timyan's Proposal Should Have Used

The loophole my proposal gave LCNB, was the "out" of being able to say it had already "[begun] evaluation of the potential outcome of a sale or merger."

As written, my proposal made it easy for LCNB to lie in its No Action Request to the SEC, in which the bank pretended its step of hiring an investment banker was sufficient action toward fulfilling the intent of my proposal, when the assignment LCNB gave the investment banker was directly counter to the proposal.

My shareholder proposal to LCNB included this paragraph:

RESOLVED, that the Stockholders of LCNB Corp recommend that the Board of Directors immediately engage an investment banking firm experienced in community bank mergers and acquisitions to guide the Company in promptly taking steps to merge or sell LCNB on terms that will maximize stockholder value.

Future shareholder proposals I present will include language more like this to preclude false claims of "substantial implementation":

RESOLVED, that the stockholders of the Company, believing that the value of their investment in the Company can best be maximized through a sale of the Company, hereby request that the Board of Directors promptly proceed to effect such a sale by (i) retaining a nationally recognized investment banking firm for the specific purpose of soliciting offers to acquire the Company by way of merger, asset sale or otherwise and (ii) establishing a committee of the Board of Directors consisting of directors, who are not current or former officers or employees of the Company or related by blood or marriage to a current or former officer or employee of the Company, and who otherwise qualify as independent directors, to consider and recommend to the full Board of Directors for approval the best available offer to acquire the Company.