This small bank is looking more and more like a takeover candidate.
Midland Capital Holdings Corp. (MCPH)
From Hughes Investment Management
Midland Capital Holdings Corp. (MCPH), trading at a huge discount to book, is still one of the best banks that should get a takeout this year.
Insiders own more than 50%, and the top two owners are both in their mid-sixties. Second, the company is one of the few banks that never took Tarp Money. The bank has almost no bad loans. In fact, it is not growing its loan book at all. Instead, the bank is shrinking it, so a sale is coming.
Fifth Third Bancorp (FITB) just announced that it is closing over 40 branches in its markets, so this should help a lot with a sale now for anyone who wants to come into this market.
MCPH’s real book value, with real estate on its books since 1910, is worth a bunch more than stated—almost $40 a share—so the bank should be worth $42- $44 on a sale.
With rates coming back down now, it appears, we think NorthWest Indiana Bancorp (NWIN) a solid bank in their MCPH’s area, could be a good fit in a one-for-one stock deal. There’s almost no downside risk, and deals for banks that aren’t growing keep happening year after year. So far, there have been over 25 deals in 2019, and insider buying at banks is still very high.
Also, Oppenheimer Holdings Inc. (OPY)—a previous Top Pick—is trading well. This small investment bank will also be sold this year for double what it is trading at, and it could earn $5.00- $6.00 a share in 2020.
Douglas Hughes, Hughes Investment Management, www.banknewsletter.com, 888-814-7575, June 20, 2019