|
Thumb of Michigan | We've owned stock in 3 local banks. Down to one now. I know a few of the board members, they claim they have a plan to not be a take over target. We'll see. The dividend isn't huge, but its steady. Very conservative bank, very thinly traded. Lots of older shareholders. Not hard to get stock bought if you really wanted it. Pretty hard to get an accurate valuation on it.
First local bank stock we owned was a result of my Grandmother and Aunt being employed at the bank. Small community bank, they both had taken stock vs some wages for years. Not sure how it worked. That stock was very very hard to buy. Bank President had instructed all employees to direct calls about anything to do with the stock directly to him. Most of the time, the person making the call had inherited some stock from a relative, couldn't figure out what to do with it, and he'd buy it. He owned an awful lot of the bank when he retired.
That bank got bought by a larger bank. I made the most money on that stock I was ever going to make when that happened. Everyone kind of felt that the stock was worth X- the new bank, which was publicly traded, converted the existing stock into their stock. Not that it matters, but it was a 4 or 5 to one swap. It was a windfall for some. That bank has now been sold and is part of a larger bank. I don't know how the last stock swap went, haven't asked anyone I guess.
I know a guy who's family owned quite a lot of small community based bank stock at one time. I always enjoyed talking to him and getting insight on different things. As far as banks go- he hoped every community bank he owned was a takeover target. He had made money every time that happened. And, its the trend if you take a big picture view of things. There are under 300 banks in England, 1800 in Germany, and under 30 in Canada. 5000 in the USA. Are the odds that England for example will someday go to 5000, or that we'll head towards 300?
Anyway, I don't feel that small local banks are a super investment, but many are pretty safe. Some may in fact never get sold, but if they do, its not always a bad thing from an investment standpoint.
| |
|
Local bank stock investment
