Click upper-right corner of infographic for download and print options.
See also February 2024 Timyan Bank Alert post Unionized Banking in the US.
Showing posts with label ASRV. Show all posts
Showing posts with label ASRV. Show all posts
Unionized Banking in the USA
Those of you who follow Timyan Bank Alert closely know that I'm on a tear about unionized banks in the US.
Evaluating Amalgamated and AmeriServ's respective performance in the context of unionized banking has me seeing the recent Wells Fargo branch unionization in an entirely new light.
Disclosure: As of this posting, I own shares in ASRV, CNAF, and WFC, and may subsequently either dispose of them or purchase more.
A Brief History
| There have been three waves of bank unionization in the US. Interest in organizing in the industry appears to surge every 50 years. 1st Wave (1920s) At least 50 of our nation's oldest banks were unionized from the start. Of these, only three remain, but all can be said to be performing well.
2nd Wave (1970s) Three banks were unionized during the second wave. None are exemplary performers.
3rd Wave (2020s) Two recent labor organization successes suggest we are in the third wave of bank unionization. So far, Beneficial Bank has performed poorly since unionizing in 2020. How the Wells Fargo branch unionized in 2023 will perform remains to be seen. Is a third predictable, based on prior waves?
See also: Infographic: Unionized Banks in the US |
Takeaways
| There's a case to be made for increasing Union Ownership in US banks. Generally speaking, unionized banks that were both founded by unions and maintained significant Union ownership have performed much better than their peers. Four of the aforementioned unionized banks boast Union Ownership — the old-schoolers, plus 70's newcomer Union Bank and Trust:
The average ROA and ROE for these four banks are 1.2% and 18.3%, respectively, vs 0.4% and 6.0% for the two publicly traded peers that don't feature notable Union ownership (i.e., CNA Financial and AmeriServ). It's not surprising today's bank tellers are expressing interest in organized labor. Frankly, many tellers are being financially exploited — and at the expense of taxpayers. The US Bureau of Labor and Statistics indicates as much as 35% of America's bank tellers are making less than $15/hour. According to a recent Axios article about labor organization efforts at Wells Fargo, as many as one in three bank tellers relies on some form of government assistance.” Bank profits are high enough that banks can afford to pay their workers a living wage, and societally, we should be expecting, encouraging, and if needed, requiring, them to do so. There's no need and no excuse for US banking to be operating as a government-subsidized industry. There's a case to be made for encouraging Teller Ownership in our banks. Financial stewardship and fiduciary thinking are mindsets crucial to the DNA of a strong banking system. A bank that doesn't care about the financial well-being of all its stakeholders isn't a world class bank. There's literally no bank in the nation that can't afford to gift some shares to every employee, getting them truly vested in the bank's performance. |
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Amalgamated Financial Corp, New York, NY (AMAL)
Unionized Banking at its Best
Posting the January 2024 Timyan Bank Alert™ Review of AmeriServ Financial got me looking into unionized banks as a class.
The Big Aha for me? There's both room and reason for Unionized Banking in America, and it can be done well.
Unionized banks are a rarity in the US –– it takes a special banker to even know what to do with them, and those bankers are even more rare than the banks in this niche.
Although there were 50 or so before the Great Depression, only six of 4,458 community banks left in the US today are unionized. Among them, Amalgamated is the top performer, and it owes its success to the good fortune of having been led by a non-traditional banker — Keith Mestrich.
Were AmeriServ or any other of the country’s unionized banks to engage Mestrich in any capacity, I would Follow The Leader and seriously consider buying shares in that entity.
Disclosure: As of this posting, I do not own any shares of AMAL.
Prospective Buyers | As attractive as the Amalgamated franchise is from a fundamentals standpoint, I don't see any acquisitive bankers in the area who'd be open to moving into unionized banking. | ||||||||||||||||
Financial Snapshot †as of 12/31/2023 |
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Luminaries | Keith Mestrich, Former CEO Lynne P. Fox, Chair Priscilla Sims Brown, President and CEO | ||||||||||||||||
Gold Stars | Most of the Gold Stars that apply to Amalgamated now are attributable to Keith Mestrich, whom the bank hired in 2012. (Amalgamated had lost money in 4 of the prior 5 years.) Despite being a “newbie” in the field, Mestrich managed the fundamentals of “normal” banking expertly, by:
Mestrich even grew Amalgamated's value via effective acquisition by:
Even more impressive to me are the ways Mestrich brought unique value to the Amalgamated franchise and community by:
In my perfect world, Amalgamated would scale the Mestrich game! Roll up some other unionized banks, bring Amalgamated's innovative products and superior service to their uniquely shared markets, and ring out their inefficiencies. | ||||||||||||||||
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UPDATE: AmeriServ Financial, Johnstown, PA (ASRV)
On the 10-year anniversary of my January 2014 Timyan Bank Alert™ Review of AmeriServ Financial, I'm disheartened to report that this bank is being run into the ground by a bunch of bumbling money grubbers.
ASRV is still flying under the radar in terms of coverage it gets from industry analysts and reporters, and I would still very much like to see it get on the radar, albeit for different — and less friendly — reasons.
My sincerest apologies to readers of my original post and/or 2017 Updated Review of AmeriServ. My only consolation is this: if you meet SEC Rule §240.14a-8 criteria, you could try submitting a Shareholder Proposal to change the bank's bylaws to make it easier to nominate a more independent slate of directors.
Per AmeriServ's April 2023 Proxy, the window for submitting shareholder proposals is between January 27 and Feburary 26, 2024.
Disclosure: As of this posting, I own shares of ASRV and may subsequently either dispose of them or purchase more.
Prospective Buyers
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AmeriServ has a unionized workforce, which likely acts as a poison pill for potential acquirers. The only acquisitive bank I can imagine might not be put off by this is Amalgamated Bank, which is also unionized.
Amalgamated Financial Corp, New York, NY (AMAL)
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Financial Snapshot
†as of 09/30/2023 |
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Scoundrels
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Jerome Michael Adams, Jr, Chairman
Jeffrey A. Stopko, President, CEO, and Head of Investor Relations
Allan R. Dennison, Former Chairman and CEO | ||||||||||||||||
Red Flags
| The red flags about AmeriServ and ASRV are too many, for too long, to enumerate succinctly, but here are a few summative and recent highlights.
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24 Underperforming Bank Stocks
Stuck Owning Stock in a Bank that Should be Sold?
Happily, if you’ve owned some of the bank’s stock for awhile,* there’s a legal process whereby you can strongly encourage management to sell the bank.
Specifically, according to SEC Rule §240.14a-8, you can write a shareholder proposal that the bank’s board of directors must include in the next proxy statement they send to all shareholders.
Submitting individual shareholder proposals to bank management has gotten easier since 2010, but it appears that interest in supporting such proposals is just starting to be “a thing.” Personally, I’d like to see it become an even bigger thing, because there are a couple dozen community banks in the country that could use a public kick in the pants, ideally dealt from a shareholder in their own back yard.
Disclosure: As of this posting, I own shares in all but one of the 25 banks mentioned in this post and may subsequently either dispose of them or purchase more.
How It Works
| *WHO Can Submit a Proposal According to SEC rules, if you’ve owned the following dollar values of a given bank stock for the following durations, then you can submit a proposal to management that the bank must both include in its next proxy statement, and present to your fellow shareholders for a vote.
HOW To Submit a Proposal Basically, to deliver this sort of kick, you write a proposal outlining your reasons for believing it’s high time management sell the bank, submit your proposal to the bank with a letter that conforms both to SEC rules and the bank’s previous proxy statement, and follow up with bank management as needed to see it through to a proxy vote. WHAT to Expect Management may ignore you (if you let them) in an attempt to run out the proxy deadline clock. They may try to talk you out of it, challenge your right to make the proposal, or claim your proposal is deficient in some way. Note that even if your proposal is deficient, there’s a deadline for the bank to make this claim, and the bank is required by SEC rules to afford you time to cure the deficiency, for example, by amending your proposal or submitting documentation supporting your claims. |
Good Example
| Mid-Southern Bank Management Gets a Kick in the Pants Since the day it went public in July 2018, Indiana’s Mid-Southern Bancorp (MSVB) has been mismanaged and underperforming. Unsurprisingly, Mid-Southern’s performance invited pressure from shareholders losing money on the stock. On August 3, 2021, Mid-Southern silenced its loudest shareholder critic by buying him out at a premium not afforded to other MSVB shareholders. On December 22, 2023, another shareholder of Mid-Southern Bancorp submitted a formal proposal recommending the bank be sold. Apparently, Mid-Southern deemed this shareholder too small to be worthy of a premium buy-out offer, but as required by law, the bank did publish the shareholder’s proposal in the proxy for its annual meeting. The proposal won 56% of the shareholder vote, in spite of self-serving opposition by bank Management and proxy advisors. Was the kick enough to make Mid-Southern respect shareholders' demands to sell the bank? Time will tell. But it was a well-deserved and well-delivered kick that should inspire confidence in shareholders seeking to protect their investments from being squandered. |
24 Invitations
| Banks Deserving a Kick in the Pants Here’s a shortlist of community banks I believe are worth far more in a sale than the market will accord them under current Management. Managers of these banks are a walking invitation for a good kick in the pants. Were I to see a shareholder proposal recommending the sale of any of these banks in a proxy statement, I would very likely vote for it.
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UPDATE: AmeriServ Financial, Johnstown, PA (ASRV)
Disclosure: As of this posting, I own shares of ASRV and may subsequently either dispose of them or purchase more.
Prospective Buyers
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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)
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Financial Snapshot
†as of 12/31/2016 |
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The Crew
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Craig Ford, Chairman
Jeffrey Stopko, President and CEO (promoted from CFO)
Michael Lynch, Senior VP, CFO, Chief Risk and Investment Officer
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The Skinny
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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.
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Community Bank of Bergen County, Maywood, NJ (CMTB)
A Case of Another Late Bloomer
Disclosure: As of this posting, I own shares of CMTB and may subsequently either dispose of them or purchase more.
Prospective Buyers | The three healthy branches that make up the Community Bank of Bergen County would make an attractive addition to any buyer's bouquet, particularly for institutions like these, which have overlapping branches: Boiling Springs MHC, Rutherford, NJ (private) Clifton Bancorp, Clifton, NJ (CSBK) Oritani Financial, Township of Washington, NJ (ORIT) | ||||||||||||||||||
Financial Snapshot (as of 06/30/2014) |
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The Crew | Marianne Byrne, Chairman (Chairwoman) Peter Michelotti, President and CEO Raymond Zachmann, Executive VP and CFO | ||||||||||||||||||
The Skinny | This is a pretty good bank that's getting better. The Community Bank of Bergen County successfully reduced NPAs from 7% in 2011 to today's 2.5%, while holding equity stable at $25M. CMTB is the rose of Rochelle Park and daisy of Maywood. In its single Rochelle Park branch, CMTB holds $96M in deposits —the largest share of any bank in town. Its branch in Maywood, NJ is the second largest in town, boasting $126M in deposits. An acquiring bank could make money here. Assuming the requisite efficiencies for a merger, an acquirer could pick up this beauty for 125% of book and dress up its own book value and earnings. Any investor can make money here! You won't find many banks like this left in the field today, trading at less than book value despite their freshly tidied loan portfolios. Trading now at 54% of book, CMTB offers plenty of upside for the enterprising investor. | ||||||||||||||||||
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AmeriServ Financial, Johnstown, PA (ASRV)
An Extreme Case of Under the Radar
Disclosure: As of this posting, I own shares of ASRV and may subsequently either dispose of them or purchase more.
Prospective Buyers
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I'd say these acquisition-minded banks in particular should be looking at this bargain billion dollar bank buy in their backyard.
F.N.B. Corp - Hermitage, PA (FNB)
First Niagara Financial Group - Buffalo, NY (FNFG)
Northwest Bancshares, Inc - Warren, PA (NWBI)
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Financial Snapshot
(as of 09/30/2013) |
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The Crew
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Craig Ford, Chairman
Glenn Wilson, President and CEO
Jeffrey Stopko, Executive VP and CFO
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The Skinny
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This is a pretty good bank. AmeriServ has enjoyed 14 profitable quarters in a row, is getting fee income from its trust and advisory business, and has a strong credit culture wherein NPAs haven't exceeded 2% of assets for as long as I can tell.
Insiders know what an opportunity they have here. Insider ownership of ASRV is pretty high at 8.3% and growing. There have been 26 insider buys in the open market in the past year alone, and zero sells.
An acquiring bank could make money here. The buyer could afford to pay a 25% premium to book value, because — assuming the requisite efficiencies obtained in a merger — the acquisition would be immediately accretive to both book value and earnings.
Any investor can make money here! AmeriServ pays a decent dividend, and even without an acquirer in the story, there's a more than fair chance your investment would double in value, because it's only a matter of time before the market recognizes this bank for what it is.
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