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White Paper – M&A Boom in Small & Mid-Cap Banks Creates Opportunity

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White Paper – M&A Boom in Small & Mid-Cap Banks Creates Opportunity, November 15, 2010, Prepared by FJ Capital Management

  • “In a white paper released today on the small- and mid-cap bank sector, Friedman, a banking expert [Martin Friedman, Chief Executive Officer and Portfolio Manager] with more than 20 years of capital markets experience, points to several factors creating considerable pressure on banks’ ability to earn acceptable shareholder returns. This lack of returns, according to Friedman, could drive many management teams to exit the business. The paper also discusses the banking landscape, past and present, and showcases recent bank acquisitions, which while falling below investors’ radar screens, have produced outsized returns. In the year-to-date period ended Oct. 31, 2010, 26 public transactions were completed with an average, one-day stock price spike of 83 percent following the deal’s announcement. Additionally, today’s banking climate is compared and contrasted to the last major consolidation cycle in the United States. Though there are some differences, there is one indisputable constant — the trend in the sector today is, as it was 20 years ago, clearly consolidation with the number of banks having dropped by roughly half during this time.”
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