Is This Regional Bank's Stock a Buy After Its Latest Acquisition?

Great Western Bancorp (NYSE: GWB) based in South Dakota surprised many investors recently by announcing that it had agreed to sell to First Interstate Bancsystem (NASDAQ: FIBK) based in Montana, a deal that will create a $32 billion asset institution. The sale was surprising because Great Western had only hired a new CEO at the start of 2020, which usually indicates the bank is not interested in selling in the near term. But with credit issues to work through and a challenging revenue environment for banks, it looks like management and the board think it's the right time to sell.

With First Interstate Bancsystem adding another $13 billion in assets to its operation and becoming one of the largest banks in the region, let's take a look at how Great Western adds to the bank and whether First Interstate is still a buy. 

First Interstate is traditionally a strong-performing bank stock. Prior to the acquisition announcement, the bank traded at more than 200% to tangible book value (TBV), which is a bank's equity minus goodwill and intangible assets, and represents what a bank would be worth if it were immediately liquidated. That's a strong valuation. Since the acquisition announcement, however, First Interstate's stock is down about 9%.

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Source Fool.com