Sterling ($28.40) has a buy rating according to ValuEngine and a one-year price target at $30.11, just below the deal price. The daily chart profile is positive with the stock well above its 50-day SMA at $26.05. Monthly and quarterly value levels are $25.23 and $24.21 with a semiannual risky level, now a pivot at $28.26.
The daily chart below shows some funky price action going into Aug. 30 and also in the days that followed. The deal was priced off the close of Aug. 30 and the stock was declining going into that day and bottomed that day with a low of $24.02 and close at $24.20. Note the spiky trading pattern that began with a high of $29.76 on Sept. 9, three days before the deal was announced.
Chart Courtesy of Thomson/Reuters
Based upon FDIC data the combined community bank will have assets at about $21 billion and still be overexposed to CRE loans versus the regulatory guideline of 300% of risk-based capital. The overall CRE loan commitment would be considered well-managed.
In my opinion this merger is just the first among the 90 focus community banks that I profiled Wednesday.
At the time of publication the author held no positions in any of the stocks mentioned.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.