Timyan® Bank Alert: February 2018

A Case of Bad Guys but a Good Buy

Glen Burnie Bancorp's history is sordid. However, GLBZ stock is undervalued and there is a new sheriff in town.

If new CEO John Long can earn a respectable ROA of even 1% in three years, that would equate to $1.50 in earnings per share. Book value would approach $15 and GLBZ could trade in the low $20s, giving shareholders a chance to double their money.

Long is 21 months into his plan. If he is unsuccessful, Chairman Demyan should sell the bank in keeping with the bank's mission statement.

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

Prospective Buyers

In my perfect world, one of these three banks with cleaner pasts and stronger performance would acquire The Bank of Glen Burnie.

Howard Bancorp, Ellicott City, MD (HBMD)

Old Line Bancshares, Bowie, MD (OLBK)

Southern National Bancorp of Virginia, McLean, VA (SONA)

Financial Snapshot

^†as of 09/30/2016

Total assets:	$390M^†
Tangible book value per share:	$12.38^†
NPAs to assets:	1.1%^†
Price to book:	93.6%
Market cap:	$32.5M
Dividend yield:	3.4%
Trailing 12-month ROA:	0.37%^†
Trailing 12-month ROE:	4.27%^†

Scoundrels

John Demyan, Chairman

F. William Kuethe, Jr, former President and CEO (deceased)

F. W. Kuethe III, Director and VP

The Skinny

There's too much to tell about the history of Glen Burnie Bancorp's bad board behavior to fit in a single blog post. But prospective investors should know it, so please, before you go buy GLBZ, see Infographic: Glen Burnie Bancorp (GLBZ).

In any event, I believe GLBZ is a good buy today. The Bank of Glen Burnie has six strengths in particular that give me confidence.

Leading market share. The Bank of Glen Burnie dominates banking in Severn, Crownsville, and Riviera Beach. It also owns a solid 7% of the market in Glen Burnie.
Quality deposits. $105M of the bank's $334M in deposits is non-interest bearing, and the bank has many long-time, loyal customers.
Strong loan portfolio. Glen Burnie's loans are clean and low risk with highest concentration in residential mortgages. Even at their worst point in the Great Recession, the bank's NPAs did not get much above 2%.
Healthy dividends. GLBZ’s relatively high 3.4% dividend has been paid for 102 straight quarters.
Room to grow. If the team at The Bank of Glen Burnie can tap into even a fraction more of the $12.6B of deposits in Anne Arundel County, GLBZ would earn a great return.
A new CEO.* If John Long, who only arrived in 2016, proves able to transform the bank's historically criminal culture, he could get GLBZ’s returns up to acceptable levels or better.

*For a sense of the difference that an effective and ethical CEO could make here, see this Infographic: County National Bank (CNBE) about a prior Bank of Glen Burnie CEO.

Sources

Confidential interviews with shareholders and analysts

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Glen Burnie Bancorp, Glen Burnie, MD (GLBZ)

A Case of Bad Guys but a Good Buy

INFOGRAPHIC: County National Bank (CNBE)

INFOGRAPHIC: Glen Burnie Bancorp (GLBZ)