Friday, October 22, 2004

Greater Bay Bancorp on the block.

Greater Bay Bancorp (GBBK) announced that it is looking for a buyer. This is among the last remaining independent banks in the Bay Area. I own a small number bought around $26/share - stopped soon after, since it moved higher way too fast. I think it will ultimately be acquired for anwyhere between $32 to $35. Now that they have announced their intention to sell, the price may not go much lower from here.

2 other (and possibly the only ones ?) independent banks operating in the Bay Area should also be acquired soon. They are Silicon Valley Bancshares (SIVB) and Union Bank of California (UB). The former was a high-flyer during the boom, and the latter has some attractive branches. Both are currently overvalued, and I will be waiting for drop to add.

As I said in an earlier post, practically every local/state bank is a target. The aim is to buy them at prices that deliver you a decent premium on a takeover.

There are other sub-themes within banking that are worth following :

  • Banks catering to immigrant communities : A number of Chinese, Korean banks operating in California are worth looking at, but not right now given their high valuations.
  • Banks in the south-west : The US south-west (Arizona, New Mexico, Nevada) is growing at an amazing rate. Banks here are sure targets, though again at current prices these are not worth nibbling at.
  • Central Coast banks : California's central coast is filing up and in a matter of years LA and SF will be one contiguous area vis-a-via population density. I own a few of Central Coast Bancorp (CCBN), and plan to add at the current price.
  • Puerto Rico banks : Banco Popular (BPOP) is attractive right now. Others are expensive at this moment.


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