What amounts of charge off's do you expect to see from the 2 loans from the q2 report?
The thing that's really questionable is the 6.5M dollar loan secured by stocks and commercial real estate. I question if GFED will ever recover a nickel from that loan other than whatever the real estate was worth. If even half of that loan ($3.75M) was secured by stocks, the losses could wipe out a years worth of profits. What if $5M of the loans collateral was embezzled though? They didn't say how much was real estate and how much was securities.
At the shareholders meeting Burke said things were doing great except for 5-6 large individual clients. We've seen 3 come out of the wood work in the last 2 quarterly reports. I wonder what other skeletons are lurking in the closet?
I don't think Shaun Burke needs to be running the show anymore. $300-400k dollars a year is a big paycheck to be making reckless loans to tycoons that were probably just getting an insurance policy if their stocks shot craps.
You "think" Romney may be more business friendly? Is that a question!
Shortly after the election in 2008, I thought Obama being the best choice in that election was debatable, it didn't take long for the debate in my mind to be settled. Fast forward to 2012, it would nearly take the threat of me being sent to a Nazi death camp for me to consider voting for Obama. I am pretty conservative and voted for McCain in 2008, but my position is that the 10% on the far left and the 10% on the far right get all of the coverage, and the 80% in the middle suffer while the 20% complete idealogues fight to the bitter end over every simple issue. I say, pass Simpson-Bowles, put some certainty into the market and let the American economy and people do what they do.
I think Obama may have been the right choice 4 years ago, that's debatable, but I don't think we need any more democratic policies in place for now. It's my view that corporate taxes need to be lowered and Republicans will try to accomplish that goal. America pays the highest corporate tax rate in the world, and that's why multinational companies do not bring money or jobs back here. I believe the tax rate on repatriated overseas profits is as high as 50%. It's absurd.
If Obama wants to crank taxes even higher you'll see more and more "one percenters" just decide to leave the country. This is not the American economic and social system that rose to lead the world in economic output and ingenuity, and there are plenty of people here that are beginning to realize that it may not be the greatest environment to be rewarded for your hard work and prudent course in life.
The democratic policies need to take a rest for a while. I don't like Romney that well, but I think he would be more business friendly.
I agree, I think managing expectations is the key. GFED has come a hell of long way in a short time, however I thought they would be further along the way at this point. But I still believe they have $2+ per share annual earning power in a decent market, and we will get there. Let me set my expectations again, I believe the time frame for this is a year to a year and a half with a Romney White House and GOP congress. Uncertainty is killing everyone in all business dealings, "change and hope" are needed. "Hope and Change" has not worked out so well for us.
I think in 2-3 yrs from now people will be happy they held. I think in the short term we should stay in the $6-$8 trading range. Seems like liquidation of retail traders are slowing up, only 1,000 shares today. Should hold $6.50-$7.50 range for a while.
GFED may have shown $52k in charge off's for the quarter, but I'd expect that the portion of the $6.5M loan that is secured by investments will not have a good likelihood of being recovered and result in a big charge off at some future date.
GFED has begun to provision early without a doubt, and we may have already seen the brunt of the earnings weakness by the large reserves set aside in Q2. Operationally I think things will work out well over the long term. I think that the best thing you could call the origination of that loan would be a momentary lapse of reason.
I sold about 5 grand worth of GFED to pay my credit cards off, but that's insignificant. I see some other local stocks that look more attractive though right now. (Peabody Energy is a screaming buy right now in my opinion)
I apologize for the rant yesterday. GFED is still a great stock, but I've just been shocked at a time when I thought things were finally in the clear.
I was very disappointed as well with the quarter. Couldn't agree more on the credit quality issues. The bank is going to have to aggressively deal with this as it happens. Some pickup in the economy would take a lot of pressure off of this area as well.
Buffet, I have not sold one share and have a very sizeable position. I am not planning on selling. I am extremely dissapointed though.
I find it very hard to believe that they would be adequately reserved for the $6.5 million loan and receive all of their principle back on the TDR, but I guess anything is possible. I'm not necessarily knocking on management overall, but I think as well as they have done operationally running the bank, there must be some stricter controls on credit quality issues.
Why wouldn't they mention how much of it was in securities and how much was secured by commercial real estate? What if the majority of it was collateralized by that security portfolio? I don't know because they didn't say, they should disclose this.
They have provisioned well which I am happy about. Overall, I think the bank will make it, but with what has come out of the woodwork it seems to me they are farther out than expected from really gaining control and ending these larger loan blowups and credit issues.
Could you imagine if they got their NPA's in the 2-3%. At this point of the credit cycle that is what I was expecting. I've seen plenty of small regional banks running this 1.5-3% NPA levels
Regarding the rest of the posts. I believe the loan in question regarding the embezzlement of securities, etc. should be under significant scrutiny on how the fraud on the borrower and GFED came to be, and I believe it is. I am sure that it is personally guaranteed, which could or could not mean anything. Due to the small chargeoff, as noted in my last post, I believe GFED feels that they are adequate reserved for this credit. Regarding the other loan mentioned that was a Troubled Debt Restructuring, I believe the bank will receive all or nearly all of the principle outstanding. The reason I say this is that banks are very impatient regarding loans that are underwater or that the borrower is not adequately performing, and are very quick to foreclose in these instances.
I have a lot of faith in the management and the board of GFED and them doing the right thing for the shareholder and the overall health of the bank. I would not have made an investment the size I did if I thought otherwise. There is a lot of speculation and worse case scenario going on in this string, however you have to realize this bank is very well provision compared to most, 2.7% of loans outstanding. When things went south in 2008, this bank provisioned early, often and very strong.
From the posts on this string it appears that no improvements have been realized in earnings, fundamentals or share price, when in fact vast improvements have been realized in all these categories. I would support a buyout or the exploration of a buyer but not at anything the price of $10, if the price approached the upper teens then my interest may be piqued. You all can dump if you want, but I think you will be very sorry in a year.
Regarding Chris's original question, the net chargeoffs can be calculated from the earnings release.
Last Quarter's ALLL $10,974
Current Q's Prov +$2,100
Current Quarters Alll -$13,126
Net Chargeoffs -$52
Operationally the bank knows what they are doing and have done a great job of getting their net interest margin up. These npa's and credit quality issues keep seeming to pop up out of nowhere. It may now be in the best interests of the bank to shop for a suitor at the price of around $10. It would make sense for the acquiring bigger bank as they would be able to absorb the bigger losses yet gain a good frintprint and operation