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BNC Bancorp Message Board

sambordulac 5533 posts  |  Last Activity: Jul 9, 2016 11:27 PM Member since: May 25, 2000
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  • sambordulac by sambordulac Jul 9, 2016 11:27 PM Flag

    With all the heavyweights in this new Birmingham office, I an certain lots of efforts were made to grow loans.
    Loan may grow pretty well, I suspect loan yield remains under pressure. It beats investment in Treasury.
    ALC should resume growth. It may add $2 million or so on its loan portfolio. I'd like to see margin to hold up but that's too much to hope for.
    USBI may sell some of its investment to support loan growth. Given the low interest rate, it may report some gains on sale.
    On the whole USBI should earn a better return this quarter.

  • Reply to

    JGWE going for a song

    by sambordulac Jul 5, 2016 2:20 PM
    sambordulac sambordulac Jul 9, 2016 10:51 PM Flag

    The competitive landscape changed so much that anyone can bid on the same deal. Which means that JGW will be just another bidder. To be competitive takes an entire new mind set and focus on cutting cost in every aspect of the operation. I am not sure that this highly paid management is used to that kind of thinking. It'll have to, or EMG and others will eat its lunch. It's scaling back, but too slowly so far.

    That said, mortgage banking is on the rise and this acquisition should help the bottom line. The mortgage division can also benefit from JG Wentworth's name recognition. IMO, if this runs well, JGW can be saved.

    Weak financial, continued losses, and more regulations can all derail the revival effort. If JGW should survive on its own, the $0.29 per share is definitely cheap. If it needs to raise additional capital, then it depends.
    I don't think it'll go down in flames. There is so much tax asset--an unfortunate outcome--it's worth salvaging.

    The odds is good that it'll experience another hiccup or two. That would be the better scenario.

    IMO price can drift upwards if additional news were not so gloomy. Maybe just my wishful thinking.

  • sambordulac by sambordulac Jul 5, 2016 2:20 PM Flag

    JGWE has serious operational problem and likely to have regulatory problem down the road. But share price indicates that the entire business is worth $7 million. It spent ten times that on advertisement in the past five years!
    At least part of that went to building the name recognition one would guess. What I am driving at is this, the name alone is worth the price tag.

  • Reply to


    by contra_fella Apr 16, 2016 7:49 AM
    sambordulac sambordulac Jun 24, 2016 8:34 PM Flag

    Mr. Contra,
    What is the stock in question? Thanks.

  • Reply to


    by contra_fella Jun 22, 2016 11:18 AM
    sambordulac sambordulac Jun 24, 2016 8:30 PM Flag

    None whatsoever.
    --The bank is pursuing an aggressive growth strategy. Even though capital ratio is strong at around 13%, in time it'll need all the capital it has. It can deploy the capital advantageously. This will take a couple of years.
    --When someone makes a good offer the board has responsibility to consider. I'd say it's not interested in a sale but the currently low price makes it more difficult to say no.

    It's easier to identify target and more profitable invest in them. UWHR may be ready to sell. I suspect the upside is limited to 25% from the current $4.40 price.

  • sambordulac sambordulac Jun 21, 2016 10:33 PM Flag

    Two cylinders.

    Trust service took in less in 1Q than before. Perhaps the correction of stock market did a number to it.
    I suspect 2Q would be better.

    T Bank, N. A. was listed #88 of the top 100 SBA lenders in the nation. All the more remarkable if one were to consider its small size.

  • Reply to

    First Avenue acquisition

    by sambordulac Mar 18, 2016 9:00 AM
    sambordulac sambordulac Jun 21, 2016 10:23 PM Flag

    Mortgage banking was pretty strong in 2Q so far. If CBCO can match its mortgage banking peers and grow its traditional banking (organically and through this First Avenue merger), we should see better results.

    The wild cards are two.
    --It may expense the merger related cost as they are incurred.
    --it may need to increase provision due to larger portfolio loans.

  • Reply to

    The worm has turned

    by sambordulac Feb 5, 2012 9:45 AM
    sambordulac sambordulac Jun 20, 2016 12:28 PM Flag

    The effect of recap at discount( to insiders) and that of large option awards (again, to insiders) aside, CWBB continued to crank out satisfactory numbers.

    The weakness in deposit gathering persists.
    CWBB is only 1/5 the size of WIBC yet it made nearly as much SBA loans. Amazing!
    ROE was around 13% due to somewhat higher equity ratio (perhaps needed due to its SBA business).
    Besides, loan growth required additional reserve which in turn penalized earnings.
    Interest margin drifted lower in the past two years due largely to low interest rate environment.
    The above factors may all change and allows it to earn 15% ROE.

    Shares flatlined for two years, I don't see any hold back from this point on.

  • Reply to

    TMAK turned the corner

    by dictonada Mar 23, 2015 11:56 PM
    sambordulac sambordulac Jun 9, 2016 12:06 AM Flag

    Five quarters later (from 4Q14 to 1Q16), asset grew $58 million, or 35%; Loans, $50 million, or 43%; deposits, $38 million, or 36%. After such rapid growth, t-1 is still 13.78%. which means the bank has room to grow further.
    You can't knock the 36% growth in deposit but it clearly has trouble keeping up with loan growth. Bank resort to borrow heavily from FHLB, now $19.5 million. Not an ideal state.
    More loans demands more provision which was partially responsible to weak earnings.
    1Q16 showed much reduced earnings. Apparently SBA loan production slowed and it kept more loans in house since 4Q15. SBA loan production is historically volatile. We'll see what 2Q16 brings.
    Low oil price encourages traveling. Which, in turn, encourages motel expansion. The loan type TMAK specialize in.
    Head count now numbers 31. Overhead ratio came down. Perhaps due to expanded size.
    They are about to run out of space, I think.

  • sambordulac by sambordulac May 26, 2016 11:50 PM Flag

    No surprise. Earnings was $0.523 million, down from $0.689 million in 4Q15, but beat the $0.494 million in 1Q15.
    However, it did not come from shrinking interest income as I expected. Margin did compress but it was more than made up with bigger loan pool.
    Loan grew by $9.446 million from 4Q15 but provision was only $49K. Again, it did not penalize earnings by much.
    Non-payroll overhead did not go up as I expected either. Maybe the Bank capitalized all expenses related to the new headquarter.
    Surprise, but it shouldn't be, With the return of Mr. Sisk we have now 22 people on payroll VS 21 in 4Q15. Payroll went up by $53 K in 1Q16. Maybe Mr. Sisk is paid nearly $200K per year?
    True, earnings is down. But I am encouraged by the loan growth. Maybe Mr. Sisk is already making things happen?

  • Reply to

    Prospect of LION

    by sambordulac Mar 28, 2016 2:22 PM
    sambordulac sambordulac May 24, 2016 1:34 PM Flag

    To put in perspective, residential real estate loans originations numbered 6.5 million loans per year in the four years leading to the bust. We are now at about half of that. LION's mortgage concentration was a good strategy. It still is.

  • sambordulac by sambordulac May 18, 2016 3:13 PM Flag

    ALC experienced seasonally soft quarter. That usually rebound by 5% to 10% in the second quarter. No worry.

    Overall, portfolio loans grew strongly for two quarters in a row. Though loan yield was somewhat soft.

    Beside land, new office by Mountain Brook may cost $11 million inclusive of equipments in 1/4 of the 40,000 SF space. The rest are for rent.
    The location is great. Access may be somewhat wanting. But there is no more land in the stretch. That's that.

    All the heavy weight are now in the rented space nearby. It's in good mortgage market. Why not do mortgage banking? But then it is geared up for commercial lending, the people and all. Will be great if it can lever up in the next two years.
    Loan portfolio is only half of its asset. Then asset can expand due to low financial leverage. Exciting things can happen.

    A good quarter if we read between the line.

  • sambordulac by sambordulac May 17, 2016 12:05 PM Flag

    Earnings has been strong. No complains there.

    Credit and OREO has been stuck in the mud.
    This $5.5 million OREO on a condo development in Absecon is troubling. Absecon relies heavily on Atlantic City, and Atlantic City is dying.

    Stock dividends is a gesture, nothing more.

  • sambordulac by sambordulac May 14, 2016 12:25 AM Flag

    Shares drifted upward since two years ago, now near its book value of $4.80.
    The bank was shaping up but still underperforming. In today's market similar bank would fetch less.
    Me think a sale is coming soon and someone is buying because of that.

  • Reply to

    HTWC's prospect

    by sambordulac Mar 19, 2016 6:05 AM
    sambordulac sambordulac Apr 9, 2016 9:24 AM Flag

    Book value and DTA allowance was $3.61 and $1.89 per share respectively.

  • Reply to

    HTWC's prospect

    by sambordulac Mar 19, 2016 6:05 AM
    sambordulac sambordulac Apr 4, 2016 8:11 PM Flag

    Hi, Cenhuddude,

    FWIW you are welcome.

    I am afraid the original subscribers will still lose big. $10 to $2, yikes!

    The conversion and the reverse split is typically done simultaneously. Sometimes there is no split.
    Ben Franklin Bank of Illinois (BFFI) ($11.25) was a good example. BFFI converted in early 2015 at roughly 3 legacy shares to one new share at $10 (subscription price) per share. I vaguely remember that book value was around $16 per share right after conversion. After some losses, book is now around $14.5. The losses kept a lid on share prices.
    Another, Quarry City in west Missouri (QRRY) ($12.00) did a little better. Again, subscription price was $10 per share. Initial book value was around $17. QRRY is somewhat profitable. IMO the shares did not rise further because QRRY has only one branch and shares are very illiquid.
    There are reasons to believe that HTWC will be more like QRRY.

    As to merger partner, I don't have any idea.
    The area is in long term decline, consolidation makes sense.

    The larger and better known thrifts also convert from time to time but shares usually pop right away. NECB, WFD (2006) are examples.

    In general, thrifts earn smaller interest spread and have little fee income. As a group, they are less profitable than , say, commercial banks. Even in better times, I suspect thrifts do not earning enough to justify holding at near book value. Today, I'd probably sell them at 80% of book value.
    In spite of the potential of a turn around, I bought only a small position for that reason.


  • Reply to

    HTWC's prospect

    by sambordulac Mar 19, 2016 6:05 AM
    sambordulac sambordulac Mar 31, 2016 5:38 PM Flag

    Hi, Mr. Thrifts,

    Glad you are around or I'd be talking to myself.

    From the numbers I'd agree with you, but "the board continues to review all strategic alternatives."

    If we look at the loss trend (charge offs), the sizable troubled asset appears less of a concern.
    The board understand the credit better than any outsiders and will probably do the second stage conversion "when the time is right".
    (Yeah, they know they can flip it for 50% gain in two years.)
    I place 95% probability on conversion, if not, a merger is possible. More likely, merger would take place after the conversion.

    "Time is right"
    if credit is all reserved for and if the insiders have their own financing ready. Once you see a large reserve, it's time. A large reserve is not a prerequisite.


    With second stage conversion, bank sets a conversion price at, say, $2 per share. Immediately after the conversion, book value would be around $3.5 per share. What's more, allowance on deferred tax asset will most certainly be restated which may add $1 per share--$1.93 before dilution. We'll end up with an over-capitalized bank with $4.5 per share book value.
    The unknown is the conversion price. At $2 per share we'd be fine, at $1 per share we'd end up with far less.
    It's a general rule to buy in after the conversion. Converted at $1, my shares would be worth only $2 and traded at $1.2. However, many who bought in at $1 probably would be happy to flip it for a small gain like at $1.2. I can then add with confidence.
    $2 or $1 are used to illustrate the changes in value. It's customary to set the price at $10 and have the existing share converted to a fraction of new share.

  • sambordulac by sambordulac Mar 28, 2016 2:22 PM Flag

    But first let's look back.
    LION had a sizable mortgage department. After the recession rate induced refinance demand was high and it grew mortgage many folds. Mortgage banking peaked in early 2013. None the less LION forged ahead. While resale margin weakened since then, it was able to maintain mortgage revenue by making more mortgage loans. Because of that, the bank was able to maintain its profitability in spite of the narrowing lending margin.

    So, why is it attractive now? IMO mortgage will continue to contribute to the bottom line AND net interest spread started to firm and may well continue. Better results may start to show this year and the next.

    Shares are not cheap. If one should adjust for the imminent dilution from the large in-the-money warrants, book value may be around $12 per share.
    In spite of strong refinancing in the first half of 2015, ROA was only 1.13% for the year. But here is my speculation: With the $75 million new subordinated debt, it can grow lending side and it did some so far.
    (Just hope its shares stay up on the next acquisition.)
    My expectation for the year is 1.2% ROA. We shall see.

    A caveat, leverage is a two edged sword, I am betting on better results but I can be wrong (and get killed.)

    Bank has proven management.

  • Reply to

    Who here owns shares?

    by o08o.ugh64w Mar 29, 2015 2:06 PM
    sambordulac sambordulac Mar 26, 2016 12:28 PM Flag

    Hello, Knowvalue.

    Congratulations. $9.5 to $16.0, you called it.

    It's been two years and the subsidiary bank managed to earn 8% ROE in 2014 and nearly 10% the next. Never the less, shares steadily rose. Hm.

    While mortgage banking was pulling the load, the results has been lumpy. From the reported numbers, we can infer that its mortgage banking has high fixed cost and it got caught in 2013/2014 and to a lesser extend 4Q15.
    I still like the mortgage banking strategy and think it should be less lumpy going forward. However, refinancing boom is over and we should only expect gradual improvements.

    SBA lending is still in its infancy. Scale is important and it will take time.

    The bank is fully levered. Without more leverage, maybe we can see 12% ROE this year? The low rate environment will keep a lid on banks' lending profit this year and fee income will only grow moderately.

    Someone once asked why Boswell sold early in 2014. On hind sight he knew that a large option was coming and selling at triple of his cost to repay debt made sense.

    IMO the shares are not expensive but any rise will depend on its progress.


    Disclosure: I have not been a shareholder since early 2013.

  • Reply to

    Berkowitz gave up, I think we should too

    by jmn12321 Mar 26, 2016 3:24 AM
    sambordulac sambordulac Mar 26, 2016 10:20 AM Flag


    In all due respect, I think you missed the point. It's not the talent or resolve...
    LUK made a macro bet on inflation, especially on energy. As deflational force sets in, LUK, even with its talented people and efforts, is lucky to have stayed afloat.
    That said, it'll adapt, probably quicker than the turn of oil. Oil, I surmise, may take a decade to turn.

    Ask this, Buffett is no dummy, why does he partner with this "looser"?

    Adjusted for potential losses book value is probably higher than $16. and it has no risk of going out of business. I may not go hog wild but I certainly won't bet against LUK.


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