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.
Full write-up (free guest account required):
https://www.valueinvestorsclub.com/idea/UNITED_BANCORPORATION_ALA_IN/5253543884#description