Smaller banks are fetching higher prices

  • Article by: NEAL ST. ANTHONY , Star Tribune
  • Updated: November 17, 2012 - 4:16 PM

BreAnna Fisher

Sales of community banks -- and the premiums being paid -- are accelerating, reports Fredrikson & Byron attorney Karen Grandstrand, a former top bank regulator for the Minneapolis Federal Reserve Bank of Minneapolis.

Grandstrand should know. Her book of business has picked up markedly in the past year, a reflection of improved loan portfolios and community bank owners who are cashing out at prices well up from a couple of years ago.

For example, Grandstrand represented the recently closed sale of Western Bank of St. Paul, a well-capitalized, well-run community pillar owned by the Sands family since 1935. The buyer was Omaha-based American National Bank, about four times larger than 82-employee, four-branch Western. American will continue to run the Minnesota operation independently and under the Western name.

The price was not disclosed under a privacy provision of federal banking law that covers family-owned community banks.

However, Grandstrand said she's seeing well-run banks starting to sell for 150 percent of their book value. That's still a far cry from the two to three times book value that some banks brought during the go-go days of 2005-06.

But a year ago, savvy buyers were willing to pay only about book value for profitable, well-run institutions and they were getting troubled shops for a lot less in government-assisted deals.

"The merger-and-acquisition activity will continue because buyers and sellers are finally in agreement on pricing, regulators are starting to approve deals, buyers believe this may be the right time to buy from a pricing standpoint, and there are many very good bank franchises for sale," she said.

In addition to Western, Grandstrand has worked on a half-dozen other deals in recent months throughout Minnesota.

STUDENT ENTREPRENEUR BREWING UP A NEW BUSINESS

BreAnna Fisher, a University of St. Thomas senior, swept the regional competition against 30 other student entrepreneurs late last week at the Global Student Entrepreneur Awards (GSEA) in New York City.

Win or lose, Fisher, who honed her entrepreneurial skills, believe it or not, during her eight years in the Minnesota Army National Guard, is an interesting story. She describes herself as the "Geek Squad" of her infantry outfit during a yearlong tour of Iraq, where she set up an Internet service provider (ISP) that served her unit. When her unit left, the ISP was left intact to serve future soldiers who were able to communicate more readily than others with their families.

Fisher, 28, is a social media expert who wants to revolutionize gift-giving over smart devices with her new Web-based application. Her site, www.DoDrinks.com, is set to roll out a one-brand pilot test, in partnership with Heineken, at several Twin Cities locations.

She started with an established beer partner, partly because those national and international brands are eager for avenues because they are under pressure from fast-growing, local craft breweries.

"Instead of four tap handles at the bar, there are now a dozen or more," Fisher said.

The application, which essentially lets one party buy Heineken for another party, could work for any consumer product.

Founded in April 2012, DoDrinks is currently incubated at the Schulze School of Entrepreneurship at the University of St. Thomas.

In an interview, Fisher, a mother of two, said she bowled over her husband when she told him she wanted to use their savings to commercialize her idea earlier this year.

Fortunately, he's got a good job, and agreed, she said.

SHORT TAKES

Independent analyst and investor Tom Brakke has interesting things to say about the sagging fortunes of J.C. Penney and its Edina-bred CEO Ron Johnson. A onetime Apple retail executive, Johnson got millions to show up last year at Texas-based Penney, the flagging retailer he's trying to remake.

Brakke is always brief and always has a great chart to help tell the story. Brakke opines that we usually overpay for CEO talent and it doesn't always work out.

"Well, it ain't over 'til it's over, but the evidence to date doesn't look good," Brakke said of the Penney story so far. Brakke, a former Ameriprise portfolio manager, writes at www.rp-pix.com/mj.

Mickey Edwards, a former Republican member of the U.S. House of Representatives and author of the timely book "The Parties Versus the People: How to Turn Republicans and Democrats Into Americans," will speak Nov. 27 at a dinner meeting of the Minnesota Chapter of the National Association of Corporate Directors. He will discuss congressional gridlock and what it means for corporate governance.

This timely, post-election topic comes as a lame-duck Congress attempts to address the "fiscal cliff," national budget, debt ceiling and tax policy, subjects dear to CEOs who want some certainty before they invest and hire in 2013. Recently 80 CEOs of these companies signed a letter requesting that Congress promptly address these matters in a bipartisan manner, noted Fredrikson & Byron attorney John Stout, a national authority on corporate governance and the evening's host.

More information: minnesota.nacdonline.org/Events/

The new Salvation Army Northern Division website was developed with about 500 hours of work by Mark Morse and his 28-employee Morsekode agency, which has done free work for the Army since it was a six-person shop in 2004.

"There aren't many brands that deliver their brand promise with such authenticity and genuineness," Morse said. "We are continuously impressed ... by what the Salvation Army does on both the local and international level."

For more information: www.salvationarmy north.org

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