IF the Fed announces another round of "quantitative easing" in the near future, and there's a lot of "speculation" out there that they will do just that, interest rates will fall even further, which is NOT good for HCBK's already anemic NIM. How long after that will it be until another "restructuring" is announced, adding even more charges against future "earnings"?
These guys have dug themselves a VERY deep hole, and they're going to be fighting a low interest rate environment for YEARS to come. Just some food for thought; let's see what "song and dance" Hermance has to say next week....
Well, it looks like the Fed just moved the goalposts again; now "economic conditions are likely to warrant exceptionally low levels for the federal funds rate AT LEAST through late 2014". 10 year Treasuries are rallying on the news, which means their yield is dropping...again. I'm now thinking we're likely to see 1.65% on the 10 year before we see 2.65%.
Think about it: mortgage rates MUST stay low if the housing market is going to have any chance at recovering. That's what amazes me about HCBK's strategy over the past few years; they've been fighting one of the basic rules of investing: DON'T FIGHT THE FED.
HCBK is likely to just hang in its current trading range for quite some time, unless something drastic occurs. They appear to be in better shape financially than they were a year ago, but the fundamentals of the economy are still working against their business model. Mr. Hermance says our "patience will be rewarded", but I suspect our "reward" will be another restructuring later this year or early next year, which means more red ink.