NSTS Bancorp, Waukegan, IL (NSTS)

An Illinois Case of Self-Serving Bank Conversion

In my opinion, Illinois’ NSTS Bancorp is one of the Top 3 worst recent bank conversions along with 1895 Bancorp of Wisconsin (BCOW) and Ponce Financial Group of New York (PBLB).

Is there an NSTS shareholder who meets SEC Rule §240.14a-8 criteria for Who Can Submit a Shareholder Proposal willing to deliver the kick in the pants North Shore Trust and Savings apparently needs to do the right thing and sell the bank? 

North Shore can't legally sell before the three anniversary of their conversion comes up in January 2025, but its upcoming May 2024 annual meeting would be the perfect time to put your proposal up for a shareholder vote as needed to get Management in line sooner vs later. 

Per North Shore's latest Proxy, the deadline to submit a proposal is December 16, 2023.

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

Prospective Buyers	I suspect any or all of these Illinois banks would be interested in submitting a bid to buy North Shore Trust and Savings when its three-year moratorium on a sale expires in 2025: First Mid Bancshares, Matoon, IL (FMBH) HBT Financial, Bloomington, IL (HBT) Tri-County Financial, Mendota, IL (TYFG)
Financial Snapshot †as of 06/30/2023	Total assets: $257M† Tangible book value per share:    $14.53† NPAs to assets: 0.3%† Price to book: 59% Market cap: $48M Dividend yield: 0% Trailing 12-month ROA: -0.06%† Trailing 12-month ROE: -0.27%†
Scoundrels	Stephen G. Lear, Chairman, President, and CEO Nathan E. Walker, CEO North Shore Trust Thomas Ivantic, Director (longest serving)
Red Flags	North Shore Trust and Savings is run by weak operators with a flawed operating model delivering a negative return on equity. Two years after taking NSTS public, Management has failed to successfully deploy the money they raised. They're buying back stock, but not anywhere near as aggressively as they should. Instead of cutting costs, NSTS hired a team of seven mortgage lenders, raised Management salaries by 14%, and paid CEO Stephen Lear average compensation of $340K per year. In contrast, the annual salary for the average bank CEO in the US is $184K,* and the average bank has been earning a 12.9% ROE.**
Sources	North Shore Trust and Savings website 2023 Proxy Statement SEC Rule §14a-8 Denver Law Review of SEC Rule §14a-8 Confidential interviews with other shareholders  * How much does a bank CEO make? (by Comparably) ** Return on Equity (ROE) of US Commercial Banking Industry (by Statista)

Best Hometown Bancorp, Collinsville, IL (BTHT)

A Case of a Rantoul Rerun

At the end of the day, this is the story of the man who once ran Rantoul and now runs Best Hometown—Ronnie R Shambaugh.

Ronnie's stats have me anticipating a home run for BTHT shareholders.

Best Hometown Bancorp converted to public ownership in March 2016. If I'm right to suspect the bank could be sold for $16-$18 per share over the next year, investors who buy BTHT today at $11.20 have a fair swing at getting a 50% return.

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

Prospective Buyers	Interestingly, First Mid-Illinois Bancshares is currently buying First BancTrust (FIRT) which bought Rantoul First Bank (RFBK) when Ronnie was its CEO. First Busey, Champaign, IL (BUSE) First Mid-Illinois Bancshares, Mattoon, IL (FMBH) Town and Country Financial, Springfield, IL (TWCF)
Financial Snapshot †as of 12/31/2017	Total assets: $110M† Tangible book value per share:    $14.99† NPAs to assets: 0.1%† Price to book: 74.7% Market cap: $9.3M Dividend yield: 0% Trailing 12-month ROA: - 0.5%† Trailing 12-month ROE: - 4.7%†
The Team	LaMont K Doctor, Chairman Ronnie R Shambaugh, President and CEO David W Ganser, Executive VP, Chief Loan Officer
The Game	A proven player has stepped up to the plate at Best Hometown Bank. This isn't the first time that Ronnie Schambaugh has taken an unprofitable mutual savings bank public and effected a successful turnaround. Ronnie Ran Rantoul First! Shambaugh was CEO of Rantoul First Bank (RFBK) in Rantoul, IL from 2001 until its sale to First BancTrust (FIRT) in 2005. He converted that cellar-dweller of a thrift in October 2002, raising money from investors at $10 per share. He then sold it for over $22 per share as soon as the three-year post-IPO moratorium on selling expired. Ronnie's up to bat again with BTHT. Best Hometown Bank was another loser of a thrift before Ronnie joined the team, and it will never earn enough to have a shot at the Big Leagues. When Ronnie took it public two years ago, fans familiar with his game anticipated he'd make some successful turnaround moves next, and he has — increasing loans by 25% and practically eliminating NPAs. Ronnie's not the spring chicken he was when he ran Rantoul. When this moratorium expires, he will be 69 years old, with a 3-year change of control in hand to carry into retirement. I predict a rerun: we'll see a sale of Best Hometown Bancorp after the three-year window expires in March 2019.
Sources	Best Hometown Bank website Q3 2017 Quarterly Report 2016 Annual Report SNL Financial Confidential interviews with shareholders and analysts