United Bancorporation of Alabama (UBAB), mcap=$140m

UBAB pitch:
– Opportunity to acquire a cheap profitable bank with a clear path to earnings growth.
– Beneficiary of the ECIP program having received funds equal to 55% of the bank’s book value.
– Bank has the ability to grow earnings by 50% using the newly received funds.
– ECIP funds are structured as low-cost preferred equity, but should be considered as permanent low-cost equity.
– Common shareholders derive all the benefits (earnings) from these new funds.

UBAB valuation:

– Trades just over 8x 2022 earnings of $5.11/share.
– An adjusted BV basis to incorporate ECIP preferreds, UBAB trades at 0.7x TBV.

Exp. gain: Not specified.

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