Friday, October 14, 2005

Hit #65

Salinas, CA based Central Coast Bancorp (CCBN) announced yesterday that it is being acquired by Dutch agri-banking giant Rabobank for $377 million in cash.

The offer, of $25/share is a 29% premium over the previous day's closing of around $19.5. The offer represents a 75% premium over my average, including a recent stock-split, of $14.26/share.

I had mentioned that California's Central Coast banks were targets, and had singled out CCBN in this post, almost exactly a year ago. At that time, I was expecting one of the larger mainstream banks, like Bank of America or Wells Fargo, to make a move. I had started seeing Rabobank as a potential acquirer after its failed attempt last year to buy Farm Credit Services of America, a farm-lending cooperative active mainly in Nebraska/Iowa/Wyoming. That bid, for a GSE, was thwarted by Congress, as FCSA is just a vehicle to keep alive farm subsidies. For an interesting summary of what happened there, check out this report, published by the Federal Reserve Bank of Kansas City.

Rabobank is a winner as a result. By focusing on the much richer and diversified California agri-market, they stand to gain far more and may even be able to encroach on other mainstream bank's lending areas. Expect Rabobank to go after other banks soon. Rabobank is a century-old bank, with a presence in practically every major agri-business lending market in the world. It is also an extremely well-managed bank. I would have happily settled for a stock-swap!

This hit joins my favorites list. I first came across this bank, while driving through the bucolic locales of Hollister, Watsonville etc. I have gone back for a few more scenic drives.

Worth watching are Placer Siera Bancshares (PLSB) and Central Valley Community Bancorp (CVCY). I don't own either, but will be considering them seriously.

Previous hit - Centra (#64)


Post a Comment

<< Home