A Stock Pick for (Almost) Every State

A Stock Pick for (Almost) Every State

2019 is a year to break the mold.  Deliver and obtain more value per effort and minute. So I'm giving myself "literary license" to step out of my review-one-bank-stock-at-a-time format.

This month, I took inventory of my current community bank stock holdings "by State" to let others "in" on my portfolio and research a bit more.

If you've been following me, you know I believe America and Americans would be well served to invest in our community banks. Hopefully this exercise will help everyday investors across the country to see opportunities close to home.

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Disclosure: As of this posting, I own shares of all the bank stocks reviewed in the Timyan Bank Alert except $TBBK, $CDAB, $MELR, $CESO and $PUB, 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 Pick(s) Per State as of January 2019

Some of these I have reviewed previously. Just click the stock symbol to access its 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 cheap and directors own over 20%.	5.7%	104%	12x
AL	UBAB	United Bancorporation of Alabama – has high returns, low price and does good in local Opportunity Zones.	0.7%	117%	6x
AR	OZK	Bank of the Ozarks — stock is cheap from being overly punished by the market for two bad loans.	3.3%	93%	8x
AZ	MPHX	MetroPhoenix Bank — not great, but the only one I own since State Bank $SBAZ got too expensive.	0%	128%	15x
CA	NCNB	Northern California National — stock in Chico's hometown bank is undervalued, earns good money, and has high takeover appeal.	1%	125%	12x
CO	SLRK	Solera National – Marty May expertly runs this one-branch bank and it’s fair to assume Chairman Michael Quagliano will want a return on his investment in 22% of the stock.	0%	110%	15x
CT	BWFG	Bankwell Financial Group — Larry Seidman is the largest investor and he makes things happen for shareholders.	1.7%	129%	13x
DE	TBBK	Bancorp, Inc — I don’t own this or any other Delaware-based bank, but board members Shiv Govinden and John Eggemeyer are savvy bank directors.	0%	121%	8x
FL	FCIT	First Citrus Bank — I love the team Jack Barrett has put together in Tampa and especially love recent results:1.3% ROA and 15% ROE.	0%	132%	11x
GA	CCFH	CCF Holding Co — my largest holding. I love Leonard Moreland’s turnaround, have high hopes for the amalgamation of the two Heritage Banks and Providence Bank, and trust largest shareholder and Chairman, Ken Lehman.	0%	110%	15x
HI	OHPB	Ohana Pacific Bank in Honolulu — it’s ugly, but cheap. I’m hoping they sell to someone who knows what they’re doing.	0%	87%	13x
IA	MOFG	MidWestOne Financial — it’s selling nearly 30% below their last stock offering. I hope they’ll either get their returns in line with peers or sell the bank.	3%	89%	9x
ID	CDAB	Couer d’Alene Bancorp — earnings like these plus a slight discount to book make it hard to resist this tiny gem.	2.7%	98%	12x
IL	RYFL	Royal Financial — DISCLOSURE: I own 9.99% and have been a director since 2011, but I like Royal’s footprint in the backyards of serial acquirers FMBI and WTFC.	0%	105%	9x
IN	MFSF	MutualFirst Financial — attractive takeover target owned by two activist investors, PL Capital and Ancora Advisors.	2.93%	121%	10x
KS	BVBC	Blue Valley Ban Corp — a tad pricey, but very valuable branch network near Kansas City, with an ace director, Tony Scavuzzo of Castle Creek. SOLD 01/16/2019	0%	142%	9x
KY	KFFB	Kentucky First Federal — returns are inadequate, so I hope they one day do a full conversion and sell three years later. *Price to book would be 60% under full conversion scenario	5.8%	111%*	20x
LA	CTUY	Century Next Financial Corp — it’s undervalued and the perfect acquisition candidate for First Guaranty Bancshares.	3%	107%	11x
MA	MELR	Melrose Bancorp — only buy this if you believe activist investors Seidman and Maltese will be successful in pressing for a sale.	3%	105%	28x
MD	DBCP	Delmar Bancorp — earnings are improving rapidly and Chairman Ken Lehman is heavily invested in turning a profit on his 41% ownership.	1.4%	112%	9x
ME	KTHN	Katahdin Bankshares — it’s cheap and has a branch network that should be appealing to acquirers.	2.6%	96%	9x
MI	EFIN	Eastern Michigan Financial of Crosswell — Michigan has many great publicly traded community banks, but this 127 year old has the cheapest stock.	2.94%	82%	9x
MN	MFGI	Merchants Financial Group of Winona — my hands down favorite for the State, big enough for the Russell Index and trades for a fraction of its true value.	2.1%	107%	10x
MO	LBCP	Kansas City’s Liberty Bancorp — I’ve owned it since its conversion in 2005, because it has stayed too cheap to sell.	1.1%	115%	9x
MS	CIZN	Citizens of Arkadelphia — nice dividend, but Citizens never earns enough to justify its independence.	4.7%	125%	14x
MT	EBMT	Eagle Bancorp — pickings are slim for cheap bank stocks in Montana. This is it.	2%	107%	13x
NC	UWHR	Uwharrie Capital — if this one sells, it’ll pay off. If not, I’ll be stuck holding a cheap bank stock with crummy returns.	0%	103%	20x
ND	BNCC	BNCCORP — could more than double if sold, and many activists and unhappy shareholders are pushing for just that.	0%	101%	13x
NE	FINN	First National of Nebraska — an undervalued, high performing, 150 year old family run bank.	0%	109%	10x
NH	NWYF	Northway Financial — expertly run by the energetic Bill Woodward for the past 43 years.	2.4%	102%	12x
NJ	PKBK	Parke Bancorp — started in a trailer by one of my favorite bankers, Vito Pantilione. Now it has $1.3B in assets in seven branches making it the envy of acquisitive banks in the area.	3%	135%	11x
NM	None	Unfortunately, there are no community bank stocks in New Mexico that I want to own.	-	-	-
NV	None	Sadly, there are no publicly traded community banks headquartered in Nevada.	-	-	-
NY	GLDT	Gold Coast Bancorp in Islandia — a valuable franchise, 22% management owned, but it doesn’t earn enough to remain independent. I’m hoping it sells.	0%	93%	25x
OH	CBKM	Consumers Bancorp in Minerva — steady insider purchases at higher prices are a clue that this stock will soon be worth more.	3%	108%	9x
OK	CESO	Central Service Corp — a nice 100-year old institution to own a stake in, if you can find shares near a $30 bid price.	0%	46%	8x
OR	CLAT	Clatsop Community Bank — cheap for a reason. It’s ten years old and still doesn’t make enough money to be independent. Original shareholders are still under water. Needs to sell!	2.1%	94%	19x
PA	FRSB	First Resource Bank, Chester County PA — I'm not alone in rating it the best bank in the wealthiest county in the state (PRN Newswire 10/30/2018)	0%	100%	11x
PA	EMYB	Embassy Bank — David Lobach built it from scratch, it's been a wonderful stock for ten years, and I expect it to keep performing.	1.2%	130%	10x
PA	FRAF	Franklin Financial Services — instituted a share buyback and is listing on NASDAQ. I anticipate the stock will be added to the Russell Index in June.	3.4%	123%	10x
RI	WASH	Washington Trust Bancorp — a bit pricey, but the only community bank headquartered in Rhode Island.	3.6%	212%	13x
SC	SFDL	Security Federal — Chairman Timothy Simmons' 22% ownership stake gives me confidence this bank's value will keep growing.	1.3%	107%	13x
SD	GWB	Great Western — has done a great job building this bank organically and via acquisition.	2.9%	109%	11x
TN	IBTN	Nashville’s Inscorp — it’s the cheapest thing in a great market, but I wish they would improve their deposit mix.	1.2%	117%	12x
TX	CADE	Cadence — the stock has been punished too much for its purchase of State Bank of Georgia.	3.3%	107%	9x
UT	PUB	Peoples Utah Bancorp — Utah's one and only publicly traded community bank, but it is a beauty! I just wish it were cheaper...	1.5%	204%	14x
VA	MNSB	MainStreet Bancshares — this bank is in a great market, growing, and likely to sell sooner or later.	0%	126%	11x
VT	MDVT	Middlebury National Corp — going strong for 188 years and holds 60% of the deposits in its home town.	2.7%	96%	11x
WA	PPBB	Peoples Bancorp — a valuable franchise with superior returns and good prospects for selling.	0%	145%	10x
WI	SBBI	S.B.C.P Bancorp —  it's in a great market and run by a great banker, Jim Tubbs.	2%	103%	8x
WV	PTBS	Potomac Bancshares — good things usually happen for shareholders in Mike Voinovich's deals and he just raised capital here.	2%	121%	13x
WY	CRZY	How could I not pick Crazy Woman Creek Bancorp? Especially with Joe Helmer on their board.	1.9%	85%	12x

UPDATE: Embassy Bancorp, Bethlehem, PA (EMYB)

Clearly, the bankers in charge at Embassy still know how to pack a punch. As I predicted in my 2013 review, CEO David Lobach and his colleagues have succeeded in doubling the bank's value. In fact, they've done better than I predicted, accomplishing this growth "organically" versus sale of the bank. EMYB is up 120%, and assets are up 50%.

I see no reason why this team can't grow EMYB another 50% over the next four years. If I'm right, Embassy's stock could trade for $30 on its own by 2021, giving investors another chance to double their money.

Lobach is 67 and has certainly earned the right to cash in on his 500% change in control provision any time he likes. I'd be just as happy to see him keep running at full steam ahead for another four years, first. Either way, he's done right by the bank, its customers, its shareholders, and his own family.

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

Prospective Buyers	The M&A scene in Embassy's back yard is so hot that two of the institutions I had listed as prospective buyers in May 2013 have since been acquired, themselves — First Niagara Financial Group, Buffalo, NY (FNFG) and National Penn Bancshares, Boyertown, PA (NPBC). Fulton Financial Corp, Lancaster, PA (FULT) Provident Financial Services, Iselin, NJ (PFS)
Financial Snapshot †as of 03/31/2017	Total assets: $963M† Tangible book value per share: $10.15† NPAs to assets: 0.66%† Price to book: 145% Market cap: $110M Dividend yield: 0.9% Trailing 12-month return on assets: 0.83%† Trailing 12-month return on equity: 10%†
Luminaries	David Lobach, Jr, Chairman, President, CEO Judith Hunsicker, Senior Executive VP, Secretary, CFO, COO James R. Bartholomew, Executive VP
Gold Stars	I still love how efficient and committed Embassy is! In some ways the bank is operating even more efficiently now than it was four years ago, especially considering that its peer group is now comprised of only the strongest players. Employees per branch. In 2013, Embassy Bank had just 70 employees across 7 branches and was operating 30% to 90% more efficiently than its peers. Today, Embassy has just 83 employees across 8 branches, and is now operating 30% to 100% more efficiently than its peers. Assets per employee. In 2013, Embassy Bank had whopping $9.2M in assets per employee and was operating 50% to 100% more efficiently than its peers. Today, Embassy has $11.6M in assets per employee and is still operating 30% to 60% more efficiently than its peers. Insider ownership. In 2013, insiders owned an impressive 32% of EMYB stock worth $15M and Embassy Bank managers and directors were 3x to 20x as invested in their bank's success as their peers in other banks. Today, insiders own 27% of EMYB stock worth $30M, and Embassy managers and directors are still 3x to 4x as invested as their industry peers.
Sources	Embassy Bank website May 2017 10-Q 2017 Proxy Statement SNL Financial Confidential interviews with shareholders and analysts

Embassy Bancorp, Bethlehem, PA (EMYB)

A Case of a Dynamic Duo in the Steel City

The two in charge at Embassy sure know how to pack a punch. This is one bank that I believe could get 150%-160% of book value in a sale. If this pair succeeds in growing book value to over $8 over the next three years, a sale would present a really nice opportunity to double one's money.

And given the Chairman's previous experience selling Ambassador to Fulton in 1998, I think it's reasonable to anticipate that the bank will sell when the price is right. That being said, at a discount to book and only 8x earnings, EMBY will almost certainly make shareholders money even if the bank never sells.

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

Prospective Buyers	In addition to the obvious neighborhood heavyweights, F. N. B. Corp (FNB) and M & T Bank Corp (MTB), each of these three banks has good reason to be interested in Embassy, given its 5% share of the deposit market in both Lehigh County and North Hampton County First Niagara Financial, Buffalo, NY (FNFG) - acquiring EMYB would double FNFG's deposit market share in Lehigh and make it #2 in the county Fulton Financial, Lancaster, PA (FULT) National Penn Bancshares, Boyertown, PA (NPBC) - acquiring EMYB would make NPBC #1 in North Hampton and a solid #2 in Lehigh
Financial Snapshot (as of 03/31/2013)	Total assets: $636M Tangible book value per share: $7.07 NPAs to assets: 1.5% Price to book: 95% Market cap: $47M Dividend yield: 0.6% Trailing 12-month return on assets: 0.92% Trailing 12-month return on equity: 12.9% TARP: $0M
Luminaries	David Lobach, Jr, Chairman, President, CEO Judith Hunsicker, Senior Executive VP, Secretary, CFO, COO
Gold Stars	I just love how efficient and committed Embassy is! Just look at how many jobs the two leaders at the helm take on their own shoulders. Here are a few numbers that speak volumes, as well. Employees per branch. With just 70 employees across its 7 branches, Embassy is operating 30% to 90% more efficiently than its peers. M & T has almost twice as many employees per branch (19) First Niagara, Fulton, and National Penn have 30% more per branch (13) Assets per employee. With a whopping $9.2M in assets per employee, Embassy is operating 50% to 100% more efficiently than its peers Fulton has half the assets per employee ($4.6M) First Niagara is managing a third less assets per employee ($6M) National Penn and M & T aren't managing any more, with $5M and $5.7M in assets per employee each, respectively Insider ownership. With insiders owning an impressive 32% of EMYB stock, Embassy managers and directors are 3x to 20x as invested in their bank's success as their peers are in their own Fulton and First Niagara insiders own a measly 1.5% and 2% of their own FULT and FNFG stocks, respectively M & T and National Penn insiders, although wildly beating the average bank's level of insider ownership with 10% and 20% of their respective MTB and NPBC stocks, still fall far short of Embassy's impressive level
Sources	Embassy Bank website 2012 Annual Report 2012 Annual Meeting and Proxy Statement SNL Financial Confidential interviews with shareholders