The following is per the press release:
"The Treasury no longer has any equity interest in the Company as a result of the Company's repurchase of the warrant. In June 2012, the Company repurchased $5 million of the $17 million in preferred stock originally sold to the Treasury in 2009. In April 2013, the Treasury sold the remaining $12 million of preferred stock at a private auction to entities unrelated to the Company."
The 112 Million of TARP funds are still outstanding . I believe what was repurchased were the Warrents to purchase GFED stock. The interest payments are still due and if not repaid by the end of January 2014 the rate will increase to 9% The 12 Million needs to be refinanced or paid off before they can even think about dividends It may still be down the road aways
In the Q1 earnings discussion the increase in non-interest expense was attributed primarily to $231,000 loss on customer accounts. That is not a loan loss but a deposit loss that the bank is obligated (?) to reimburse. Unless it represents an unauthorized investment gone south, I can't figure out what it means. Any ideas?
So if I'm reading correctly, TARP is now gone, and no more TARP payments? Should help earnings..still look mispriced by about at least 30%, may take a position here...as things starting to look stabilized at GFED and management seems to be following up on promises.
Sentiment: Strong Buy
In banking, as in insurance, you really never know about the next blow up. It's a percentage game that some play well, others don't. But you never know in any given time.
You can fault Burke of not forthcoming on a few occasions and on a few blunders, but the theme for investment does not change.
It has book value 50% above current quotations.
Its credit problem is receding.
The turn off for me is the lack of earning power. Pretax, pre-provision operating income was stuck at 1.1% on asset, way bellow peer average of 1.7%.
The bank held on its interest spread by lowing interest cost. It held down expense too. What it need is to make profitable loans. Easy said than done.
Not exciting enough to buy at $10 per-share for sure. I still don't see how some of the multi-million dollar fraud loans from last year got swept under the rug without seeing any major charge-offs since then.
I have serious reservations about GFED because I have a hard time trusting anything they say. I would be far-far more likely to buy here if they canned Burke. On paper it looks fairly attractive, but you never know what disaster is lurking just around the corner with GFED.
Pretax , pre-credit, was $1.35 million. Much is left to be desired.
earnings, after 20% income ta and preferred dividends, was $0.25 per share
However, book value went up by $0.15.
I did not look at it close. Nothing strikes me as exciting.
Tired, Many banks use a preferred issue to pay off TARP. As most on this Board knows, GFED's TARP will reset at, some point not far from now, at 9%. If GFED can sell a pfd. at say 5%, it is a good deal for the entire bank.
Word on street is that GFED has been looking for investors in preferred stock to pay off TARP. I guess it would be a good thing to payoff Treasury. However means someone else gets paid dividend before common stock holders. What does everyone think the long term effect will be? I think they should be looking for a buyer, but Burke and others would lose their huge paychecks. Not going to happen.