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

A Case of Being Run Off the Road

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.

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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 There's no White Knight to save shareholders from the CMRB Board New Chairman Thomas Bovino has no banking experience (although his uncle James "Jimmy the Bank Killer" Bovino does) Newly installed Vice Chairman Abe Penzer's claim to fame is having been caught for paying bribes in 1994 Director and CEO Donald Mindiak has little stake in the stock and appears to need the job too badly to do the right thing
Sources	First Commerce Bank website March 2024 Proxy Statement Q1 2024 Earnings Release 2023 Annual Report September 2013 Herald Tribune article June 1994 New York Times article Confidential interviews with shareholders and analysts

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.

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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. $2K for three years $15K for two years $25K for one year 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.  See https://www.sec.gov/divisions/corpfin/rule-14a-8.pdf  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.  1895 Bancorp of WIS (BCOW) Ameriserv Financial (ASRV) BankFinancial (BFIN) Broadway Financial (BYFC) California Bancorp (CALB) Citizens Community Bancorp (CZWI) Community Bank of Santa Maria (CYSM) Community First Bancorporation (CFOK) First Commerce Bancorporation (CMRB) First US Bancshares (FUSB) FVCBankcorp (FVCB) Horizon Bancorp (HBNC) LCNB Corp (LCNB) Lewis & Clark Bancorp (LWCL) MainStreet Bancshares (MNSB) North Dallas Bank & Trust (NODB) NSTS Bancorp (NSTS) Oregon Pacific Bancorp (ORPB) Pathfinder Bancorp (PBHC) Ponce Financial (PDLB) Provident Financial Holdings (PROV)  Third Century Bancorp (TDCB)  Touchstone Bankshares (TSBA) Town Center Bank (TCNB)
Sources	SEC Rule §14a-8 Denver Law Review of SEC Rule §14a-8 Mid-Southern Bancorp April 2023 Proxy Statement Mid-Southern Bancorp Statement in Opposition to Shareholder Proposal May 2023 Mid-Southern Bancorp Form 8-K

Timyan's 2022 Top Stock Picks

Timyan's 2022 Top Stock Picks

2022 is a year for recovery. 

After what we’ve all been through, I’m more grateful than ever for America’s community banks. They’re unique on the planet, critical to their communities, and creating value for investors. They’re what I invest in for my parents and kids, and I’d really like to see more “everyday people” take advantage of these opportunities in their own back yard.

The bank stock picks below fall into the following — not mutually exclusive — categories: 

• You can buy the stock today for less than it is worth, 
• You could profit when valuations catch up, 
• You could earn a windfall if the bank sells, and/or 
• The dividends provide a nice return. 

 Differences you might notice between this and my 2019 list: 

• I now have a clear favorite in Pennsylvania. 
• Three California banks made the list. 
• Virginia – more than once named Top State for Business by CNBC – presents six bargain bank stocks
• This year’s list features banks in a few US territories and one British territory.

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Disclosure: As of this posting, I own shares of all the bank stocks reviewed in the Timyan Bank Alert except $BKGM, $DBIN, $EQBK, $WASH and $WSFS, and I may subsequently either dispose of them or purchase more. For full disclosure, please note, I personally own many other bank stocks that are not represented in the Timyan Bank Alert portfolio or record.

Timyan's Top Community Bank Stock Picks as of January 2022

Stocks I have reviewed previously include links to their most recent Timyan Bank Alert review.

 

State	Stock	Why It’s My Favorite in The State	Yield	P/B	P/E
AK	DENI	Denali Bancorporation — Stock is still cheap and directors still own over 20%.	6%	100%	14x
AL	AUBN	Auburn National BanCorp – In a great market, and an acquirer could put the bank’s deposits to much better use.	3.3	107%	14x
AR	WRIV	White River Bancshares – Solid bank in a growing market with strong operators, so it’s reasonable to expect the stock to catch up with its peers.	2.5%	99%	11x
AZ	HRRB	Horizon Bancorp – Fingers crossed that they’ve learned from declining previous chances to sell for far more than today’s trading price.	0%	105%	7x
CA	EXSR	Exchange Bank – Stock price has lagged in spite of the bank’s outperforming peers on every return metric. Time will correct this.	3%	82%	7x
CA	SMAL	Summit Bancshares – We know since 2018 they’re open to a sale and the stock is worth even more today, so I’m banking on a return.	1%	111%	17x
CA	UBFO	United Security Bancshares – Founder and Chairman Dennis Woods is in his 70s and owns over a million shares. I hope he’ll cash his check and enjoy retirement.	5.5%	115%	15x
CO	SLRK	Solera National – CEO Marty May has left since our 2019 pick list, Chairman Quagliano bought a plane and put his daughter on the board. So, hmmm —but — the stock is cheap and still performing, so far.	0%	9%	5x
CT	BWFG	Bankwell Financial Group — The bank’s largest investor, Larry Seidman, is now on the board, and operations are rapidly improving.	2.3%	128%	13x
DE	WSFS	WSFS Financial ­– Great bank, but like its only peer in the state (TBBK), too expensive to get excited about from an investment perspective.	1%	176%	9x
FL	PBKC	Pioneer Bankorp – Cheapest bank in the state, and the airport expansion in Clewiston will drive growth.	1.9%	95%	9x
GA	EXCH	Exchange Bankshares – Trading for 30% of what it can sell for, and timely bank buybacks are driving growth in book value.	2.3%	69%	7x
HI	CPF	Central Pacific Financial – If you’re into fintech, this is cheap way to get it, with the added plus of a nice dividend.	3.6%	140%	11x
IA	MOFG	MidWestOne Financial — As hoped, the bank has gotten returns in line with peers. It also acquired an underperforming bank at great price, so stock price is likely to rise.	2.7%	96%	7x
ID	IDFB	Peak Bancorp – Currently the cheapest community bank stock in the state.	0%	104%	7x
IL	QCRH	QCR Holdings – The bank has consistently beat its earnings estimates.	0.4%	133%	9x
IN	SVBT	SVB & T Corp – This family-founded bank stock is high-performing, cheap, and in good hands with CEO Jamie Shinabarger.	1%	97%	7x
KS	EQBK	Equity Bancshares – Priced comparable to its peers in the state, but has the lowest P/E.	1%	115%	10x
KY	LMST	Limestone Bancorp – Stock is cheap, and key players collectively own over 40%. In other words, the team here is highly incented to keep creating value.	0%	112%	10x
LA	CTUY	Century Next Financial Corp — Still undervalued and still the perfect acquisition candidate for First Guaranty Bancshares.	0.8%	101%	9x
MA	WNEB	Western New England Bancorp – The bank is repurchasing stock, operations are improving, and there’s still a gap between its 2006 and current price.	2.3%	90%	9x
MD	CMHF	Community Heritage Financial – Good performance at a discount compared to its peers in the state.	0.7%	90%	8x
ME	KTHN	Katahdin Bankshares — Still cheap with a branch network that should be appealing to acquirers.	2%	99%	8x
MI	STBI	Sturgis Bancorp – Far cheaper than its peers, in spite of stronger performance and a unique trust business.	3.5%	80%	6x
MN	MFGI	Merchants Financial Group of Winona — Still my favorite in the state, still trading for a fraction of its true value, (although no longer big enough for the Russell Index).	2.2%	90%	7x
MO	HWBK	Hawthorn Bancshares – Another cheap stock I anticipate will catch up, since the bank is performing far better than average and industry investor Jon Holtaway is on the board.	2.4%	120%	8x
MS	BFCC	BankFirst Capital – The bank is making shrewd acquisitions and adding value along the way so this stock likely won’t stay this cheap for long.	2.2%	100%	9x
MT	EBMT	Eagle Bancorp Montana — Pickings are still slim for cheap bank stocks in Montana. EBMT is still it.	2.2%	100%	9x
NC	BKOR	Oak Ridge Financial Services — Hard to misfire at this price for a very decent bank.	1.6%	97%	7x
ND	BNCC	BNCCORP — Still cheap and the board has shareholders in mind.	%	110%	5x
NE	FINN	First National of Nebraska — Still reasonably priced for a solid, 150 year old family run bank.	0%	125%	7x
NH	NWYF	Northway Financial – Performance has slipped since 2019, but it’s the envy of would-be acquirers and investors like me want to see it sold.	2.6%	91%	11x
NJ	CMRB	First Commerce Bank — Three years past their own declared target sell-by date, but performing well and I have no reason to believe their plans have changed.	0%	82%	8x
NM	BCTF	Bancorp 34 Inc – The only game in town and not bad.	1.5%	85%	9x
NV	GBFH	GBank Financial – Happily, there is now a publicly traded community bank headquartered in Nevada! It’s expensive, but rapidly growing a unique business.	0%	170%	14x
NY	PCSB	PCSB Financial — Valuable underutilized franchise in a great market. Now that the three year conversion moratorium has passed, I’m hoping to see it sell.	1.3%	107%	20x
OH	CFBK	CF Bankshares — A high performing bank, with fully invested management, that investors suspect will sell.	0.75%	115%	7x
OK	BSVN	Bank7 Corp — A very high performing stock that was overly punished by the Chairman’s large sale a few weeks ago.	2.1%	160%	9x
OR	LWCL	Lewis & Clark Bancorp — Rumor has it the bank came close to selling pre-pandemic, and I think it will sooner or later.	0.9%	102%	9x
PA	FRBK	Republic First Bancorp – CEO Vernon Hill wants investors to fund new branches. Investors want to see the bank sold. Given the stock’s current price, investors are right.	0%	80%	12x
RI	WASH	Washington Trust Bancorp — Still pricey, still the only community bank headquartered in Rhode Island. To boot, it’s a great bank that pays a nice dividend.	3.8%	176%	13x
SC	SFDL	Security Federal Corp — When a Director named Spooky Weeks owns 10% and Chairman Timothy Simmons still owns 22%, I can’t say no.	1.4%	89%	8x
SD	DBIN	Dakota Banks — Not a bad bank in a state with few choices.	1.8%	107%	12x
TN	IBTN	InsCorp — Still the cheapest bank stock in a great market, and they are improving their deposit mix as I’d hoped.	1.2%	102%	10x
TX	NODB	North Dallas Bank & Trust – The underperformance here is so great, I can’t advise buying unless you have reason to believe they’ll sell. I’m betting on it.	1.3%	119%	25x
UT	None	There are no publicly traded community bank stocks in Utah on my current buy list.	–	–	–
VA	BOTJ	Bank of the James Financial – Stock price lags franchise value. The wealth management acquisition alone should add 20% to earnings.	1.8%	110%	10x
VA	FDVA	Freedom Financial Holdings – Prior to this gig, CEO Joe Thomas built and sold Bay Bank for a premium. That’s all I need to know.	0%	120%	9x
VA	MSNB	MainStreet Bancshares — I expect they’ll likely fulfill on their stated mission to sell the bank, in spite of their dinking around the past few years.	0%	120%	8x
VA	PKKW	Parkway Acquisition – More than decent operators taking advantage of low valuations to repurchase stock. I will be with them when the market corrects.	2%	88%	9x
VA	TSBA	Touchstone Bankshares – Decent operators taking advantage of low valuations to repurchase stock. I will be them when the market corrects.	2.46%	78%	10x
VA	VBFC	Village Bank & Trust – Likely to sell at some point, but it’s building value so fast I’m enjoying the wait.	1%	139%	7x
VT	MDVT	Middlebury National Corp – I love this little, woman-run bank more every time I look at it. (CEO Linda Harmon has run it since 1995). I’d buy more, but it’s very thinly traded.	2.5%	90%	9x
WA	SFBC	Sound Financial – An affordable stock in a solid woman-run bank. Laurie Stewart is in her 70s, has been CEO since 1989, and has earned a break.	1.5%	127%	11x
WI	PSBQ	PSB Holding – An undervalued high performer that is highly attractive to prospective acquirers.	1.8%	105%	9x
WV	JFWV	Jefferson Security Bank – Stock price currently lags how the bank’s performance suggests it should be priced.	2.1%	90%	8x
WY	CRZY	Crazy Woman Creek Bancorp – Call me crazy — it’s been a slow climber — but it’s still cheap, the only community bank in Wyoming, and accretively buying back stock. Someday, it’ll reach book.	1.3%	90%	8x
GU	BKGM	BankGuam Holding – The only game in the territory, and it is cheap.	3.6%	0.7%	6x
PR	BPOP	Popular, Inc – Not a community bank stock, per se, but it’s the cheapest bank stock in Puerto Rico’s red hot market.	2.2%	108%	7x
BM	NTB	Bank of NT Butterfield & Son – Expensive to book, but cheap on earnings. Pays a great dividend, has superior returns, and benefits from location in a tax haven.	4.6%	200%	12x