Monday, May 30, 2011

First Connecticut Bancorp -- Stock Conversion

First Connecticut Bancorp is going public. It's converting from mutual ownership to stockholder ownership and it appear the conversion is occurring at a considerable discount from book value. In other words, this conversion may well be an excellent deal for depositors who want to become owners.

First CT Bancorp will sell up to 17.2 million shares at $10 each when it goes public in either June or July.

Keefe, Bruyette & Woods is handling the conversion. The phone number for the conversion center is (877) 860-2086.

If the maximum number of shares are sold, the Price-to-Book Value Ratio will be 73.2%.

Meanwhile, the Price-to-Core Earnings Multiple (based on trailing 12 months earnings) will be 73.6.

Thus, based on Price-to-Book, the deal is attractive. But based on the Price/Earnings Ratio, it's much less attractive.

Bottom line: this deal deserves close analysis. The stock may well jump from $10 to $13 when trading begins.

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