I just realized I had a few Twitter connections from south Florida and their comments today intrigued me about the real estate recovery down there.
"I am involved in transactions where south Florida oceanfront condo owners who bought at peak in 06,07 are selling for 40-50% gains"
That's some serious rebounding.
"huge inflows into south Florida real estate from Europe, Venezuela, etc. real estate is a store of value, no return necessary"
Zero interest rate environment / distrust of government pushes the demand for real estate. We saw Asian buyers pump up the Canadian housing market (that bubble will pop eventually).
"SF oceanfront has its own dynamics, economics (cap rates) do not apply....hard to analyze"
While this sure can suck when the bottom drops out, such uniqueness also juices values on the upswing in a recovery.
Anyway, just explaining my rationale that even though I can't afford to invest in real estate, I'm happy buying derivative plays of banks for 50% of BV
$42 Million but we still don't know at what price. I would think it would be accretive but still reasonable so as that over-allotment gets filled.
Something interesting I just thought of as I saw this quote from the prospectus:
Excludes up to $15.0 million to be purchased by certain of our officers, directors, insiders and existing shareholders pursuant to a directed share program, for which the underwriting discounts and commissions will be one percent (1%). See “Underwriting — Directed Share Program.”
$15MM to that group alone potentially vs. a current market cap of $8.67MM.
Bank mergers and acquisitions are heating up in the Southeast and Jacksonville is among the “most hotly pursued markets.”
The Southeast had the second highest amount of merger and acquisition activity among financial institutions nationwide during the 12 months ended Oct. 22, according to data from Banks Street Partners.
The Atlanta-based investment banking firm said banks headquartered in the Southeast have announced 50 deals in the last year, following the Midwest’s 69 deals during the same time period. In the past year, there have been 210 bank mergers announced nationwide.
Banks Street Partners CEO Lee Burrows said almost without exception, banks in the most desirable markets are getting the best pricing. He said the Southeastern markets most in demand from buyers includes: Charleston, S.C.; Charlotte, N.C.; Greenville/Spartanburg, S.C.; Jacksonville, Fla.; Knoxville, Tenn.; Nashville, Tenn.; Norfolk/Virginia Beach/Hampton Roads, Va.; Northern Virginia; Raleigh/Durham/Chapel Hill, N.C.; Richmond, Va.; and Savannah, Ga.
Florida is ripe for community bank mergers and acquisition, as the wave of Florida bank failures is mostly over and the recession in the rearview mirror. The Business Journal took an indepth look at bank mergers and acquisitions in Florida as a whole earlier this year.
Bank mergers and acquisitions are heating up in the Southeast and Jacksonville is among the “most hotly pursued markets.”
The Southeast had the second highest amount of merger and acquisition activity among financial institutions nationwide during the 12 months ended Oct. 22, according to data from Banks Street Partners.
The Atlanta-based investment banking firm said banks headquartered in the Southeast have announced 50 deals in the last year, following the Midwest’s 69 deals during the same time period. In the past year, there have been 210 bank mergers announced nationwide.
Banks Street Partners CEO Lee Burrows said almost without exception, banks in the most desirable markets are getting the best pricing. He said the Southeastern markets most in demand from buyers includes: Charleston, S.C.; Charlotte, N.C.; Greenville/Spartanburg, S.C.; Jacksonville, Fla.; Knoxville, Tenn.; Nashville, Tenn.; Norfolk/Virginia Beach/Hampton Roads, Va.; Northern Virginia; Raleigh/Durham/Chapel Hill, N.C.; Richmond, Va.; and Savannah, Ga.
Florida is ripe for community bank mergers and acquisition, as the wave of Florida bank failures is mostly over and the recession in the rearview mirror. The Business Journal took an indepth look at bank mergers and acquisitions in Florida as a whole earlier this year.
Peco, which counts big consumer names among its accounts, but declines to name them, has booked consolidated average growth of 25 percent in revenue for the past four years; annual sales are now about $120 million. With an estimated 6 to 7 percent of the U.S. market for pallet rentals, it charges customers around $5 per pallet, Lee said.
Well now what do we have here? Three things I loosely pondered:
1) By these calculations, the total obtainable U.S. market would be:
$120 MM / 6% = $2 Billion
Now of course some of those sales probably included a little Canada, but $2 Billion is a nice round number. Would need to gross it up to 2013 from 2011, but GLGI would have barely 1% market share regardless.
2) If Peco Pallet was growing at 25% clip then Pritzkers paid multiples of sales one would think, aka a few hundred million. Let's just say $200 MM. If GLGI has 1/6th the market share Pagz, could it be worth $30 million or 3x as much as today? But they had 25% growth and GLGI doesn't, what's the point? How could they get there? Well...
3) The article states Peco had average growth of 25%, this could be obtained by a smaller compay through doubling sales via a large customer every couple of years for a while.
The article also makes the point that there is a heavy up-front cost for customers, but this partially makes said customers "sticky" because the company would be incentivized to do whatever it takes to keep them.
Meaning if GLGI were to pick up another large beverage company as a customer it could take possibly take a step up in revenue to another sustainable level, showing the same 25% average growth in sales.
Sorry, if that was some oddball rambling but just considering the potential of all my holdings today.
They bought Peco Pallet, who claims to be the North American leader in pallets, for an undisclosed amount.
“These guys want to expand, whereas the previous guys didn’t,” says Lee, who expects sales of $190 million for 2013. “They are long-term investors, so they’re not looking to pump something up and get out before the bubble bursts.”
Now if you remember GLGI did almost $25 million in sales for the year end, where would we compare in a buyout? This is obviously hypothetical as management would require a massive premium. Anyway, GLGI is trading at 40% of sales, meaning the equivalent would be $76 million for Peco Pallet. Seems way too low.
When involved in micro-caps, one is nearly doing private equity investing which requires a performance goal of 20% at least. Scenario 1 being the reverse split, there is your 20% discount baked in as a required return.
Scenario 2 being the split does not occur, what is the value of the company on an earnings basis? Consensus is GLGI is cheap on that basis, but if the split did not go through was it because of lack of financing? And if so, that shows a weakness in company fundamentals. You would also be owning a company that is tied to its management from personal financing and related transactions, a situation that many funds would discount the shares heavily for. It requires more attention into a small investment than many would normally undertake.
You will find those here have analyzed the various outcomes and have placed their bets while trying to communicate the best they could with management. Personally handicapping the outcomes with the data available to oneself (and the resultant moves up or down) is key I feel.
Think about this one Chevy on a quarter over quarter basis.
Q3 Non-interest income was $1.634 MM vs. $1.087 in Q2 so an increase of $550K
Now look:
Q3 Non-interest expense was $10.95 MM vs. only $7.445 MM in Q2, or an increase of $3.5 MM
Net change of about $3 MM
If there are any one-time items in that category somewhere you would have to add that back into the loss to normalize. It can be pretty tough with these tiny banks on that one.
Point being, it could have been a better quarter than the $2.4MM loss last quarter. During the lumpy earnings stage as a bank recovers, two quarters a trend does not make. Paying off TARP as you know is huge.
I'm in some today at $3.74. Profitability will come and I have a hard time believing if / when they raise capital it will not be a positive when buying at 30% BV.
Step one looking at this year's figures is looking at numbers with the costs of their failed takeover stripped out.
Q3 results, sounds like some progress here and a break-even quarter.
“Our primary focus in recent years has been on reducing our problem assets and returning the Company to profitability,” stated CEO Gary Deems. “We are now in a position to refocus some of our efforts on attracting new business and rebuilding our loan portfolio.”
Lots of noise this quarter and a semi-transitional one (sadly no TARP news), have to dig further into this but one must obviously normalize the data. Focusing on ND is a smart move as asset growth has been strong, 17% annually is huge.
Throw rocks at this thinking, it's very back of envelope:
.487 net income (1.055) life insurance benefit .3 quarterly saving from Minnesota closings (1.2 / 4) 1.5 impairment charge on real estate sold
1.23 MM / 3.34 MM shares outstanding = $.35 per share
$.35/share x 4 = $1.42 annualized
$13.30 current price / $1.42 = 9.4x earnings multiple
Couple that w/ BV = $13.30 / $14.75 = 90%BV for 17% asset growth
Pinched NIM's are tough, but that asset growth is a positive.
Earnings should be out soon if history is any indicator. Even if net income would drop a few hundred $K to roughly $.50 / share, we still would be trading less than a 7x multiple annualized and under BV. Continue to hold all my shares for the moment.
One of the parties involved in settlement talks buying up chunks of notes to hedge against their costs? Just a shot in the dark obviously, but did seem curious.
http://www.fdic.gov/bank/analytical/stateprofile/Atlanta/Fl/fl.pdf Notes: - Jacksonville is the 3rd largest deposit market ($45.9 Billion), having 41 banks in the area - There are 24 banks with assets greater than $1 Billion - 33 banks with assets under $100 Million, the area where JAXB needs to go hunting
John Rose, who is a board member and a principal at CapGen Capital Group, the private equity firm that provided about half of the funding for the bank’s most recent capital raise, said that the new capital improves the bank’s capital reserves so they exceed regulatory requirements. The capital also puts the bank in a position to take advantage of the local banking market where more than half of the banks need capital to meet regulatory demands.
Scott Hall, the president of Jacksonville Bank, said the goal is to get the bank to a size of at least $1 billion in assets. At its height in 2010, the bank had about $790 million in assets, but shrunk to $549.3 million in assets as of the third quarter, the latest data available. Rose said the bank is now around $600 million in assets because of the new capital.
Leaves me thinking about how many shares are really out there that are NOT in the hands of insiders or long-term holders.
puts the company (Nasdaq: JAXB) back in a position to grow again in a number of ways, including the possibility of acquiring other local banks that still need capital.
When the reverse split becomes effective, every 20 shares of common stock held by a shareholder will automatically combine into one (1) new share of common stock, and every 20 shares of nonvoting common stock held by a shareholder will automatically combine into one (1) new share of nonvoting common stock. No fractional shares will be issued as a result of the reverse stock split; any fractional shares that would have resulted from the reverse split will be rounded up to the nearest whole share. The number of authorized shares of common stock and nonvoting common stock will be proportionately reduced as a result of the reverse split; there will be no change in par value for such shares.
JACKSONVILLE, Fla., Oct. 8, 2013 /PRNewswire/ -- Jacksonville Bancorp, Inc. (the "Company") (JAXB), holding company for The Jacksonville Bank, announced today that its Board of Directors (the "Board") has approved a 1-for-20 reverse stock split of its common stock and nonvoting common stock. The Company anticipates that the reverse stock split will be effective on or about October 24, 2013. The Company's shareholders had authorized the Board to approve a reverse stock split at a ratio of up to 1-for-20 at the special meeting of shareholders in February.
The reverse stock split is being implemented primarily for the purpose of regaining compliance with the $1.00 per share minimum closing bid price requirement for continued listing on the Nasdaq Capital Market, although there is no assurance that this will be achieved.
When the reverse split becomes effective, every 20 shares of common stock held by a shareholder will automatically combine into one (1) new share of common stock, and every 20 shares of nonvoting common stock held by a shareholder will automatically combine into one (1) new share of nonvoting common stock. No fractional shares will be issued as a result of the reverse stock split; any fractional shares that would have resulted from the reverse split will be rounded up to the nearest whole share. The number of authorized shares of common stock and nonvoting common stock will be proportionately reduced as a result of the reverse split; there will be no change in par value for such shares.
The Company
Jacksonville Bancorp, Inc., a bank holding company, is the parent of The Jacksonville Bank, a Florida state-chartered bank focusing on the Northeast Florida market with approximately $522.4 million in assets and eight full-service branches in Jacksonville and Jacksonville Beach, Duval County, Florida as well as our virtual branch. The Jacksonville Bank opened for business on May 28, 1999 and provides a variety of community banking services to businesses and individuals in Jacksonville, Florida. More information is available at its website at www.jaxbank.com.
What is interesting is the price action around the series of events. After a private placement, a rights offering, and then a public offering, we are still trading at the price of these capital raises. Even a fund late to the party could gobble up shares here and take a meaningful position, well after CapGen did! Just seems a little odd.
When you are the guy providing financing on numerous occasions (Kruger), taking shares from other shareholders makes perfect sense.
Financial engineering gives him personal returns and then there is little resistance to future moves by shareholders. Not a slimy move in my eyes, merely one done to protect his investment and to grow the business. That said, the $.50 offered could turn out to be a bargain for major holders by management projections.
The nice part is it doesn't take much to add above the threshold to join in the future of the company. I know some have or are contemplating it.
Those with degrees from the Cox School of Business are generally pretty sharp.
I see what you did there subtly. Have fun with a pissed off Johnny Manziel next week EI :p
On June 18, 2013, Greystone filed a Schedule 13E-3, File No. 005-59735 (the "Schedule 13E-3"), and a Preliminary Proxy Statement on Schedule 14A, File No. 000-26331 (the "Preliminary Proxy Statement"), each relating to a Special Meeting of the Shareholders Greystone to be held on August 2, 2013. The sole matter that was to be voted upon at that Special Meeting of the Shareholders was to approve an amendment to the Company’s Certificate of Incorporation, which would have authorized a one for ten thousand (1-10,000) reverse stock split of Greystone’s Common Stock and a cash payment per share for resulting fractional shares equal to $0.50.
Greystone decided to delay the date of the Special Meeting of Shareholders until such later time as Greystone can amend the Schedule 13E-3 and the Preliminary Proxy Statement to (i) respond to comments received by Greystone from the United States Securities and Exchange Commission (the "SEC"), (ii) incorporate into the Preliminary Proxy Statement by reference this Annual Report on Form 10-K, (iii) attach as an exhibit to the Preliminary Proxy Statement this Annual Report on Form 10-K, and (iv) set a new record date and a new special meeting date for the Special Meeting of Shareholders.
Greystone intends to file such amendments to the Schedule 13E-3 and Preliminary Proxy Statement shortly after filing this Annual Report on Form 10-K. A new record date and date for the Special Meeting of Shareholders will be set forth therein. Greystone anticipates that the new date for the Special Meeting of Shareholders will be sometime in the fourth calendar quarter of 2013.
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