“For those who invest in regional bank stocks, this is as good as gets,” says
Doug Hughes, who specializes in small and regional banking sector, with a focus on potential takeover candidates.
“Here are two bank stocks -- each with 100+ year histories -- that we have wanted to own for many, many years,” he says in his BankStock Newsletter. “It may take 2 months, or it may take 2 or 3 years to make money with these. But now is your chance to load up the boat.”
“Small–cap banks are at 2-6 year lows, with many down 20%-30% this year alone. At the same time, mid cap and large cap banks are holding up. As a result, we think they will buy up many small banks now at large premiums -- with their rich stock prices. Don’t miss the sale that is going on now.
“Through its banking subsidiaries, Tompkins Trust Company (NYSE: TMP) -- The Bank of Castile, and The Mahopac National Bank -- primarily offers commercial banking services in Westchester and upstate New York. They have some great locations, operate 37 offices throughout New York, have over 650 employees and $2.2 billion in assets.
“The bank also has a large trust division. The bank has a strong return on equity of almost 15%, and they should earn $2.80+ in 2007. And, it has been around over 170 years.
“Insiders own a ton of stock, and there is a large short position of over 300,000 shares at the current time, with a yield of almost 3% that doesn’t make since. The book value is almost $20.00 a share and they would be worth at least $50.00 a share in a deal or a 42%+ premium.
I recommend loading up now under $37 with the stock near its lows. It trades plenty, put please still buy in slowly with limits. They have just over 10 million shares outstanding. This is a no-brainer with the stock at these levels.
“Arrow Financial (NASDAQ: AROW), as the holding company for Glens Falls National Bank and Trust Company and Saratoga National Bank and Trust Company, which provide a full range of commercial services in Upstate New York with over 31 branches.
“They also have been around over 120 years so maybe the two banks featured today should get together! With over 440 employees and also a return on equity of over 14% and very solid asset quality, this one is also as good as it gets. They have over $1.5 billion in assets.
“Their book value is just over $11.00 a share and they would be worth at least $30- $34 in a deal or a 36% + premium. They should earn $1.75 a share in 2007 and insiders own a bunch.
“They also pay a strong 4.3% cash dividend that always goes up and they just announced a large $6 million share buyback, plus there was still some left on the old buyback. The bank is buying shares at these levels of years ago, today. The stock trades plenty, but buy it slowly with limits please.”
