I recently read an article that said that as a result of Obama’s financial regulation bill 50% of banks <$1 billion in assets will be gone in 3 years. He believes they will be forced to sell out to bigger banks because they lack the economies of scale to cope with the onslaught of new regulations in the bill. Two questions: 1) does anyone agree or disagree? 2) SHBI is $1.2B. They aren’t all that much above his cut. Are they OK?
If you really think now is a good time to buy financial stocks, I suggest going with larger banks. I wouldn’t touch any bank under $1B or even $2B. The Frank-Dodd act is brutal on small banks – much more so than the biggies. First, community banks will have a disproportionately large share of their fee income wiped out due to the cap on interchange fees (bye-bye free checking). And, the bill creates a special government fund to bail out big city banks that get in trouble but are "too big to fail." Small-town banks might as well hang out a banner that says "OK to fail."
Time to start building a position under $10 per share. The insiders are buying in the mid 9's. SHBI earnings would have been positive for the 3rd quarter but for the goodwill write off. I look for a pop to 13..