If you do the math on Banner, it could be worth over $5 per share within three years. Assume that it gets back to reasonable banking basics and grows assets 10% a year to $6 billion over three years. Estimate that its ROA in three years recovers to ~0.8% (they should get back over 1% eventually?) and that could possibly result in earnings of nearly $50 million. Dividing by the new shares outstanding and you might have EPS of approximately $0.45. At a 12x P/E, that yields a potential stock price of well over $5. Even if you discount that back to today at a risk adjusted rate, you end up with an intrinsic current value of almost $4 per share. The entire question pivots off of how management will now execute with its flush core deposit liquidity and capital adequacy?
The go-go days of banking with risk and leverage are over in my opinion, along with your higher P/Es. With more normal demographic growth, a reasonable regional community bank deserves a P/E of about 10x-12x, from my experience. In my personal opinion, I am also not sure that this management has demonstrated that they are in the top tier to justify an above average P/E that would come with superb A/L, strategy, credit, and operational management. In fact, one slip in commercial real estate or A/L management, and some of my profit projections may go out the window. The stock just ran up to $2.35 so I am less bullish now.