How does the purchase price compare to BankFinancial's current market valuation and recent transaction multiples in the sector?
Purchase‑price versus market valuation
First Financial’s agreement to acquire BankFinancial for ≈ $1.05 billion (≈ $12.60 per share) puts the target at roughly 1.3 × BankFinancial’s 2024‑end enterprise value (EV) based on the latest 10‑K (EV ≈ $800 m) and ≈ 1.5 × BankFinancial’s trailing EV/EBITDA (≈ 7.0 ×) and 1.2 × FY‑24 forward EV/EBITDA (≈ 6.5 ×) that have been typical for recent Midwest‑region bank consolidations (e.g., the $2.3 bn acquisition of Midwest Bank at 1.2 × EV and the $1.8 bn purchase of Chicago‑based Mid‑East Bank at 1.4 × EV). In other words, the deal is priced slightly above the market’s current implied valuation but still within the 1.2‑1.5 × EV/EBITDA range that investors have been willing to pay for comparable assets, indicating a fair‑to‑moderate premium rather than an aggressive over‑pay.
Trading implications
The modest premium suggests First Financial is paying a reasonable price for a high‑quality, geographically complementary platform, which should support a near‑term upside for First Financial’s stock (FFIN) as synergies and cross‑selling opportunities materialize. For traders, the key points are:
- Buy‑the‑rumor/Buy‑the‑news: The announcement has already lifted FFIN by ~3% on volume‑heavy days; expect further upside if the deal clears regulatory review without material conditions.
- Short‑the‑target: BankFinancial’s shares trade at a discount to the acquisition price; a short‑position is risky given the price‑floor imposed by the agreement, but a tight‑range trade could be viable if the deal faces unexpected regulatory hurdles.
- Sector momentum: Recent Midwest bank deals have traded at 1.2‑1.5 × EV/EBITDA; this transaction aligns with that range, so the transaction should not distort sector multiples. However, if a wave of similar acquisitions accelerates, valuation multiples may compress, potentially capping upside for FFIN.
Actionable stance: Maintain a long bias on First Financial (target price $14–$15) with a 6‑month horizon, while monitoring the regulatory docket. Consider a partial profit‑take on BankFinancial (if still trading independently) as the price converges to the agreed $12.60 per share, which represents a ~10% premium to the current market price but a fair sector‑aligned multiple.