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Bank Of Utica Tender Will Generate 35-42% Upside

Bank of Utica [(BKUT), (BKUTK)] is a reasonably profitable, single-branch community bank in Utica, New York, which earns interest income almost exclusively via securities investments rather than loans. The bank was prudent during the financial crisis and thus avoided significant credit losses. Post-crisis, President Tom Sinnott, the third in a line of Sinnotts to run the bank, decided to retain vast amounts of extra capital to be ready for the next crisis. Unfortunately, as global interest rates have fallen and local loan demand remains slack (and not priced right for the credit risk), there aren't a lot of good options for all of the extra capital the bank has held on to. There is, however, one move that would, in one fell swoop, reward the bank's shareholders with an increased share price, increase the bank's tangible book value while dramatically increasing earnings per share, and utilize some of the excess… Read More …