I'd be careful about aggressive debt repayment through loan restructuring. This sounds like the cash-strapped homeowner doing some serious financial prioritizing to pay off maxed out credit cards in the face of meeting near-term regular costs of living. Farmers is restructuring $24 mn. in loans and its stock value is floundering. At best it may see incremental cash flow improvements overall in the very long run. Right now I gather it is hard for anyone, even the expert analysts, to figure what kind of financial shape FFKT will be in in the next 6 months, or year or biennium. Some of you writers seem to have strong banking and investment backgrounds so are more privy to the in and outs of how "those in the know" can make fairly reliable predictions of how things will settle regarding this company's financial "house". I would say the "house" is for the most part in too much disarray to get super excited about investing sheerly due to the $6 to $8/share price tag it goes for right now. Investors might be better off to wait for it to go up a few more dollars/share with the knowledge that FFKT's crisis has started to pass. The stock has seen up to $35 and higher historically. I imagine it still could have this potential (long-term) if it is able to see a restored national economy and local business is able to borrow at a more brisk pace. Right now these are two crucial pre-existing conditions that are missing. Restructuring loans makes sense in and of itself; however, this does not lend itself to helping the bank have more profit margins in successive fiscal yearly periods. Restructuring just is directed to getting the regulators off its back and make appropriate legal and accounting correction in its existing asset portfolio.
doctor....pain, Good post. FFKT is indeed a risky play......However the long term rewards could be handsome....If FFKT management is able to cut costs significantly and manage the balance sheet well.....Than they have a good chance to be a sucessful turnaround IMHO....
I agree Isaiah. Then why do you continue to tout Farmer's stock while never warning of the bank’s perilous financial condition. You are the company's current cheerleading captain, replacing Sara who thought FFKT was a bargain at $25. You recommended buying the stock back in March when it was selling for over $10. As a seasoned investor, I can only assume that your stop-loss kicked in.
Just curious. Have you noticed that problem loans are approaching tangible net worth? Are you concerned that many seasoned hands have been fired or quit? Do you recognize the seriousness of the situation when regulators reprimand a bank for poor performance, and engaging in unsound baking practices, calling attention to "hazardous lending and lax collection?"
You keep alluding to a successful turnaround, surprise earnings and a stock breakout. What do you really known about the management of this sick bank that the entire investment community seems to have overlooked?
Shady Fellow® It is better to know some of the questions than all of the answers.