Action the past couple of days - horrible and frankly makes zero sense based on the information available in the marketplace.
FDIC seizure? Anything is possible, but not likely.
Capital raise seems to be imminent. SNL report, proposal to increase authorized shares, marketplace conditions. More dilution at $2.50 rather than $3.50 or $4. Shorts driving the price down in anticipation of this offering?
Hudson family driving down to potentially be able to acquire more shares. They currently own 35% or so and control the destiny of this bank. If they didn't acquire anything, huge dilution may put them out of the driver's seat - unless they picked up shares in the imminent offering.
Sounds sinister, yes, but families will do many things to protect their legacy.
HARB was bought for $1B+ in stock - SBCF would have needed a $50 price tag to fetch that amount. Perhaps that is what Hudson/SBCF was looking for and to take a 50% discount from a peer in the high times would have looked equally as foolish. In terms of size, regional exposure, etc., SBCF was just about as big as Harbor Federal. Perhaps NCC was dumb in overpaying - but who knows. That's probably what they were thinking in terms of big checkbook.
Assuming management is incompetent, what would you expect to pay competent management of a bank this size? $200k? $300k? $500k may be a little much, but you couldn't pay the CEO $50k or even $100k. So, if the top 3 make $1.5M, maybe the least you could pay someone would be $750k total. Saving $750k/yr. is not making or breaking the future of this bank and the unfortunately, from a salary standpoint, the family rules the roost.
It's not the salaries bringing this down or even the management. There is hardly a bank that has not seen bad results. Certainly, no bank is higher priced than it was in the real estate peak. Furthermore, no bank was totally prepared to weather this storm. Many have failed....most have had to raise capital....most applied for TARP...many received SBCF was fortunate enough to apply and receive the TARP $....biggest for banks with HQ in state of Florida...so that says something.
Operationally, SBCF makes enough $ from fees to pay for salaries, overhead, etc. However, they are taking heavy losses on their balance sheet, write offs, etc. They likely don't make enough to earn their way out of this without a capital raise of some form.
The entitlement may very well exist, but it may also help get the bank get out of this mess, too.
I am honestly just as clueless and aggravated as anyone can be seeing the past few days. But, either this one has a great chance to succeed in a great regional market or it will go to zero and be a lesson learned for me and the Hudsons which everyone seems to have a problem with - doesn't bother me. I hope one day I can have a family business that I call the shots, pay myself what I want to pay myself, etc. Not a fun one, but an affordable one, but looks like this has the chance to be a big win over the long term.
Stock price is important, yes, but banks are meant to pay dividends. Maybe one day, assuming SBCF will survive, they will pay a $0.25/year dividend (about 1/3 of dividend at their peak and may equate to a $8-$10 stock price). Buying now means a 10% return each year on that investment. It may take a few years to get there, but that's really what I am looking for - I won't speak for anyone else. Plus riding the wave that the Hudson's want their dividend back, too.
At the very least, I am enjoying the discussion on this :-)
Management needs to take responsibility thru pay cuts---maybe 30% for the top 3 and 20% for the next ten. How can you pay 3 people 500K with these results?
Management can get stock options at 10 a share for 5-7 years, so if they turn it around they can recoup their earnings loss---along with the investors who have been beaten up over the last few years.
The public needs to see concrete actions or they will just lose faith and people's perception will drive the stock price as much as the actual news. Seacoast management spits out garbage that everything is OK, but it clearly isn't so when they tell me all is well I think they are stupid, lying or just arrogant and I don't want my money with them.
I ragged on this stock for almost three years since it was $25 a share and the basic principle I have followed is that management is elitist and feels entitled to what they have and Denny Hudson is arrogant or stupid for the "bring a big checkbook" remark. I know that was only one statement but he never backed off that view and keeps saying that all is well and Seacoast positioned itself to to weather the storm. They clearly have not. I don't cheer for their failure, I just don't see them being capable of success.
They can pay the preferred dividend - they have the means to do so, but are prohibited by nature of their agreement regarding TARP and with the OTS/OCC.
I agree that management seems to be overpaid, but how much should say the top 10 people at this bank make? Perhaps 1/2 of what they are making? But not 10%..it takes some people with some experience to run an organization of this size.
The key for banks right now is surviving and then being there when things pick back up again.
How can this be a big winner if they raise capital?
They lost 40 million over the last year, can't pay the preferred dividend's which must be paid at some point. They have to pay Uncle Sam 5% on 50 million which they practically already ran thru. They diluted the stock as part of the TARP deal and now if they raise money to stay afloat they further dilute the stock.
If the Hudson family didn't control 30% of this stock it would be a penny stock. Managemnt is still overpaid and the governemnt wrote them up for bad business practices.
Take away the name Seacoast and tell me why anyone would invest in a company with this track record?
How will they be able to raise $50-%75 million at $3 per share, when the stock is at $2.50?
Wishful thinking. If something doesn't happen soon to move the stock back up into the $3 to $4 range (or higher), I'm not sure they've authorized enough new shares to raise sufficient capital. And last time I checked, the market doesn't get overly excited at offerings in the near penny stock range, so I'm still a bit uncertain that they will find much of a market outside current directors for a secondary offering.
I hope they make it because I'd hate to lose my entire small investment, but if I was a betting man, I'd give better odds on failing than surviving, and if they don't get the capital, failure (or forced sale) goes from a remote possibility to almost inevitable - IMHO.
A lot of people in the South Florida/Treasure Coast area have seen their wealth and income stream disappear. Harbor Federal holders, FPB, etc. have all seen this come to pass and a lot of money has been lost on paper.
Undoubtedly, SBCF will likely need to raise more capital. The stress tests of the major banks indicated nearly all of the banks needed to raise more capital. SBCF is likely no exception.
The TARP money receipt provides some confidence that they won't be rendered worthless. While technically the govt is not infallible, unofficially, they are and can be. So, there will be a lot that has to happen before the $50M investment is allowed to become worthless.
I think all banks have shown they can raise capital at any price. Nearly all of the banks have quickly raised the money needed. This is not to say SBCF can do so, but odds are they can - at the right price, anything will sell. If they need $50M, sure, it would be better if they had to sell 17M shares at $3 rather than 100M shares at $0.50, but whatever it takes to survive is what will happen - on top of that, the govt will mandate such survival one way or another to preseve the TARP money.
A secondary stock offering is in the works, and yes, we will have to wait and see what happens with that once the increase in authorized shares is most likely approved at the June 18 annual meeting.
Could be a big stinker or could be a chance to really have a big win in the years to come.
ok...I think they will be a survivor. Do I think the stock price will go lower? Maybe. Probably. But, they will pull out imho. Right now, that's all I care about. This investment (a long term investment for me) has been one of my worst.