On the following:
11% drop in home prices locally in 2011
1/3 of local mortgages underwater
Upcoming (draconian) defense cuts affecting entire local area
Hidden real estate inventory
Housing ready to take off faster than believed: "Everyone is focused on the wrong metric. They are overly focused on home price because of the tremendous correction that has occurred and the focus on home prices in the media. The media is also overly focused on price because they tend to live in the expensive markets like New York and Washington D.C. What consumers and the media are ignoring is the monthly payment, which is absolutely fantastic right now and highly unlikely to get much better."
Distressed housing is throwing investors off:http://www.businessinsider.com/barclays-the-most-important-trend-in-the-housing-industry-is-signalling-a-recovery-2011-12
1) A lot of people don't want to buy a distressed home -a short sale maybe, but not a foreclosure. They don't have the time or skill to fix it, and hiring someone is expensive. And sales prices on short sales are much higher than a foreclosure.
2) Foreclosed homes are usually at the low end of the pricing spectrum - if you want a mid-level to deluxe home, you won't find that many foreclosures.
3) The "buy, fix it up and flip" home investors aren't making that much money. By the time they buy the house and fix it, profits are actually pretty small. Watch late night TV: Only people making money are Home Depot and Lowe's.
4) So many vulture investors trying to snap up a foreclosure, they are driving prices up.
"HR unemployment rate down to 7%.
Auto sales were up 13.9% last month.
Pending home sales were up 10% in October.
Holiday retail sales are up 16%.
The stock market went up 7% last week."
That doesn't sound good for the bears.
I agree with your target.
The stock has not moved in 4+ years. There has got to be a point when the shareholders say "Enough is Enough".
What the Towne Executive unconsciaously do is tell these shareholders, "Oh, things will get better and when it does our stock will take off" Well, all you have to do is look at the numbers behind the stock.
When the economy begins to move up, then rates will have to move up. Towne will not be able to increase their loan rates very easily compared to other financial institutions, but they will have to raise their deposit rates----i.e. rate margin decline.
Outside of Bank of Hampton Roads, they are the only community bank with significant problem assets $89 million worth with only $40 milion in Loan Loss). That is too risky. Profits are too smal to retain to help put any more in reserves.
At the end of the day, Towne has "0" choices for any more financial manipulation. Tiem for the CFO to finaly say to the CEO...."I gotta start telling you "No" Man. My career is on da line"
In the perverse world of investing, a lot of negativity is actually bullish. There's a lot of buyers on the sidelines WITH NO SELLERS EXCEPT FOR SHORTS. People forget that you need buyers to come in and push up stock prices. Always ask yourself before buying a stock: "After I buy, who will buy it from me?" In the case of TowneBank: Plenty of people will buy from you AFTER the price goes up!
They said the same thing about negativity on Bloomberg radio today. When all logic says "sell," you should say "buy!!!"
So negativity is bullish in a perverse way. Unless you are like mmister70, in which case it's not perverse - just plain sick!