Bank stock specialists Keefe, Bruyette & Woods has some significant analysis on UCB’s initiative. KBW estimates this expansion will cost a few pennies in earnings for this year because of start-up expenses, branch openings, and the natural lag time between hiring people and their bringing in business. Within three years, however, this expansion will add about $.08 to $.11 to annual earnings.

Stated another way, for only about a 2% hit to earnings near term, UCB is loading up about 7% or so of accretion to earnings a couple of years out. Moreover, the amount of this accretion will only grow as the Gainesville operation continues to expand and matures.

The discounted value of this annual accretion, according to KBW, adds about $1 to UCB’s franchise value immediately.

This estimate is conservative, in our view, because of an element impossible to quantify but real nonetheless. Companies like UCB which have the “halo effect” necessary to attract 50 bankers at a pop are by definition able to attract other experienced producers which in turn add to franchise value themselves.

None of this excites Wall Street, of course. We stand to be corrected, because we don’t stand around the sell-side research water cooler all day long, but we’ve seen a grand total of three comments on UCB’s Gainesville expansion. Mind you, United Community is (ostensibly, anyway) covered by nine Wall Street analysts.

This reaction is typical. Wall Street invariably pays a lot more attention to acquisitive companies and their targets than to companies focusing on internal growth and smaller, “bolt on” acquisitions. The former is much more profitable for Wall Street (think underwritings, M&A advisory fess), while the latter is significantly more lucrative for shareholders.