S&P and Moodys are reviewing the ETFC debt. If they deem it investment grade, ETFC will be able to start sharing the cash to stockholders via dividend. If not, they have no choice but to do a share buyback.
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I believe the company is planning to use the cash for share buybacks
Not possible, unless ETFC debt is classified as investment grade (see debt covenants) - just needs to be investment grade for a few days for this restriction to disappear.
The loan portfolio sale at par would be a substantial reversal from what was likely a market valuation of 30 cents on the dollar.
The bulk of deposits are off balance sheet, there is talk of bringing them back on when NIM is higher once rates go back up.
Not all of it because of the $50 billion limit - not in the cards per ETFC management.
That is in fact the next value driver to the shares once the legacy loan situation is finalized. To me the finalization of the legacy loan portfolio isn't even when it's sold or fully run off, it's when the HELOC resets are fully understood which is about a year out.
Your assumption that it was bought with cash is wrong. It was investment of the deposits (cash left in the accounts by account holders). When they take a haircut on loans not being paid it comes out of cash to make depositors whole. When it is paid off (at par or loan run off) the proceeds are invested now in agency securities.
While I also think ETFC will get to 40 in the next couple to three years, your basis is wrong (and has been wrong for a while). For starters the sale of six billion of the loan book at par does not mean the cash at ETFC increases by six billion!