With both companies' EPS reports now out, the market is narrowing the spread between the prices of HNBC and FNFG, a vote of confidence in the merger. Roughly, 211 HNBC shares equal 100 FNFG post merger. I double those share counts to squeeze down the transaction costs to calculate the arb. At yesterday's closing prices, 422 HNBC at 5.75 would have cost $2,435 after commissions. Short 200 FNFG at 13.30 would have a credit of $2,623 after commissions and paying out one dividend for an arb profit of $188 on the transaction.

At this morning's prices of $5.84 and $13.08, the arb profit is $106 for the same trade. That is a significant change in the spread and a vote of confidence from the arbs that this deal is on track to happen at the current merger terms.