EFBI - Four Small Banks That Are Acquisition Candidates
Banks that get acquired often result in a nice premium for shareholders of those financial entities. While it can be somewhat difficult to determine when exactly a bank will rise to the point where it becomes an ideal acquisition target, one banking sector that seems to get acquired at a very high rate are mutual savings banks. These banks date back to the early 1800s and are distinct because they are owned by their depositors.
There are less than 500 of these banks left, and many are private, but a few take the plunge and issue an IPO each year. Once they go public, there is typically a three-year waiting period applied by regulators before they are allowed to be acquired. Investment bankers will tell you that 60% to 80% of these banks get acquired within three to five years of going public. So most are really being snatched up as soon as they are available.
As a result, it behooves a savvy investor to look at which will soon be eligible for acquisition and perhaps take advantage by buying in before the offer is made.