Banks Offer New Charms, to Acquirers

Nobody paid much attention to the purchase this weekend of Summit Bancshares (SBIT - commentary - Cramer's Take), a small Fort Worth, Texas, bank that got a nice 25% premium bid from regional rival Cullen/Frost (CFR - commentary - Cramer's Take).

They should have.

They should have, because it shows that even in a terrible rate environment, even in an environment where banks are getting clobbered on their loan portfolios and bonds held -- check out the attack on Commerce Bancorp (CBH - commentary - Cramer's Take) today in the Wall Street Journal -- these franchises retain their worth.

For a long time at my hedge fund, I would purchase any bank that sold below two times book, because when banks fell below that price, they would be grabbed by larger entities.

Then we suffered through a prolonged period when people questioned the worth of bricks-and-mortar banks vs. online banking.

While I think that online banking can be a great business -- look at the franchise that ING has put together, not to mention the terrific sideline that Citigroup (C - commentary - Cramer's Take) has put together -- bricks and mortar are back. These franchises always seem to gain in value each year of their existence.

What's so significant about this Summit deal? It comes at almost five times book, which, to me, is a new benchmark of how high other banks will go to pay for a good franchise. This company was a $250 million bank with decent, not great, returns.

Now it's just a home run for someone who believed. We all should have believed, and there are a ton of these banks still out there worth owning.

At the time of publication, Cramer had no positions in stocks mentioned.

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Please note that due to factors including low market capitalization and/or insufficient public float, we consider Summit Bancshares to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.

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