BayCom BCML
June 16, 2019 - 10:01pm EST by
frankie3
2019 2020
Price: 23.01 EPS 2.15 2.50
Shares Out. (in M): 12 P/E 10.7 9.2
Market Cap (in $M): 265 P/FCF NA NA
Net Debt (in $M): 0 EBIT 0 0
TEV ($): 0 TEV/EBIT NA NA

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  • Banks
 

Description

BayCom (BCML) is a small well run West Coast bank in strong markets that is not widely followed.  We believe it is currently priced 25% below fair value and can continue to grow EPS 10+% moving forward.

 

Company Description

BayCom Corp is a bank holding company headquartered in Northern California. United Business Bank, its wholly owned banking subsidiary, is a California state-chartered bank which provides a broad range of financial services primarily to local small and mid-sized businesses, service professionals and individuals.  It has grown organically and through acquisitions. It is currently generating an ROA of 1.3% and trades at just 1.5 of tangible book.

 

 

Background

 

The Bank was founded in 2004 by George Guarini, who still serves as Chief Executive Officer. To management’s credit the bank avoided much of the malaise in the credit crisis of 2008.  Instead, the economic recession served as a springboard to grow as other banks struggled during the recession. They declined receiving TARP funds, and grew organically while others shrank.

 

One of the overall visions of the bank is to be a strategic consolidator of West Coast banks and a career destination for experienced bankers who want to work in an entrepreneurial culture.  Since 2010, BayCom completed six acquisitions with total assets $1.4 billion. They have expanded from Northern California, to Southern California, Seattle and New Mexico.

 

Acquisitions

2011-  Global Trust Bank

2014-  Community Bank of San Joaquin

2015-  Valley Community Bank

2017-  United Business Bank

2017-  Plaza Bank

2017-  MyBank

2018-  Uniti Financial



The largest most transformative acquisition was that of United Business Bank in 2017.

 

IPO

In May of 2018, MyCom had an underwritten IPO raising $67 million and began to trade under the ticker BCML.

Its most recent acquisition in December of Uniti Financial recently closed.  It was a $350 million asset bank with 3 branches in Southern California (Orange County).



Geographic Regions

 

San Francisco/Oakland, CA

San Jose/Santa Clara, CA

Stockton/Lodi, CA

Los Angeles/Anaheim, CA

Seattle/Tacoma, WA

Albuquerque, NM

Sacramento/Roseville, CA

Napa/Sonoma, CA





Corporate Strategy-Organic and Acquisitions

 

BCML’s principal objective is to increase shareholder value and generate consistent earnings growth by expanding its commercial banking franchise through both strategic acquisitions and organic growth. This strategy of selectively acquiring and integrating banks allows economies of scale and improved overall efficiency.  The acquisitions have also allowed BCML to diversify its risk geographically and by customer type. The bank serves various multi-cultural communities including Korean, Indian, and Latino.

 

Its geographic footprint provides access to low cost, stable core deposits in community markets that is used to fund commercial loan growth.

 

BCML is solely focused on business banking.  It offers a full suite of products from commercial mortgages, business loans, merchant card processing and other various banking products.  Commercial Real Estate represents about 65% of loans while Commercial and Industrial loans sit at around 15%.

 

Pipeline of Acquisitions:  The list of banks within its target footprint sits at almost 200 banks with assets of about $15 billion.





Management

 

Management could adequately be described as seasoned and has been through a few cycles.  We view this as a positive given where we are in today’s cycle. The Founder CEO George Guarini is 64 years old and previously was President of Summit Bank, and served in various leadership roles for Imperial Bank, and an SVP for California Republic Bank.

 

The Chairman of the bank is 71 years old and formerly worked for the US Treasury Department in the IRS.  He has worked for First Nationwide Bank and Independence Saving and Loan. He has over 25 years experience in the banking industry.

 

Insiders own about 5% of the company



Earnings Model

 

In Millions

2019

2020

Net Interest Income

70

78

Non Interest Income

8

10

Revenue

78

88

Operating Expense

45

48

Pretax

33

40

Tax

8

10

Net Income

25

30

EPS

2.15

2.50

     

YE Balance Sheet

   

Total Assets

1,900

1,950

Total Loans

1,280

1,310

Total Deposits

1,750

1,810

Tangible Book/share

17.70

20.20



Valuation

 

BCML is a well run growing bank in strong economic regions that generates a ROA of 1.3% going to 1.5% next year.  It is business only and has a loyal diverse customer base and has visibility to grow from a small asset base.  For this reason, we believe it should trade at the high end of small bank valuations at approximately 1.8 book or 14X earnings.  Vs. 1.3x and 11x today. Based on next year’s numbers, the stock looks even cheaper.



Risks

 

The economy, integrating acquisitions, bad loan underwriting, major West Coast earthquake.

 

I do not hold a position with the issuer such as employment, directorship, or consultancy.
I and/or others I advise do not hold a material investment in the issuer's securities.

Catalyst

Earnings

More Analyst Coverage

More accretive acquisitions

    sort by    

    Description

    BayCom (BCML) is a small well run West Coast bank in strong markets that is not widely followed.  We believe it is currently priced 25% below fair value and can continue to grow EPS 10+% moving forward.

     

    Company Description

    BayCom Corp is a bank holding company headquartered in Northern California. United Business Bank, its wholly owned banking subsidiary, is a California state-chartered bank which provides a broad range of financial services primarily to local small and mid-sized businesses, service professionals and individuals.  It has grown organically and through acquisitions. It is currently generating an ROA of 1.3% and trades at just 1.5 of tangible book.

     

     

    Background

     

    The Bank was founded in 2004 by George Guarini, who still serves as Chief Executive Officer. To management’s credit the bank avoided much of the malaise in the credit crisis of 2008.  Instead, the economic recession served as a springboard to grow as other banks struggled during the recession. They declined receiving TARP funds, and grew organically while others shrank.

     

    One of the overall visions of the bank is to be a strategic consolidator of West Coast banks and a career destination for experienced bankers who want to work in an entrepreneurial culture.  Since 2010, BayCom completed six acquisitions with total assets $1.4 billion. They have expanded from Northern California, to Southern California, Seattle and New Mexico.

     

    Acquisitions

    2011-  Global Trust Bank

    2014-  Community Bank of San Joaquin

    2015-  Valley Community Bank

    2017-  United Business Bank

    2017-  Plaza Bank

    2017-  MyBank

    2018-  Uniti Financial



    The largest most transformative acquisition was that of United Business Bank in 2017.

     

    IPO

    In May of 2018, MyCom had an underwritten IPO raising $67 million and began to trade under the ticker BCML.

    Its most recent acquisition in December of Uniti Financial recently closed.  It was a $350 million asset bank with 3 branches in Southern California (Orange County).



    Geographic Regions

     

    San Francisco/Oakland, CA

    San Jose/Santa Clara, CA

    Stockton/Lodi, CA

    Los Angeles/Anaheim, CA

    Seattle/Tacoma, WA

    Albuquerque, NM

    Sacramento/Roseville, CA

    Napa/Sonoma, CA





    Corporate Strategy-Organic and Acquisitions

     

    BCML’s principal objective is to increase shareholder value and generate consistent earnings growth by expanding its commercial banking franchise through both strategic acquisitions and organic growth. This strategy of selectively acquiring and integrating banks allows economies of scale and improved overall efficiency.  The acquisitions have also allowed BCML to diversify its risk geographically and by customer type. The bank serves various multi-cultural communities including Korean, Indian, and Latino.

     

    Its geographic footprint provides access to low cost, stable core deposits in community markets that is used to fund commercial loan growth.

     

    BCML is solely focused on business banking.  It offers a full suite of products from commercial mortgages, business loans, merchant card processing and other various banking products.  Commercial Real Estate represents about 65% of loans while Commercial and Industrial loans sit at around 15%.

     

    Pipeline of Acquisitions:  The list of banks within its target footprint sits at almost 200 banks with assets of about $15 billion.





    Management

     

    Management could adequately be described as seasoned and has been through a few cycles.  We view this as a positive given where we are in today’s cycle. The Founder CEO George Guarini is 64 years old and previously was President of Summit Bank, and served in various leadership roles for Imperial Bank, and an SVP for California Republic Bank.

     

    The Chairman of the bank is 71 years old and formerly worked for the US Treasury Department in the IRS.  He has worked for First Nationwide Bank and Independence Saving and Loan. He has over 25 years experience in the banking industry.

     

    Insiders own about 5% of the company



    Earnings Model

     

    In Millions

    2019

    2020

    Net Interest Income

    70

    78

    Non Interest Income

    8

    10

    Revenue

    78

    88

    Operating Expense

    45

    48

    Pretax

    33

    40

    Tax

    8

    10

    Net Income

    25

    30

    EPS

    2.15

    2.50

         

    YE Balance Sheet

       

    Total Assets

    1,900

    1,950

    Total Loans

    1,280

    1,310

    Total Deposits

    1,750

    1,810

    Tangible Book/share

    17.70

    20.20



    Valuation

     

    BCML is a well run growing bank in strong economic regions that generates a ROA of 1.3% going to 1.5% next year.  It is business only and has a loyal diverse customer base and has visibility to grow from a small asset base.  For this reason, we believe it should trade at the high end of small bank valuations at approximately 1.8 book or 14X earnings.  Vs. 1.3x and 11x today. Based on next year’s numbers, the stock looks even cheaper.



    Risks

     

    The economy, integrating acquisitions, bad loan underwriting, major West Coast earthquake.

     

    I do not hold a position with the issuer such as employment, directorship, or consultancy.
    I and/or others I advise do not hold a material investment in the issuer's securities.

    Catalyst

    Earnings

    More Analyst Coverage

    More accretive acquisitions

    Messages

    No messages
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