Anyone out there trying to figure out the book value of this company may want to check out www.sec.gov under BRKL for latest filing - SEC Form 425 on 5/13/11. Hopefully you'll find this informative.
On 5/9 I threw out a rough calculation of BRKL worth and was way off base on how I arrived at my numbers. I thought at that time the bv may be around $6.73 and trading value around $7.75 to $8.00 when the deal was completed. On 5/9 the stock closed at $8.87 so of course I thought it would take a few months to get to the lower price point when the deal was finalized at the end of the year - another 10% down. Looks like we could reach that $8.00 point this week if the trend continues as mutual fund and institutional investors continue to dump BRKL. Even if some of these companies really like BRKL - with its decreased market price it likely triggers automatic sales and an automatic divestiture of the stock. Hopefully these levels have been hit and the people that want out have sold.
The Form 425 details "Transaction Highlights". Under the Financially Attractive section it spells out that BRKL expects an approximate 22% dilution of tangible bv with an "acceptable" earn back period (that period is not described). It looks like BARI made $9mm after taxes - so it would take roughly 3 years of after tax profit just to pay off the outgoing CEO - that sounds crazy - please someone check these approximate numbers.
As of 12/31/10 the bv of the stock was $8.39 so reduce that by $1.85 and we get an approximate $6.54 bv which should make this stock trade around $7.50 based on comparable area bank book to market valuations. If BRKL could get 1.75x bv - a take-out price would now be around $11.45.
It's discouraging to read about BRKL that mutual funds are bearish, short interest is up 50%, it's been downgraded, and lately appears in the largest decliners column. Lucy - someone has some splainin' to do!
Someone posted earlier that they should buy Mayflower - at this point and with this type of buying strategy Mayflower bank would be a cheap acquisition and fit the footprint nicely. Might as well spend a few more dollars and complete the puzzle. This was a good post. Although bv would go down further it would tie it all together.
I think anyone on this board has an interest in seeing BRKL do well. Some people just have more patience than others. I am mad as heck with this transaction but I will not be selling my shares as this company obviously has long term value and a huge capital reserve. Also as the market value goes down the dividend yield continues to rise for new share purchases. My buy orders are now set at $8 and below but am holding existing shares. I think this stock was initially sold at $10 per share back in 1998 and I'm not sure but I don't recall any splits. So after 12 or 13 years the mv of the stock is down. This would test any long-time investor's patience even the most positive of investors.
I'm still waiting for one BARI shareholder to post a message saying they got the short end of this deal and to explain why.
I was hoping the company would step in with some buybacks at this point (whatever is allowed)- but if they expected a 22% decline why not wait to buyback at the expected even lower prices.
Let's all cross our fingers that the earn back period is a short period of time.
Also your figures are off. You need to distinguish between book value (which won't decline) and tangible book value (which will decline). You're using book value, rather than tangible book value to measure the decrement.
Thanks for the help - it's appreciated. Glad you and now the board have some good projected numbers to work from. I think I'll still wait a little while before buying more - when things settle down a little bit. I don't mind missing the bottom - hopefully this is it. I know you can't go day-to-day on a stock price but it's nice to see some upward movement today. Thanks again for the info. GO BRKL!!!!
>>with an "acceptable" earn back period (that period is not described)<<
22% reduction in BV = $1.85
considering that the Bank earns about 12 cents per quarter and they're expecting increased earnings, so let's say 15 cents/quarter. $1.85/0.15 = 12 quarters or 3 years to earn back that declination in book value. Yikes!
I screwed up on my prior post. I forgot to consider that the Bank is paying a dividend of 8.5 cents per quarter. I don't believe that the Bank will EVER be able to earn back this declination in book value. Yes it is a SELL.