Not a great quarter. If you net out the sale of loans and the reversal of the mortgage servicing right impairment then they are on par or slightly below last quarter. ROE sucks. Deterioration of NIM. Chargeoff ratio increased to 1.56% Increase in past dues and non-performing loans. They appear late in getting there loan portfolio problems identified compared to other banks It makes you wonder how many more suprises will develop in 2011 that they don't have identified yet. Stock is adequately priced at a 15 PE. Not much room for stock appreciation until FIB's financal performance improves. The big question is when will that begin to happen.
The main difference is that they show a gain of $3MM in impaired servicing rights vs. an expense of $2MM in the 3rd quarter. Otherwise earnings would have been slightly worse than the 3rd quarter.
Total non-performing assets went up from the 3rd quarter. The best news may be that potential problem loans dropped by about $40MM. Maybe the metric to watch is non-performing assets + potential problem loans. That total fell for the first time in a long time.
They seem under reserved vs. most banks I look at. Loan loss provision is only 57% on non-perfoming loans. That may be adequate, but I see some banks with that over 100%. The bottom line is that they probably will have high loan loss provisions for the forseeable future. That will keep earnings and ROE on the low side.
However, buying at close to net tangible book, there probably is not a huge amount of downside as long as they can keep earnings positive. I am hoping that an economic recovery will start to help with their loan quality, and earnings will eventualy improve. I think patience will be required though.