Recommendation: Short IFSB, Target Price: $0.097
Thesis:
I believe FVCBancorp’s acquisition of Colombo Bank (OTCPK:IFSB) has a decent probability to close in Q4 2018. While Colombo Bank’s management has performed respectable job turning around the bank, it is challenging to remain independent in the current environment. Since the largest shareholder of Colombo Bank holds over 90% of total shares, the main uncertainties in the merger are obtaining regulatory approvals and FVC Bancorp’s private placement. If the merger closes as expected, shareholders of Colombo Bank will receive $0.097 in stocks and cash,