A Yankee "Big Fish"by
In the market's drubbing of financial stocks, small regional banks got pounded. And with consolidation on the rise, some of these regionals now look even more enticing as buyout targets.
That's how Peoples Heritage Financial Group (PHBK) is perceived by some investors who have accumulated shares. "Peoples Heritage is a perfect target for the likes of Bank of America, First Union, and Charter One Financial--that want to get into the Northeast," says Mark Fitzgibbon, managing director at Sandler O'Neill, an investment firm specializing in bank stocks.
With total assets of $18.4 billion, New England's Peoples Heritage, says Fitzgibbon, has a "superior level of profitability and an established franchise." However, its shares continue to trade at a big discount to its peer group's price-earnings ratios of 13 to 15. Now at 12 a share, Peoples is selling at just 6.5 times Fitzgibbon's estimated 2000 earnings of $1.76. His forecast for 2001 is $1.85.
Fitzgibbon thinks Peoples' top brass has been talking with several big banks, including some Canadian financial outfits, that have expressed interest in acquiring the multibank holding company. In a buyout, the stock is worth 28, figures Fitzgibbon.
Headquartered in Portland, Maine, Peoples is the third-largest commercial bank in New England, with more than 300 offices in Connecticut, Maine, Massachusetts, New Hampshire, and Vermont. It also has branches in New York State. Its nonbank units include the largest insurance agency in Maine as well as a trust company with assets of over $8 billion. Peoples is the "big fish in a small pond," says Fitzgibbon, and the only independent vehicle for outside banks to get into the New England market. A Peoples spokesman declined comment.