Here's a blast from the past, now trading at 62.3% of tangible book value ($15.25). A rise to tangible book is a 60% return. Interestingly, the company has available-for-sale investments of $136 mn (fair value), against a market cap of $97 mn. The company bought back a fair amount of stock in 2019, about 479,000 shares. That's good for about 4.5% of its shares as of year-end 2018. Price paid: $15.42. Equity/assets = 11.6%. So are they buying back more shares now? They're only a dollar above their 52-week low. Jim
have you written about this in the past? PS: Fool's search sucks
Here's what I could find in a quick search for some past threads and reports:https://boards.fool.com/ffnw-31223986.aspx?sort=whole#312357...https://www.fool.com/investing/general/2013/01/31/im-putting...https://www.fool.com/investing/general/2014/04/15/im-buying-...Sorry I couldn't quickly find something more recent....David
https://www.sec.gov/Archives/edgar/data/1401564/000093905720...Page 21, top of page 22:A picture of the List of those "available-for-sale" assets:https://docs.google.com/drawings/d/1Oz72RUAVoOvr3WkY4d5suwiy...(saves formatting work, here in the boards.)All those assets are mortgage related stuff. I haven't been paying attention to bond and debt instrument pricing, so where is that stuff likely to be priced "now"?
I just skimmed the SEC filing, there are 35% commercial RE loans, of which office is the bulk and of which almost all in King county! So this is very closed tied with Seattle, downtown economy.In the last 2 days the banks have announced results and we have seen about $20 B is reserved by WFC, JPM, BAC and C. So we have to wait for the next quarter earnings to see, how the reserves will look like and where the book value will land up. The king county office space demand is primarily driven by Amazon and Amazon wanted their employees to come to office. Even as we speak, they are expecting by end of April they want employees to come back to office. We need to see, how this changes. If Amazon, even accepts some WFH, say 20% of its workforce, that could significantly alter office space demand in downtown Seattle. How that will affect some of the development loans, or other commercial loans in office space is a bigger risk.
Hi Jim, Thanks for the idea. I will have to look into it. It is crazy how cheap many of the smaller and regional banks have gotten. We have mentioned one on this board already, and I have a long held position in HBAN Huntington Bancshares, a fairly large regional bank in Ohio and surrounding states. I bought them back in the previously financial crisis for under $5. It has very recently been up to $14 before all of this and is now under $8. Equity is roughly $11.50 and PE is less than 7 on prior earnings (which I know will suffer!). But really, the prices of these banks are such that they are at the risk of going out of business. With the recent government support, it is hard for me to imagine these banks going under so I am thinking that in a couple years they will be back to former highs.... but maybe not. RandyLong HBAN
But really, the prices of these banks are such that they are at the risk of going out of business No the prices are not at that level. You have no idea how much of that book is impaired. The market is completely disconnected with real economy. I still see an economy that will have 20% or 25% unemployment for few more months and even after we open we may have more than 10% unemployment. What this means to their loan book, how much write off's they have to take, how it will impact book value, needs to be seen.My position is take my time, don't be in hurry, and don't assume everything is going to be back to what it was in snap. It is difficult to fight the feeling that I am missing out, sitting the rally, but I have to fight that.
Hi Kingran,I don’t disagree with anything you are saying except that the government is backstopping bonds, etc., so I don’t see them going under. If they don’t go under, the economy will recover over the next 24 months or so. My feeling is that if the banks get back to anywhere near the earnings level of last year in a couple years. Not the next few quarters but say calendar year 21-22, then we are looking at 50+% price increase which is pretty nice. Not compared to last years prices but certainly compared to today’s prices. Will they go up or down in the next 30 days, wow, I have no idea. Randy
All good points, Kingran. We have no idea where the bottom is here, and big stocks continue to rise (incredibly!). As I've said before, I think we've got a lot of time here, and no need to be in a rush. Small caps are being hammered, but that won't stop them from getting hurt even more. We're in a recession now, and it's path-dependent. We can't just go back to the way things were by throwing money at it. Some businesses are permanently closed, and they're not coming back, so that's a huge drag to future growth numbers. So I think it's case of normalcy bias. We'll see as the numbers start rolling in and the realization that this is not some weather event that will be over in a quarter or even two.Yes, FFNW was a one-time rec of Special Ops. We did decently on it. Jim
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