A Bank Deal

So, Wolverine Bank (WBKC) gets a buyout at around a 30% premium.  It’s also about a 30% premium to book, which is less than I hoped.  That fact suggests that the market is NOT as hyped-up about banks as I hoped.  It seems a great deal of Donald Trump-generated optimism for the economy has fizzled out; interest rates have fallen on the long end, etc.  Still, it’s better than a sharp stick in the eye!

 

The deal is from Horizon Bank of Michigan City, Indiana, which coincidentally bought another bank of mine (LaPort) last year.  Deals of this kind almost never have problems, so I recommend riding it out.  You will get stock in Horizon plus $14 per share in cash.  Typically, within a month or two after all is said and done, the acquirer’s stock (Horizon) moves up a little.  You could sell out at that time, likely, and make a little more profit.  Also, if you’re holding in a taxable account, pay attention to long term capital gains treatment.  In the interim, both stocks will trade very closely in total value to the deal (if Horizon drops a little, so will Wolverine, and vice versa.)

 

I might redeploy profits to something like an SVBI, RNDB or HWBK.