National Penn Sticks it to Shareholders

In August, National Penn Bancshares, Inc. (NPBC) announced a merger with BB&T Corporation (BBT) worth $1.8 billion, giving NPBC shareholders the option of either receiving a cash consideration of $13/share (current price is around $12.50) or a stock consideration of BBT 0.3206 shares (current price is around $39).

However, a contingent of NPBC shareholders had filed a class action lawsuit in September against the bank claiming that it had not adequately shopped around for a fair value deal. That law suit has since been settled for an undisclosed amount.

National Penn is one of the largest locally based banks in terms of deposit with an increase of total assets YoY of 11% in Q3 among others.

This is all happening while BBT is looking to expand its operations across the east coast. They had also acquired Susquehanna Bank in a $2.5 billion deal.

This is all fairly old news at this point given the law suit had been settled about a week ago, but here is my take on it.

This story is a bit more close to home for me. I am not a shareholder of NPBC, but my old man is. That and they are based in my city.

I see $13/share as an insult. If top executives were looking to sell why would they not have done some window shopping? A more reasonable price would be around the $16-$17 range, given NPBC’s strong financial statements. Outside of the numbers, I have had talks with different branch managers and various employees of National Penn and they have commented on an increase in business. Not only that but BB&T’s current dividend is horse shit, not nearly as sexy as NPBC’s .40 dividend which has me urging pops to just take the $13 rather than the 0.320dogshit of BBT stock. Which at the current price would be below $13 anyway. Were National Penn’s top executives fulfilling their duties to provide value to shareholders, or were they lining their pockets? The top 5 executives are inline to receive $20 million.

National Penn Bancshares is holding a special shareholders meeting on December 16th of this year that I plan on schmoozing my way into.