Shares of Peoples BancTrust Co. Inc. soared Monday on speculation that the Selma, Ala., company could be on the block.
Peoples announced late Friday that it had hired the investment bank Sandler O'Neill & Partners LP to help it evaluate its "strategic alternatives" - a move widely perceived as an indication that the $878 million-asset company is seeking a buyer.
The announcement came eight days after Peoples' largest outside shareholder indicated in a Securities and Exchange Commission filing that it was considering action to influence the company's direction.
But analysts questioned whether buyers would be interested in Peoples, given its lackluster recent performance and slow-growth home markets.
"You've got a low-growth, low-profitability bank in a state that is undergoing significant market turmoil," said Kevin Reynolds, a senior vice president of equity research at Stanford Group Co. in Memphis. "If you are a company looking to get into Alabama, is this the company you want to buy?"
Peoples reported earnings of $1.9 million in the third quarter, down 11%, from the year earlier. Its 0.95% return on assets and 10.44% return on equity were both below industry averages, Mr. Reynolds said.
The company's demographics are also working against it, analysts said.
Peoples, the 10th-largest bank holding company based in the state, has 23 branches in 10 Alabama counties, but roughly two-thirds of its $744 million of deposits are held in slow- to negative-growth markets like Selma, said David B. Scharf, a senior analyst at First Horizon National Corp.'s FTN Midwest Securities Corp.
"It'll be a tough sell," he said.
Peoples president and chief executive officer Don J. Giardina did not return phone calls Monday seeking comment.
In very heavy trading, the company's share price hit a 52-week high Monday, closing at $25.50, up 11%. The stock is up 28% since Nov. 30, when the New York private equity firm Endurance Capital Investors L.P. said in an SEC filing that it "may engage in discussions or negotiations" with company officials "with a view to encouraging a sale, merger, change of control, or other fundamental transaction." (Endurance owns a 9.7% stake.)
Mr. Scharf said that he did not expect the company to fetch more than $28.55 a share, which would be about a 15% premium on core deposits.
But Mr. Reynolds suggested that Peoples should consider an alternative to selling itself. "Maybe the best alternative is to save some money, save some regulatory burden, by going private," he said.
