Despite Sale, Now Might Be Good Time to Purchase CNB Stock

By Basch, Mark | The Florida Times Union, January 26, 2004 | Go to article overview

Despite Sale, Now Might Be Good Time to Purchase CNB Stock


Basch, Mark, The Florida Times Union


Byline: Mark Basch, The Times-Union

CNB Florida Bancshares Inc. shareholders have had a nice run-up in the stock recently, culminating in The South Financial Group's $157 million agreement to buy the Jacksonville-based bank last week. But at least one analyst thinks there's still money to be made by buying CNB's stock now.

Even after CNB's stock rose $3.70 to $24.03 after the deal was announced Wednesday, FTN Midwest Research analyst Mark Muth on Thursday raised his rating on CNB from "neutral" to "buy."

"While much of the easy money has been made in CNB, we are upgrading the shares to buy in order to move our recommendation in line with that of TSFG," Muth said.

The deal calls for CNB shareholders to get 0.84 shares of TSFG stock for every CNB share they own. So since CNB shareholders will become TSFG shareholders in July, assuming the merger closes as expected, a purchase of CNB stock now should be considered the same as buying TSFG. And another FTN analyst rates TSFG as a "buy."

Muth also points out that there is still a little money to be made on the difference between CNB's stock and TSFG. At Wednesday's close, TSFG was trading at $29.25, meaning that 0.84 shares of the stock would be worth $24.57. That was 54 cents higher than CNB's closing price.

The acquisition was not a surprise, Muth said.

"Our take is that while the deal was not widely shopped, CNB landed both the price and cultural fit that the board desired when they decided to sell the company, apparently back in September," he said.

CNB's stock was trading at about $16 at the beginning of September before it began edging up amid some takeover speculation.

Florida Banks

Florida Banks Inc., which last week reported 2003 earnings tripled from 20 cents per diluted share to 62 cents, is projecting 2004 earnings to reach 78 cents.

"We believe that going forward, the earnings will continue to increase as we move very rapidly towards a very normal earnings level for bank," said President and CEO Charles E. …

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