Have Acquirers Been Paying Too Much for New Customers?

When one bank buys another, one of the first things investors want to know is how big a premium over the market price of its stock the target is receiving.

A big premium means an instant bonanza for many shareholders. The chance to take part in this payday is big reason so many have flocked to bank stocks.

But if premiums benefit shareholders of the target bank, what does the acquirer get?

Premiums essentially mean the buyer is paying big for access to households it didn't reach before, observes John B. Moore, a bank analyst at Morgan Keegan & Co., a Memphis brokerage. And viewed through this prism, premiums that banks are paying per household these days …