It looks to me like the FHLB credit facilities were extended only because assets sufficient to cover them were pledged to the FHLB. Given that, I don't think much of your argument that no one would extend credit if the bank was going to fail. (Assuming these were the credit facilities you were referring to)
FHLB borrowings represent advances secured by certain portfolio loans and other eligible collateral. Such advances become due at varying dates and bear interest at market short-term rates (approximately 1.58% at December 31, 2011). At December 31, 2011, unused lines of credit under these facilities approximated $123.9 million. Assets pledged to secure these credit facilities consisted of portfolio loans in the amount of $328.6 million and investment securities with a market value of $4.6 million at December 31, 2011. Continued availability of the FHLB credit facilities is subject to the FHLB's review of the banks' credit worthiness.
CBCR held well yesterday in a generally crappy market, even at less than average volume. I suspect there are others that feel the same way I do as to the future of this.
Again, I hark back on my comments on the inrpoving conditions in Michigan.
Nobody would be giving CBCR a $160M credit facility if they thought that CBCR would file for BK or get taken over by the FDIC. The credit ratings of some of their banks must be getting a lot better then we thought.
You may be right that the cheap stock price will be a distant memory in 6 months.
The question is whether it will be a distant memory because the price will no longer be cheap or because the stock will no longer exist.
Q1 was actually better than Q4 if you take out the Q4 litigation gains. Hopefully the bank can continue psoitive trends in Q2 and make some progress on the capital front. I remain long some CBCRO and CBCRP and picked up some more on recent weakness.
The FDIC is looking at the operating banks like Michigan Commerce - not the holding co (which owes trust pref debt). Capital is not declining at the operating bank level.
As for the holding company, they do need to do some type of debt for equity swap to resolve the issues there.
The operating bank numbers (what the FDIC primarily cares about) are on page 44 of the 10Q. Most were about flat from Q4 to Q1. Michigan Commerce increased from 2.17% in Q4 to 2.34% in Q1. The "redline" below which the FDIC seizes banks typically is 2%.
CBCR does need to raise capital and do a trust pref swap. Not much progress was reported in that area, although I'm sure that efforts must be underway that they can't disclosed until a firm deal emerges.
It won't. This baby is going, going, gone. Auto industry wont save it. There are real banks right across the street from every crappy CBCR bank/branch. They will be absorbed (with FDIC help) not bought. There is NO value with the holding company, best I can tell, and I suspect common and TRUP holders will get 0.