The reason that they were able to pick up the assets at such a cheap price is the financial problems that the bank was having were putting pressure on the banks capital ratios.
In an environment like this if a bank has the cash the best use of the capital will probably be buying banking assets at distressed prices.
A little bank called First Federal from Waterbury did the same thing in the late eighties and into the nineties.They went public in 86. Caught a little heat for not putting all of the money to use quickly as there was a building boom going on.The inevitable building bust came along in late 88 taking out the biggest bank in the state CBT. A few years later the bank started what was to become a long buying spree by purchasing Suffield Savings from the FDIC, then First Constitution of New Haven and so on and so on. Somewhere along the way the purchases stopped being at discounts and not all of them were banks anymore.Their final purchase was made in 2006 and a nice premium was paid for the company they purchased.
Along the way the also changed their name to Webster bank and when they lost their discipline in purchasing assets they ran into trouble in the downturn. In the last 2 years they have laid off over 400 employees, needed to recapitalize the bank and the stock fell off a cliff before bouncing back after the bank recapitalized.
During the time period that they were picking up other banks assets at a discount and just adding branches, from 90 to about 98 the stock went from 7.50 to a peak of 35.00
My comment was based on the stocks value when the post was made. Webster was one of the banks that got themselves in trouble and people thought that they might go under.
If people had the guts to buy Webster after they dropped from the high 40s to around 3 bucks they would have made out very well. A less risky play would have been to buy after The Warburg Pincus recapitalization last October.Webster has been benefiting from moving from a bank on shaky ground to stable ground not any operational excellence.They are still valued a little less than Peoples on a price sales basis,but not as much as before when you back out the preferred and cash on the books.
Peoples did not have the financial problems Webster did and did not fall as much. Since they did not fall as much or get in as much trouble they did not get rewarded for just fixing their books.In addition Peoples has increased their branch footprint from just CT by adding most of New England, Long Island and West Chester County.
If the government ever stops manipulating the yield curve the way they are doing now,there is no negative inflation spike as a by product,and banks gets back to the business that they have always done both banks could move up. I would pick Peoples because of the cash position, dividends and assets they have picked up at a discount that should start performing if banking starts moving back to normalcy.
To be honest after the original dead cat bounce that the banking sector enjoyed I've ignored it for quite awhile. I think I might have gotten back in a little to early only because the risk that spiking inflation could do quite a bit of damage to the regional banks books if the fed is not careful.