Shares of Lafayette, La.-based Home Bancorp surged more than 11% to $14 in early afternoon trading in the first session since it acquired Statewide Bank of Covington, La. from the Federal Deposit Insurance Corp. on Friday.
Home Bancorp will pick up $225 million in assets as part of the deal, increasing its size by about 42% above where it was at the end of September.
Home Bancorp now trades at more than 24 times its trailing 12-month earnings. the KBW Regional Banking ETF (KRE) was trading at 19.26 times its trailing 12-month earnings at the end of January, according to Yahoo! Finance.The two other banks that bought failed competitors from the FDIC on Friday afternoon did not see such a big jump, possibly because investors had already bid up their shares in anticipation of deal activity. Valley National Bancorp (VLY) was up $2.51 to $15.13 after it bought Manhattan-based Park Avenue Bank, while Home Bancshares (HOMB) was down slightly after its purchase of Old Southern Bankof Orlando, Fla.. Still, both banks have seen big run-ups in recent weeks, and were already trading near 52-week highs going into Monday. Many banks that have acquired failed institutions from the FDIC over the past year have seen huge share price appreciation. One of the more impressive gainers is East West Bancorp (EWBC), shares of which have more than doubled since it bought UCBH Holdings in November. That is because such deals allow them to grow while taking on limited downside risk, since the government usually bears the brunt of future potential losses in the loan portfolios of banks it auctions off. The phenomenon has caused shares of other banks perceived as likely acquirers to run up in anticipation they will do a deal. That has occasionally backfired, when much-anticipated deals unravel. One such instance was Nara Bancorp (NARA), which saw its shares soar above $12 in December on hopes it would buy struggling Korean-American lender Hanmi Financial Corp. (HAFC). However, as Hanmi's chances of avoiding failure have lately improved, Nara's stock has declined precipitously. -- Written by Dan Freed in New York.