A Pair of Speculative Bank Plays
Life is full of irony and unintended consequences. More than three years since the height of the financial crisis, we still have banks that are too big to fail and are working through providing a proper regulatory structure. The monstrosity known as the Dodd-Frank bill is slowly moving along toward being implemented. Ironically, given that the focus was to punish big banks and ensure they could not bring down the financial system again, the bill may end up hitting the cost structure of smaller banks much harder than their bigger brethren. The additional costs and frustration of complying with the additional regulations is likely to drive many small banks into the arms of larger institutions, which was recently profiled in the Wall Street Journal. To profit from that likely outcome, I have selected two small banks that are bargains at current prices, with the kicker that I could easily see them being bought out at a premium in the future. Both have net insider buying, solid balance sheets and pay generous dividends.
Oneida Financial (ONFC) provides various banking products and services through 11 full-service branches in upstate New York....231 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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