Stock of the Month for April -- Bryn Mawr Bank Corporation -- BMTC

The stock of the month for April is Bryn Mawr Bank Corporation (symbol BMTC). Bryn Mawr Bank is the parent of the Bryn Mawr Trust Company, a small local bank in the western suburbs of Philadelphia. The area served by BMTC is mainly in the most affluent section of the state of Pennsylvania. The bank is over 100 years old and is and has been quite sound. It had no problems during the financial crisis, although earnings were hurt like those of every other financial institution. It just completed the takeover of First Keystone Bank, a smaller bank which allowed BMTC to expand its branch network to 17 with 7 additional part time locations. There is also a robust wealth management portion of the business which has about 3.4 billion dollars under its control. The company pays a dividend of just under three percent and it has reasonable growth prospects in its earnings.

I have invested in BMTC many times over the years. The stock seems consistently to yoyo between two levels and I have bought and then sold for a ten percent profit repeatedly.

The stock is not the type that I usually label as the stock of the month. There is, however, something new for BMTC that elevates its profile in my opinion: there is a trickle of takeover discussion about the bank.

First of all, Pennsylvania has done better than other old industrial states in economic development in recent years. It has more population and job growth than states like New York, New Jersey, Ohio, Illinois and Michigan. Much of this is due to the development of the natural gas fields located in the large shale deposits under the state. On the whole, this makes banks in Pennsylvania more likely acquisition targets than those elsewhere in the Northeast.

Second, BMTC is not likely to have hidden problems. It weathered the recession without any TARP involvement, had no large loan losses and seems to have a conservative management that has proper reserves for any likely losses. This too is a big plus for any acquiring bank.

Third, with its location in the wealthest suburbs of Philadelphia, BMTC gives access to some of the best banking locations in the state of Pennsylvania.

Under normal circumstances, I would recommend buying BMTC once it fell below $19 per share and selling above $22. Because of the takeover potential, it seems to have become one of those stocks to buy and hold.

Disclosure: I have no current holdings in BMTC although I have been in and out of the stock repeatedly. I may, however, acquire shares in the next week.

Finally, for anyone interested in BMTC, I recommend reading the company's 10-K before purchasing. it gives a much fuller picture of the business of the corporation than is possible in a post such as this.