The 12/31/2004 balance sheet for TONE is virtually the same as today. $15 book value/share vs $14 today. It has approx $300mil more loans and offsetting customer deposit liabilities than in 2004, but virtually the same equity, so the market is telling us that the earnings power is nill. I have every confidence that management can get back to keeping expenses in line based upon todays net interest income (interest income less interest expense to depositors).
A big tell sign of a business is when cash flows from operations on the "statement of cash flows" is negative. It has not been negative in any year since the business went public.
This bank at 3/31/09 had a book value of $14 per share with NO long-term debt. I can't believe that the market would put such a big discount on the banks loan portfolio that any further reductions would wipe out equity. Does the market really believe that the OTS is going to take over a bank that has no outstanding long-term debt? The bank hasn't issued any additional stock to cushion capital either. From what I can see the bank is addressing its loan portfolio with the help of the OTS, has written off all its intangibles in 2008, and has closed all the loan production offices that caused the main loan writeoffs in the first place. So all the bank is left with are the loans that are continuing to pay decent interest.
This bank is better capitalized than Citigroup, but Citigroup trades at a much higher multiple.
Why unload now at the bottom. The stock is trading listlessly. the only reason it went from 2.20 to 1.97 is that there are no active buyers or sellers. Someone sold 20K shares a few days ago and it took till 1.95 or so for the order to fill. When the sell orders go out the price drifts down too much waiting for someone to cover and buy the shares. That was why we had the big drop last friday.