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re: Stocks...
Posted on 5/5/10 at 10:28 pm to RedStickBR
Posted on 5/5/10 at 10:28 pm to RedStickBR
quote:
I know what you're saying, and realize that usually you'd be correct. That being said, this bank is trying to attract customers. Thus, an increase in interest rates will actually HELP them.
That sounds like they're stretching the issue to me. Rising interest rates = rising cost of capital = higher interest expense. People refinance when interest rates are low. Refi = more income. People don't refi when interest rates rise. They're stuck with a boatload of low[er] interest mortgage loans and high[er] interest expense on various capital sources. I am generalizing that to banks as a whole, but considering they are already hampered in increasing revenue due to the C&D, I don't see why they would be any different. Maybe Russian will provide some color, he's obviously the best source for this.
ETA: FWIW I don't expect that to be an issue anyway, as I doubt the Fed raises interest rates any time soon (for precisely the reason mentioned above).
quote:
As to the cease and desist, does that usually mean they're automatically "toast", as Russian put it. I see in their most recent 8-k they've elected 7 new directors, which was one of the requirements of the cease and desist order. Is this just smoke and mirrors?
I have no idea, I just know the C&D is requiring them to raise their capital levels pretty heavily from their current levels, and that that order has been outstanding for awhile.
This post was edited on 5/5/10 at 10:29 pm
3
Posted on 5/5/10 at 10:33 pm to kfizzle85
I need to look into all of this further. My initial comments were the result of just a quick scan through the 10-k. I haven't given the thing my full consideration yet. Thanks for the insight. I have a lot to learn about the banking industry.
1. I certainly need to see what they mean w/ the interest rates.
2. I need to check up on this C&D order and find out whether they'll be able to comply or not. From your observations re: their capital levels, they have their work cut out for them.
I'm going to dig some more over the next few days. Thanks for the input both you and Russian. My DD is no where near complete for GRAN yet.
1. I certainly need to see what they mean w/ the interest rates.
2. I need to check up on this C&D order and find out whether they'll be able to comply or not. From your observations re: their capital levels, they have their work cut out for them.
I'm going to dig some more over the next few days. Thanks for the input both you and Russian. My DD is no where near complete for GRAN yet.
This post was edited on 5/5/10 at 10:34 pm
Posted on 5/5/10 at 10:33 pm to kfizzle85
And to be fair, they could benefit from rate increases, if indeed their asset/liability structure is such. I didn't look to see how much of their liabilities were from deposits, and I don't recall whether they broke out the types of loan (arm vs fixed). I was just looking at it generally, and it looks like something that's about to get taken over.
Posted on 5/5/10 at 10:35 pm to RedStickBR
Yeah, I would've liked to dig a little more, but I am worn out (watching SA/PHO and I have barely touched my google reader, 990 items 
). Last exam tomorrow, then going to Destin for the weekend for a bachelor party. 
Come back for the home stretch for the CFA.
). Last exam tomorrow, then going to Destin for the weekend for a bachelor party. Come back for the home stretch for the CFA.Posted on 5/5/10 at 10:36 pm to kfizzle85
quote:
it looks like something that's about to get taken over.
Duly noted. I give your words a lot of weight, fizz. This is risky business for sure trying to find small regionals that will be able to shake off this economic climate and prosper into the future. But I think there is a lot of money to be made if you can find a good basket of 4 or 5 of them to put your money on.
Posted on 5/5/10 at 10:41 pm to RedStickBR
I don't disagree, you're just dealing with a relatively unpredictable option from the FDIC. Just looking at it from an outside perspective, I would imagine they could easily justify closing this bank right now if they wanted to. With a bank in such a precarious scenario, you just have no idea when they might decide to do it. They get up to date info weekly (daily?) to make decisions on, you get it once every 3 months. Just saying, the nuclear option could happen at any time with almost no warning. Plus, you're not going to get any buyouts, any vulture investors will just wait for the asset sale and FDIC loss guarantees.
Posted on 5/5/10 at 10:41 pm to kfizzle85
Sounds like you need a break. Keep us up to date on how the CFA prep and then the actual comes along. I'm always up for shooting the shite on here late night. You know you're getting old when you can't remember the last time you've been to a bar.
I finished up today. Topped the semester off with a nice Income Tax II exam which, mind you, covered about half of what we covered in class. The remaining was virtually unheard of during the semester, and was apparently a test to see who can best maneuver their way through the code book. Gotta love that eh. Unfortunately I get no break ... yet, at least. I know this sounds sad, but my highlight this summer will be when I actually get to study for the GMAT. That's a short step up from working.
I finished up today. Topped the semester off with a nice Income Tax II exam which, mind you, covered about half of what we covered in class. The remaining was virtually unheard of during the semester, and was apparently a test to see who can best maneuver their way through the code book. Gotta love that eh. Unfortunately I get no break ... yet, at least. I know this sounds sad, but my highlight this summer will be when I actually get to study for the GMAT. That's a short step up from working.
This post was edited on 5/5/10 at 10:44 pm
Posted on 5/5/10 at 10:45 pm to RedStickBR
Yeah I think we start summer school like the week after the CFA. It was an awful semester, I knew that going in. Starting a new internship/job, school every night for 3 hrs, plus the CFA, while trying to maintain some semblance of a social life.Let's just say I'm looking forward to being able to play MLB The Show 2010 for the first time...which I bought in March. Ha. August is the likely end of a long educational journey for me.
Posted on 5/5/10 at 10:55 pm to kfizzle85
Yeah I put in a full 15 hours of class this semester. On top of that, I put in about 20-25 hrs/wk clerkship. Then, I still squeeze in actively managing my own portfolio and about two others to boot. Social life is starting to slip away. Sad part is I'm too busy to even care. If I could slow down for long enough, i'd have time to actually be pissed about it.
This post was edited on 5/5/10 at 10:56 pm
Posted on 5/5/10 at 11:00 pm to RedStickBR
No way I could do the constant monitoring of a portfolio right now, but that's not my style anyway. I don't have enough money anyway. 
Posted on 5/5/10 at 11:34 pm to kfizzle85
I went searching but couldn't find it. Someone was pumping this company on here a year or so ago. LINK ][LINK]
quote:
The press releases fraudulently exaggerated the demand for pre-soaped sponges by referencing millions of dollars in sales orders, business, and revenue from five primary customers that purportedly accounted for 99 percent of Spongetech’s business, yet none of those customers actually existed.
Posted on 5/5/10 at 11:43 pm to kfizzle85
Haha, yeah I remember that company quite well (they had a billboard on I-12 near Sherwood Forest). They also had advertising space behind just about every home plate in the MLB.
Posted on 5/6/10 at 6:36 am to RedStickBR
quote:
In a decreasing interest rate environment, our net interest income will tend to fall, and in a rising rate environment, the reverse holds.
Am I just reading that entirely wrong?
Rising rates will improve a bank's net interest income. Falling rates decrease a bank's net interest income. Assuming all else remains the same. It's a mathematical certainty. Unfortunately, the increase in NII might be offset by the increase in loan defaults as higher rates make repayment more difficult for some borrowers.
This post was edited on 5/6/10 at 7:36 am
Posted on 5/6/10 at 7:18 am to LSURussian
I noticed that SORL is reporting on the 14th. I'm fairly certain they were supposed to on the 10th. So they are pushing it back? Am I putting to much stock into that? I remember you saying companies don't want to delay good news (ex clrt) and will push back bad news.
Posted on 5/6/10 at 8:09 am to LSURussian
Thanks. I guess I mis characterized that somewhat. I should've been referring to yield curves instead of explicitly to interest rate levels. It was late.
Posted on 5/6/10 at 8:15 am to RedStickBR
quote:No, it's not automatic. I don't have the statistics, but I'm pretty sure most banks who have been put under a C&D don't go under.
As to the cease and desist, does that usually mean they're automatically "toast", as Russian put it.
I was referring to the delay in earnings announcemnt being blamed on the bank examiners on site performing a safety and soundness exam. That means the examiners are pushing either for more reserves or more write downs.....or both.
I'm not sure that bank has the capital to withstand either of those of any magnitude.
Posted on 5/6/10 at 8:16 am to kfizzle85
Posted on 5/6/10 at 8:27 am to LSURussian
quote:
No, it's not automatic. I don't have the statistics, but I'm pretty sure most banks who have been put under a C&D don't go under.
I was referring to the delay in earnings announcemnt being blamed on the bank examiners on site performing a safety and soundness exam. That means the examiners are pushing either for more reserves or more write downs.....or both.
+1
Posted on 5/6/10 at 9:48 am to John Merlyn
Nice discussion on the fundamentals side of GRAN. It does appear to be a high risk/high reward candidate. Again, this thread continues to educate.
Posted on 5/6/10 at 10:50 am to LSURussian
Russian handing out free lessons like candy. Thanks very much. Everything you said makes perfect sense.
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