I thought you might like to know that GFED has been raised to "Buy" at Jaywalk Consensus. This is based on a ratings average with 5 analysts covering the stock.
Totally understand on the earnings/revenue guidance, but I do believe shareholders should expect some guidance from management and the board regarding major issues facing the company and their strategy to deal with such issues, currently the major issue is TARP and the worry from investors regarding the potential of dilution. From the last two annual meetings they have discussed this and that it is their intent to retire TARP with minimal to no dilution, but outside of that forum management has not conveyed that in any public material that I have seen. And I agree with others on this message board that this is a really important issue to investors.
Some companies just don't do that though. I've got a few shares of BKE that I've owned for years. They are a conservatively run retailer, and they have NEVER offered guidance that I know of for almost 20 years of public trading.
It's clear that GFED's made a big priority of cutting interest expenses by paying off 40M worth of interest bearing liabilities over the last few months. They were able to strengthen their capital ratios while they were paying off those debts. I'd expect preferred stock will be one of the next priorities.
I find it hard to believe that a reasonable statement about forward looking views from management regarding the next twelve months at the annual shareholder meeting or in a press release could be a legal liability. I am a little tired of that excuse, when I hear of other public comapnies every day issuing forward guidance regarding revenue and earnings. I believe shareholders should EXPECT some guidance, at a minimum of once a year, some guidance as to managements expectations of the coming year. The primary concern of GFED shareholders at the current time is the disposition of TARP, and that it will not be a dilutionary effect on current and existing sharholders. I believe with the current capital ratios and earnings potential that hopefully management will be more candid in the near future eith their intentions and expectations with shareholders.
I think they are probably a little leery about making any forward looking statements that could create a potential lawsuit liability.
I think that actions speak louder than words most of the time. If GFED made ANY repurchase of their preferred shares, that would be massively reassuring to the market.
I also agree the large insider interest in this stock will help to keep stock price at the forefront of their mind. You also have to consider that once the bank stock is above book value they have other options to expand by issuing stock to fund expansions, acquisitions that will be accretive to EPS, etc. I believe management couldn't be more motivated, both personally and as a company, to get common share prices above book value.
It seems I am ever the optimist on earnings, but we are already at 1.12 EPS TTM with two not so good quarters in that calculation. GFED is still good for 0.40 EPS per quarter with flat loan balances, if you can get some loan growth and eliminate TARP they can produce 0.55 to 0.60 per quarter.
I agree that TARP, and the way the bank management deals with it is the key to investors having the confidence in the stock. They have not addressed in any public fashion, that I have seen, their strategy to deal with TARP. However in my knowledge of the balance sheet and their earnings potential, I think it would be silly to assume that they will do anything but pay it out of bank capital and earnings. It would be nice though if they would come out and say that it is their intent to do that and allay any fears of dilution to the existing and interested investors. If they did do an offering of stock at $8 that would add 2M+ to the share count of 2.7M. I know it would be ridiculous for them to consider this, but to the investor that hasn't spent time following the stock and it's progression could very well feel that dilution is possible.
I hope that when they do act on TARP they further address the issue that it is not their intent to use a common offering in any future payoffs to TARP.
I think the board of directors and inside management are too heavily invested in the common stock to do anything that would hurt common shareholders. Insiders have also continued to purchase the stock at market price, so I think that's a good indication they keep the price of the common stock as a priority.
It's hard to watch the slide given I have bought as high as 8.75. However I will load more if it gets in the 6s. I think that first quarter really deflated some retail longs hopes. I think gfed is still capable to make 1.20+ this yr.
Gfed management needs to address their TARP plan to give clarity as to how it will effect share price. If they can pay it off almost all with capital and earnings the stock should drastically increase in no time. It's the one thing holding the stock back. No one wants to see a stock offering, and retail longs may be nervous given how wreckless other small banks have behaved in handling shareholder value.
I think gfed management wants to do it the right way and will.
It sounds like GFED should be capable of essentially mitigating thier risk of an interest rate increase on their preferred stock immediately, or within a matter of weeks at a worst case. It's aggrivating to see the stock taking another slide. I feel like polyanna talking about the positive aspects here, and it seems like there isn't anyone out there listening.
I guess if value investments were popular, then value investing wouldn't have ever been successful because the buying opportunites wouldn't have come into existence. This stock is impirical evidence that investor psychology has not changed one iota since Warren Buffet was young. The times have changed, but people have the same emotional tendencies that they have always had.
The question is, how aggressive will they get in paying this out, will they do a 1/4, 1/2 or 3/4 payoff when they do it. We shall see but from my vantage point, TARP has to be the next consideration.
The $15,465,000 in subordinated debentures also qualify as capital, even though they show up as a liability to the company.