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TierOne Corp. Message Board

  • follyfullnut follyfullnut Sep 10, 2009 8:56 PM Flag

    Book Value increase after Dec 3rd?

    Will book value increase after the sale on Dec 3, 2009?

    I was looking at some calculations...additionally 300 employees being transferred to buyer..another 12 million in savings per year...$40k per employee time 300...would increase cash flow. D/E ratio goes down....P/B for Bofa is 1.6....

    Do you think there is some room to grow share value here?

    Out of Florida...just a few projects left in Las Vegas.
    Unemployment in Neb is only 5 to 6% compared to other states!

    Farming is solid.Ethonel on the way back as oil rises...
    Steep yield curve helps banks.

    Thoughts from the board...please be intelligent.

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    • You are correct, ATSG is not a bank. But the principles remain the same. If your liquidity cannot meet your obligations you're going down. The only difference is the entity that shuts you down, the path to that shutdown is basically the same whether a bank, air transport, or a candy company.

    • Yeah but I'm sure the company you are describing is not a bank. Banks on the brink get shut down by the FDIC...so your analogy is completely irrelevant.

      BTW - I did the same thing with IEC.

    • Y4buymore is fear mongering basher who tries to plant false seeds of despair. He acts as a spoiled jeuvenile delinquent who just got caught with his hand in the cookie jar. Anyone with half a brain can see through that veil. At least Voodoo is pointing to what he believes are legitimate possible concerns. There is nothing wrong with that. It helps allow for a reasonable presentation of opinions and possibilities. Be glad we are only discussing a company stock here and not the reform of health care! :)

    • Hey, no one is right about everything, no one is perfect, I think Buffet proved that. I look at the technicals and make the best decision I can based on those. In this case it is next to impossible to make a clear cut prediction of the results of this asset sale. We all will have to wait to see what the balance sheet really looks like after the dust from this sale settles down.

      I own many stocks and mutuals. Let me give you just one example of the gyrations I have witnessed....ATSG. This company was labeled as a gonner, their asset losses were considered irreversable and their share price plummeted from around 3.50 a share to .12, yes...12 cents a share. People wrote the company off as history. I watched ATSG go through complete reorganization and bought 5 shares for a dollar several times over because I could see the cut in expenses and their sale of assets giving them the window they needed to survive. Now they are trading at 3.39 a share as of close on Friday (9-12). Yes, I have made an obscene amount of money on their turnaround and their future now looks much more stable. I use this example only to illustrate that companies that are left for dead can rise again IF they take the appropriate actions to 1) cut expenses, 2) sell assets to insure liquidity, and 3) return to a consolidated business model that allows stability.

      That is exactly what we are seeing TONE doing at this juncture and that is why I believe you are seeing the market react to this asset sale through the recently rising share price.

      You are not 'bugging' me voodoo and I honestly and sincerely wish you the best of luck in whatever endevour you follow in this squirrely market. As long as people don't spread flat out mistruths, I welcome any and all points of view.

    • I said it before; will say it again. This bank is underreserved. If reserves were adequate, they would not have had to do this deal. All of the loans being sold are performing. They are being sold at a 2% discount (do not know therefore, if they need to include 2% more in gross value to satisfy the conditions). This was not mentioned in the press release but in the sale agreement. So the 5% deposit premium might, in effect be less than 5%. I think there is a big provision bullet coming down the pike. Other banks in similar positions have been forced to reserve WELL in excess of Tone. If this is true, BV/share is not going up, it is going down. Please refute this thesis.

      • 2 Replies to got_the_voodoo
      • Yes, according to the 8K none of the loans being sold are to be in excess of 60 days past due, so I do agree that they would be currently performing loans.

        On the other issue I suspect you read that here:

        "(ii) the aggregate gross book value of the Loans, including (to the extent not reflected in such book value) all Loan Interest, minus an aggregate discount equal to 2.0% of the aggregate gross book value of the Loans (other than the GAP Loans), including (to the extent not reflected in such book value) all Loan Interest, and minus $1,750,000 (as a discount in respect of the GAP Loans)"


        This is not as extensive if you read the part past the 2% where it says minus 1,750,000 .....

        Also keep in mind that a majority of what they are selling is from the UNB aquisition done in August of 2004 at an estimated total cost of 97.3 million. Last year they took a 100% impaired goodwill writeoff of 42.1 million against that very aquisition.

        Now their BV may indeed decline after this deal, it wouldn't surprise me at all. But your call of them being underreserved will become a moot point once the additional capital from this sale is received. It could likely be one of the reasons they felt this sale was necessary....to raise capital. Regardless, their BV after this deal is finished should be considerably higher than the current sp indicates.

        Final thought..... why buy assets at the value they are being sold at (relatively high) if the institution you're buying from is headed for BK?? The cows are much cheaper bought at auction then from the farmer.

      • You say "All of the loans being sold are performing. They are being sold at a 2% discount (do not know therefore, if they need to include 2% more in gross value to satisfy the conditions). This was not mentioned in the press release but in the sale agreement. So the 5% deposit premium might, in effect be less than 5%."

        My question is simple, where are these deal details mentioned or shown in any public info? I'd be happy to discuss ramifications if you could supply a link to this information.