Now that the year end has passed we will be getting the last quqrter reports for the small banks. I have talked to the employees at several of them. Looks like a good quarter but nothing outstanding at any of them.
With my return on the stock over 500% over the past 5 years and earnings going up each quarter I am not going to look at the presidents pay check. In your posting you say there is no buyout in sight. Are you sure of this? There have been no insider trades since June. As a former small banker the best bank location is next door to Citibank with Wells Fargo on the other side and Bank of America across the street.
Yes, the CEO's compensation has been a hot topic on this board for a while now. I'm not sure that you can 100% justify it, however, the bank's historical earnings have been tremendous and the bank has been a huge success. But here is what worries me about TMCV:
This is a real estate/construction lending bank that has a substantial percentage of their loan portfolio in speculative residential lending; not an area that you want to be too concentrated in these days. But so are a number of other community banks. What I think sets TMCV apart from their peers, is that (contrary to what you may think) the management team is more creative than what others may give them credit for. This bank has morphed into more than just a community lender. Over the course of the past 12-18 months, it has developed new products, new lines and divisions to expand it's services and geographic footprint. The bank has also increased it's core lending activity (much needed for years!) which should counter some of the real estate concentrations.
As for the CEO's compensation....I can certainly understand your thoughts and concerns. It's quite a package for him. However, you can't argue with success and as long as the bank continues to post strong trends in revenues, earnings, ROA, ROE, etc., I'm in for the long haul
Granted ROE/ROA are strong; however, there are plenty of larger better capitalized regionals that have 4x revenues and almost 2x margins [i.e. CVBF] where the CEO earns under$400k and the stock pays a divd.
TMCV is thinly traded and that adds to the 'hype'. Once the RE rollercoaster starts heading south with speed, in about 12 mos this will become a sub $10 stock.
All Real estate dependent banks in the USA will have their day of reckoning within the next 2 years. Buyouts will not be at premium, especially for the late decliners.
Doesn't anyone remember the mid 80s?!
I neither own nor short the above mentioned securities. However, I am looking for my marks for the next 2yrs.