$NCOM Last year Tom sights were on Birmingham, AL-based National Commerce Corp. (NASDAQ: NCOM - 37.50), up over 59%. It is engaged in the business of banking through its wholly owned banking subsidiary,
National Bank of Commerce.
Through the bank, it provides an array of financial services to businesses, business owners and professionals through eight full-service banking offices in Alabama (Birmingham, Huntsville, Auburn-Opelika, and Baldwin County) and seven full-service banking offices in Central Florida (Longwood, Winter Park, Orlando, Oviedo, Kissimmee and Vero Beach).
"The short story is that this bank is essentially run by the same group of people that ran the old Alabama National," says Tom. "So this is a 'putting the band back together' story."
The old Alabama National began as a very small Birmingham bank and was built into one of the finest southern banks around, with operations across Alabama, Georgia, and Florida. Alabama National was a highly profitable, well managed bank. It was also smart enough to announce their sale to Royal Bank of Canada in 2007 (closed February 2008), just before the last cycle turned ugly, for about 2.9x tangible book value and 20x earnings. If National Commerce can reach the profitability levels of the old Alabama National, then this stock should trade at a much higher valuation.
Many of the old Alabama National executives and board members purchased control of another struggling Birmingham bank in 2010. From this seed has grown operations across Alabama (e.g., Huntsville, Gulf Shores) and into Florida (Vero Beach, Daytona Beach).
They are growing very quickly and definitely have laid the foundations to build another high quality bank. Tom believes as they continue to grow, in part by calling on old customers, they will regain the efficiencies that come from scale and return on equity will return to the 10% to 15% range.
National Bank of Commerce.
Through the bank, it provides an array of financial services to businesses, business owners and professionals through eight full-service banking offices in Alabama (Birmingham, Huntsville, Auburn-Opelika, and Baldwin County) and seven full-service banking offices in Central Florida (Longwood, Winter Park, Orlando, Oviedo, Kissimmee and Vero Beach).
"The short story is that this bank is essentially run by the same group of people that ran the old Alabama National," says Tom. "So this is a 'putting the band back together' story."
The old Alabama National began as a very small Birmingham bank and was built into one of the finest southern banks around, with operations across Alabama, Georgia, and Florida. Alabama National was a highly profitable, well managed bank. It was also smart enough to announce their sale to Royal Bank of Canada in 2007 (closed February 2008), just before the last cycle turned ugly, for about 2.9x tangible book value and 20x earnings. If National Commerce can reach the profitability levels of the old Alabama National, then this stock should trade at a much higher valuation.
Many of the old Alabama National executives and board members purchased control of another struggling Birmingham bank in 2010. From this seed has grown operations across Alabama (e.g., Huntsville, Gulf Shores) and into Florida (Vero Beach, Daytona Beach).
They are growing very quickly and definitely have laid the foundations to build another high quality bank. Tom believes as they continue to grow, in part by calling on old customers, they will regain the efficiencies that come from scale and return on equity will return to the 10% to 15% range.
