what they really need to do is pay out a special div of about $5/shr, so you get a stock price of $6.5-$7 plus the $5 cash, then cut the div to $0.30/shr. That will boost their ROE to acceptable levels, PE of 12 or so, and now it looks attractive to a buyer while you've banked that extra cash payment, and in the meantime you can get a decent +4% yield that is actually covered by earnings.
I would be inclined to put most of the money right back into the stock. What you suggest seems to make sense. Bank consolidation has slowed down considerably after years of frantic M & A activity in the sector. It seems only a matter of time before it picks up again. At the moment, Europe is a big distraction. It's like being constipated; this too shall pass.
I brought up the same suggestion a year ago on this board and agree that it would make sense. The only way they can employ excess capital is to acquire and that is hard to do and be accretive to earnings.
Pay a special dividend and all the numbers fall in line.