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Community Banks represent and extremely attractive asset class at this stage of the cycle. They are an important engine of economic growth and are almost entirely overlooked by private equity investors.
While credit quality has improved significantly,community banks continue to need equity capital to fund strategic and assisted acquisitions, recapitalizations,TARP re-payments and growth initiatives. Over 800 of these smaller players are on the FDIC\'s Problem Institutions list. The 761 banks with $500 million to $5 billion at year end had $944 billion in aggregate assets and 3.9% non-performing assets. The healthiest of these companies have good franchise value and are trading right around book value. We think target returns are mid-20% plus.
Please see our recent report for additional information.