Danvers is to be truly admired for their denial of the TARP, this shows confidence and a morally commendable attitude towards the ridiculous gov't TARP program. However... Why is it acquiring a bank in the middle of 2009?? This seems ludicrous. There are banks all over the country shuttering and being sold by the FDIC for nothing, a small premium on deposits and cheap assets (branches etc...). There are many more of these failures to come, so plenty of cheap inventory for Danvers to buy. Why pay 1.5x book value for a bank when plenty of banks can be had for less than book value or for the value of their assets directly? No idea what Danvers or Beverly has as loan investments on their balance sheet. It doesn't matter. What matters is commercial RE, high-end residential RE, and middle-class residential RE are all going to drop in price this year in next, similar to the nasty drop subprime RE had in 2008. So unless Beverly is a subprime lender that took no hits to it's portfolio (doesn't exist), I fail to see how acquiring a financial institution for 50% more than book value is anything other than foolhardy. Additionally, Beverly seemed to be the type of bank that paid pretty high interest rates to depositors if memory serves.
$13.22 (07/08/09)
