Stephen Frankola sends: I bought 100 shares of National City (NCC) after-hours today as rumors about a possible buyout surfaced today.

Apparently, both Fifth Third (FITB) and KeyCorp (KEY) may be eyeing National City. Fifth Third covers basically the same geographical area (Midwest/MidAtlantic) that National City does, [theoretically] making a merger much easier. KeyCorp is another regional bank, but its presence is heaviest in the Mountain states. One could argue that NCC could give KEY an opportunity to expand into a new market; others may argue that it would just complicate KEY’s current business.

Anyway, I don’t expect any bidding war, but with two potential suitors, I think that National City will fetch a good price (if a deal is reached). I bought in at $9.77; I’d expect a deal to close in the $12-15 range.

I don’t see too much downside; sure, banking is dangerous (especially when your assets are the mortgages of blue-collar workers), but NCC isn’t a Bear Stearns (BSC). The analysts/speculators commented that a deal may be completed before NCC reports later this month; there seems to be potential for a very quick turnaround.

As any regular reader knows by now, my risk tolerance is high. I’m buying this on a feeling, more so than on tangible, actionable information. However, I bought CIT below $10 on gut feeling about a week ago, and that has turned out pretty well - if NCC doesn’t work out, maybe it’s just my karma.

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