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First Niagara Financial Group Inc. Message Board

  • thriftmanni thriftmanni Mar 6, 2013 9:04 AM Flag

    TBV below $5

    I spoke to my source at KBW about FNFG yesterday, and here is what they think of the bank. They told me that KBW calculates TBV of FNFG at well below $5 now. The bank is still reporting it to be higher, but analyst do not accept the banks numbers. Also, the advertising budget of FNFG has been cut drastically, because there is no money left to advertise with. You won't be seeing ads for the bank like you previously may have. The dividend is not safe, and in KBWs view, should be eliminated to conserve capital. The dividend is being paid out from cash that the bank just does not have. The money from the dividend could be put to much better use by using the cash to buy back the preferred shares and to pay down some of the massive high interest debt. The shareholders would benefit much more from this than getting the dividend.

    The bank has also been agressively going after commercial loans, and in KBWs opinion has given out way too many very risky ones in an attemp to boost earnings. KBW sees many of these loans going bad very quickly and at great expense . Also, First Niagara has gone on an initiative to weed out unprofitable customers. Not just smaller customers but high asset customers that the bank does not make enough money off of- mostly because the bank does not have the correct products to offer these customers. The bank feels that it is best to "push" these customers out and to another bank. KBW feels that the bank should look for ways and products that they can offer these customers that the bank can make money on.

    Overall, KBW thinks if you short FNFG, you should be fine.

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    • Damon DelMonte is the KBW analyst covering FNFG. If he is your "inside source," is the info shared with you consistent with the analysis & commentary he has expressed to KBW's clients? If it isn't, that's a problem, isn't it? If DelMonte isn't your source, then how knowledgeable is that person likely to be on a stock that's outside his/her coverage area?

      Some of the comments offered by your source, such as the quality of the commercial loans being made by the bank, simply aren't credible. For example, how would your source know the identities of FNFG's commercial borrowers, and also independently be able to judge their credit worthiness?

      I'm no booster of FNFG. It's HSBC purchase was ill-conceived & has been a disaster for the shareholders. In my view, management over estimated, over promised & over paid. But water cooler speculation about what really is going on within the bank isn't particularly helpful. In the absence of a published KBW report reflecting the negative views which you indicate were expressed to you, I think the accuracy of the information is suspect.

    • Go ahead and short. You can become part of the squeeze when it comes.

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