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:
$1.5B
Tangible book value per share:   
$8.13
NPAs to assets:
1.3%
Price to book:
74%
Market cap:
$135M
Dividend yield:
2.7%
Trailing 12-month ROA:
0.8%
Trailing 12-month ROE:
6.3%

Scoundrels

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

Sources

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