On Apr 11, Sterling Financial Corporation (STSA) of Spokane, WA announced it is buying North Valley Bancorp (NOVB) of Redding, CA. Both are savings and loans.
The offer is $25.14 per share of NOVB, which was a slight premium to the market price. NOVB is much smaller than Downey, with a ~$180M market cap vs Downey $1.72B. So, the difference in size is approximately 10x.
Importantly, this offer puts the P/B at around 2.4; significantly above Downey's 1.23x. Obviously, it would blow out our Downey short if a buyer paid anywhere near 2.4x for Downey.
However, NOVB is more of a commercial lender (8-K). In fact, only 6.1% of their portfolio is residential mortgage loans.
And, although I'm sure that commercial loans will have problems in time, NOVB probably doesn't give no-doc, negative amort commercial loans.
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