A Case of Pure Michigan Surviving and Thriving
It looks to me like BBBI will be a $15 stock, more than double today’s market price. If management continues to grow profits at the current rate in this environment where bank stocks in general are recovering, Bank of Birmingham could easily grow book value to $10 per share and trade at 150% of book in the next few years. If an acquirer enters the picture and pays the trending 10% deposit premium, investors can expect a similar return.
Disclosure: As of this posting, I own shares of BBBI and may subsequently either dispose of them or purchase more.
With the third highest share of deposits in town, Bank of Birmingham is no doubt attractive to acquirers, although clearly it's thriving well enough under current management to remain a pure, standalone, one-branch bank.
Chemical Financial, Midland, MI (CHFC) - has an obvious hole to fill in southeastern Michigan
Old National, Evansville, IN (ONB) - has been bulking up in MI and BBBI would expand the reach of ONB's pending United Bancorp acquisition in Ann ArborTalmer Bancorp, Troy, MI (TLMR) - has just one branch nearby with a mere 30% of the deposits held in the one-branch Bank of Birmingham
(as of 03/31/2014)
Thomas Wagner, Chairman
Robert E. Farr, President and CEO
Thomas Dorr, CFO
In my experience, a bank like this in a place like this is more than likely to trade at a premium sooner or later.
There just aren't that many community banks left in the United States, like this: