Why StellarOne Shares Had a Stellar Day

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of StellarOne (UNKNOWN: STEL.DL  ) , a commercial, mortgage, and wealth management bank servicing small and medium-sized businesses in Virginia, jumped as much as 20% after agreeing to be purchased by Union First Market Bancshares (NASDAQ: UBSH  ) .

So what: Under the terms of the agreement, StellarOne shareholders will receive 0.9739 shares of Union First Market which, as of yesterday's close, equated to $19.50 per share, or a 20.2% premium. The combined entity will become the largest community banking institution in Virginia with $7.1 billion in assets and $5.8 billion in deposits. The synergies expected to be realized from this merger should add to Union First Market's bottom line in 2014 according to management.

Now what: If there were a sector riper for industrywide consolidation, it'd be regional banking. Although many small-to-mid-sized banks have recovered nicely from the recession, many are still struggling to bring in new deposits and generate loans because of tough peer-to-peer competition, and cash-strapped consumers having difficulty navigating a high unemployment and higher tax environment. Consolidation really makes sense for many smaller banks like StellarOne. I can't say I'm thrilled that it's an all-stock deal as that leaves some downside risk in shares from today's value for StellarOne shareholders, but it nonetheless should add value from Friday's close when all is said and done.

Craving more input? Start by adding StellarOne to your free and personalized Watchlist so you can keep up on the latest news with the company.

With so much of the financial industry getting bad press these days, it may be a greedy when others are fearful moment. Not surprisingly, some of Warren Buffett's biggest investments are in the space. In the Motley Fool's free report, "The Stocks Only the Smartest Investors Are Buying," you can learn about a small, under-the-radar bank that's too tiny for Buffett's billions. Too bad, because it has better operating metrics than his favorites. Just click here to keep reading.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2480710, ~/Articles/ArticleHandler.aspx, 9/26/2016 8:46:52 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 2 days ago Sponsored by:
DOW 18,261.45 -131.01 0.00%
S&P 500 2,164.69 -12.49 0.00%
NASD 5,305.75 -33.78 0.00%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/31/1969 7:00 PM
STEL.DL $0.00 Down +0.00 +0.00%
UBSH $27.27 Down -0.27 +0.00%
Union First Market… CAPS Rating: No stars