I have owned this stock for ~10 years. My take is that this bank grew very quickly over that period and was in a period of consolidation when the crisis hit. The biggest mistake that I saw was that management was less than forthcoming concerning the nature/extent of its bad loan portfolio. All the banks tanked......BXS just delayed the pain. That being said, I believe that the defensive positions (ie dividend cut, branch closings, etc.) are appropriate given the charge off's. I love the sell low mentality though. Only two reasons to sell IMO are if you need income or if you are skeered. The reason this bank did well was because of a good product and smart acquisitions. Once this crisis and recession are over, the bank should be well positioned for growth again........or it could go to zero tomorrow. Ahh, the joy of owning an individual stock.
Nearly your entire "understanding" of the situation is inaccurate. BXS is known, and was commended, for its stricter than average loan underwriting. The problem is one of regionality and timing.
Most of the large banks that took massive losses in 2008 did so because their loan portfolio was so weak that it only took a little push to send them over the edge. They all "took their lumps" at the same time and amidst a widespread crisis. When bad news is knocking on your door, you don't want the neighbors to notice. And it's a lot easier to go unnoticed when bad news is knocking on everyone's door at the same time.
BXS, on the other hand, had minimal write-downs during the recession. They weren't teetering on the edge like so many others. The problem is that most of those other banks had a D- portfolio and all the crap loans were washed out quickly and early. BXS had a B- loan portfolio. Unfortunately, unemployment has remained higher than average here in the South and real estate values in areas such as Texas are recovering at a slower pace than most of the rest of the country.
In the end, BXS withstood the financial earthquake of 2008 much better than most of its peers. However, it is the sustained and prolonged aftershocks of that storm that are starting to shake the foundations of the company. Couple that with the fact that the media has no other banks with which to focus their attention and it's easy to understand why BXS is having difficulties. There has been no indication of, implication of, or investigation into their having deceived the public about the quality of their loan portfolio (as you assert).
As for me... I have clients with a combined 50,000 shares (give or take). Our advice has been to hold if your goal is capital appreciation and sell if you depend on the dividend income.
All loans in a banks portfolio are risk rated. Bxs knew it had problems in 2008 just like everyone else. Their hopes were that a quick turn in the economy would bail them out. Obviously it did not. Mgt. Gambled and lost. Also when you are as spreadout geographically as willynilly as they are it is hard, if not impossible, for senior mgt to keep up with all the risks.
I am happy not to be a client of yours and I feel for those that are. You really do not have a clue what you are writing and voicing your opinion about. The reason BXS had "minimal write-downs during the recession" is because they chose the "Pray and Delay" strategy as opposed to realistically addressing their problem assets. This is rather obvious from the sudden impact on earnings, dividends, etc. once their devious strategy was unearthed by the regulators and outside accountants. The advice you indicate that you have given to your clients is simplistic, without merit, and more along the lines of "I gotta hunch"
Wow. OK. To kastnna:
Where to begin. Well my post, which you so grossly misunderstood and are misrepresenting, was meant to be from the perspective of a small shareholder of this stock pertaining directly to its actions since the start of "this crisis". I didn't say, "the financial crisis, the derivative debacle, the credit crisis, sub-prime loans, etc.". I WAS referring to the Main-Street crisis (local economies/unemployment/loans/etc.). This company has been showing (or not showing depending on your perspective - see later link) serious problems on its sheets since late 2009. Over the next year or so, things obviously got worse. My concern was not these problems (ie the changing financial fortunes of BXS), but the apparent lack of action for a full year, followed by the precipitous free-fall of this stock's dividend. I think that they gambled that the economy would bounce back well, which is confounding when the facts bear out that only robust economic recovery would have allowed for the realization of such upside (and overcome such strong headwinds). Just my opinion mind you.
You say that,"In the end, BXS withstood the financial earthquake of 2008 much better than most of its peers." I would argue that this is obviously not the case (hence the delayed the pain statement). But hey, your the adviser, right? My contention would be that not only did they not weather the storm that started in 2008 and led from wall street to main street, but they could have better handled the descent (no change in dividend for over a year>>>>>95.5% plummet in 3 months). This made a lot of loyal/long investors (including this one) jittery. And you don't have to be the only story on the block to garner negative media attention with that sort of altitude loss that quick.
As to your "assertion" (I think YOU meant to say implication[implied] here) that, "There has been no indication of, implication of, or investigation into their having deceived the public about the quality of their loan portfolio (as you assert)", you are again mistaken.
Apparently, some people disagreed with YOUR assertion. I point this out, not because I agree or even care about the case, but because it shows that speaking loudly or meanly does not equate with speaking factually. Hey, who knows, maybe some of the complainants were/are clients of yours.
Finally, I love that generally our views concerning BXS are the same and that your concluding recommendations are exactly the same as mine (ie to hold unless income is needed). Hey maybe I could be an adviser. Nah.....too much job insecurity (that passive thing is probly a game changer) and a tad unscrupulous for me. Maybe a lawyer ;-).
My family has held BXS since a couple of our local banks consolidated which was longer ago than I care to remember - maybe the earlier 90's? It never substantially increased in value, nor did it substantially decrease. I would agree with the message that says keep it for capital appreciation but sell if you need income. However, that capital appreciation may be a long time in coming. Because the dividend was so good, this stock was more like a bond. The yield was better than anything else going and seemed safer than most types of investments. It is about half the value it was a couple of years ago, so how long are you willing to wait to see it double in value and how likely is that in the foreseeable future?
I continue to read more banking industry conclusions & hear more banking analysts' comments on the fact that banks need to consolidate due to the increased cost of regulation compliance.
These banking CEOs remind me of a sow & her piglets. Once the larger, stronger, piglet(management) gets the largest tit, it will fight with all its might to get its fill without regard to the smaller, weaker piglets(shareholders).
Even in a combined state, BXS & TRMK would still be small by today’s standards. I was just hoping that such combination may enable MS to hold onto a bank of sufficient size to offer MSians a “home town” alterative. But, when greed enters the equation, everything else is secondary.
You make several interesting points, but some of your conclusions don't really tell the whole story. You believe that the biggest mistake that management made was not being forthcoming with the loan problems. While I agree that this was/is a problem, the biggest mistake that management made was concentrating the portfolio in poorly underwritten speculative construction and development real estate loans. They compounded the problems by failing to recognize declining values and diminishing prospects for collection. And, while you state that "All The Banks Tanked", the fact is that very few banks in Mississippi are in bad shape and only the Cadence and M & F shareholders suffered worse over the last two years than those holding BXS stock. Also, you attribute the success of BXS to smart acquisitions, but can you name a single acquisition that was acquired at a reasonable price and has positively impacted the banks overall health and provided anything other than a temporary boost to the share price?
First, I would like to thank you for your respectful disagreement and counterpoints in response to my post. Refreshing.
As to your query, I can't name any specific acquisitions that were positive. Heck, I can't even tell you the actual value (in dollars) of any of the acquisitions.
As I said, I started following this stock in 1998. Since that time, the company has diversified geographically (bank merger/acquisitions in TN, MS, AR, MO, IL, TX, AL, and LA) and added new income streams (insurance/brokerage). I guess my point was that their growth/acquisition plan seemed sound to me (a lay investor).
I guess the question of how smart they are/were is somewhat relative. If the acquisitions/mergers occurred in the decade preceding the '90's, we'd be calling them geniuses. Unfortunately, they did not.
Regardless, I like their response, which seems to be to trim the fat given the new environment/reality. If you're interested, here is cool interactive time-line for the acquisitions/mergers:
Enjoy and good luck to all.