Caught my eye with that name, but I'm glad I didn't buy into anything before. However, this is one restructuring I thought I would at least look at some. Too tied up in banks these days!

I couldn't resist myself, I just picked up some more shares.

And the hits keep coming....that liability alone is another:

$8.5 MM / 3.3 MM s/o (not counting those contingent shares for now)

= $2.57 a share

Awesome Hank, let me do a little back of the envelope test here:

$36 a share * 3.3 MM shares = Mkt. cap of $118.8 MM
$118.8 MM / 10x Earnings multiple = Earnings of $11.88

ROA of 1.5% (just an example):

$11.88 MM / 1.5% ROA = required assets of $792MM

Current assets = $771MM
Asset growth required = $792/771 - 1 = 2.7%

You get the idea even with adjusting the variables AND we're still trading under BV. I'm loving where this is heading and may add more on any post-earnings pull-back.

Hmm really? I thought I just checked Zion's book on it and there were 60 available at $80 and 310 available at $100.

I think it should be 4.9 MM shares outstanding * $.30 / $9.2 MM or about 16% BV actually.

Sorry about that, not enough coffee this morning.

Looking at the FDIC call report from Q3 it appears they have $9.2 MM in BV, at today's trading MOKB would be only .35X that. If this is correct and they are turning the corner to profitably, another one to add to the old watch list. Thanks.

-Pagz

Any news you see out there guys? Sell-off before earnings?

Good point, but I would not be surprised by someone making a bid anyway I would think.

That's a bold prediction Hank, I like it. Here's another one and the reason it won't happen:

Take-out bid in the high teens!


-Pagz

I think it's a good possibility too, only a dime away haha. This has been a great ride and 2013 should be exciting.

You checked too soon Chevy, we blew right through $12! I knew our reasoning was sound but didn't think we would move up so fast! People wanted in before the next quarterly release I assume.

Consolidation coming within the niche Korean-American banking group?

http://www.bloomberg.com/news/2013-01-09/hanmi-said-to-seek-sale.html?cmpid=yhoo


Hanmi Said to Seek Sale
By Matthew Monks & Dakin Campbell - Jan 9, 2013 4:22 PM ET

Hanmi Financial Corp. (HAFC), the second- largest U.S. bank catering to Korean-Americans, is looking for a buyer and hired DelMorgan & Co. to advise on a sale, said three people with knowledge of the matter.

The lender may attract interest from BBCN Bancorp Inc. (BBCN) and Wilshire Bancorp Inc. (WIBC), which like Hanmi are based in Los Angeles and target Korean-Americans, said two of the people, who asked not to be named because the process is private. Hanmi rose more than 8 percent today, giving the firm a market value of about $481 million. It has assets of about $2.8 billion.

Hanmi, led by Chief Executive Officer Jay Yoo, is pursuing a sale less than two years after its takeover by South Korean lender Woori Finance Holdings Co. collapsed. Hanmi may draw interest again from Woori, as well as South Korea’s Hana Bank, both seeking expansion in the U.S., the people said. The lender was founded more than 30 years ago and operates in areas such as San Diego, San Francisco and Orange County.

Hanmi shares rose 8.1 percent to $15.26 as of 4 p.m. in New York.

Woori Finance agreed in May 2010 to buy Hanmi for as much as $240 million. That deal was terminated in June 2011, when the firms agreed to a business alliance instead. Officials at Woori and Hana declined to comment, while representatives at Wilshire and BBCN didn’t return calls seeking comment.

David Yang, Hanmi’s corporate strategy officer, didn’t return a call seeking comment. Rob Delgado, co-founder of DelMorgan, declined to comment. Delgado helped found the Santa Monica, California-based investment-banking boutique in 2011.
Enforcement Actions

Hanmi has 27 branches in California. Its shares had gained 76 percent in the year through yesterday as the company recovered from steep commercial loan losses in 2009 and 2010.

BBCN is the largest Korean-American-focused bank, with $5.3 billion in assets as of Sept. 30, according to SNL Financial, a bank-research firm in Charlottesville, Virginia. Wilshire is the third-largest with $2.6 billion in assets.

The California Department of Financial Institutions and Federal Reserve Bank of San Francisco lifted late in 2012 two enforcement actions placed on Hanmi in 2009. The actions had required Hanmi to maintain certain capital levels and restricted the bank from paying dividends, increasing debt and changing its businesses plan without regulatory permission.

Hanmi also last year began to draw down a nearly $80 million deferred tax allowance, or pool of money that represents a tax benefit a company can’t recognize unless it is healthy.

The drawdown sharply enhanced the company’s book value, which was $364 million as of Sept. 30, up almost 80 percent from a year earlier, according to the company’s third-quarter earnings report.

To contact the reporters on this story: Matthew Monks in New York at mmonks1@bloomberg.net; Dakin Campbell in San Francisco at dcampbell27@bloomberg.net

To contact the editors responsible for this story: Jeffrey McCracken at jmccracken3@bloomberg.net; David Scheer at dscheer@bloomberg.net

Fantastic Chevy, exactly the type of info I was looking for! Let's make it a great investing 2013 starting tomorrow!

I'm so sick of how they operate now with "illiquid" and OTC stocks. It seems to really only be since TradeKing and Zecco merged that this has happened. It's weird to own positions that you can't exit easily, or to want to buy even a small number of shares but can't due it violating some liquidity trading rule. I want to move my account, thinking Interactive Brokers maybe.

Good luck in 2013 one and all!

Profitable now and trading at 43% of book value it looks. Thanks for adding a board to keep an eye on it Chevy.

Thanks guys, although I wasn't really speculating under or over-valuation but rather getting at what the effects of capital raising depending on methods would do to share price. As in, wrapping my head around if they did from an outside source how dilutive would it be to shareholders and what future levels could it trade at. Then, once that is normalized could start valuation measures. It's all a moot point if they appear determined to accomplish ratio compliance organically.

So Chevy, we've seen a 20% pullback within the month and I'm thinking to myself...does this bake in effects of possible dilutive capital raising? I don't have a position now but was considering it. I don't doubt that Q4 will show positive results, but what are your thoughts on this capital raising? They seem to have no time table, so are they just trying to raise ratios organically through earnings? Another good quarter could push them into adequate capital ratio territory I would think maybe. Thanks.

-Pagz

EI, do we have a rough schedule for any courtroom dates? I just noticed SAF Financial took about 2 years to settle so thought I would circle back and see where we are at, since 2 years on the others would put us about springtime. Thanks.

I'll post two quick things at once:


1) There was an 8-K filed regarding modifying warrants, could this be the precursor to an exchange offer?....

http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=8970405-5994-29741&type=sect&dcn=0001171843-12-004504


2) The warrants have negative time premium trading at $.90 when the common is at $12.91. Just thought that was a little interesting.

And just like that we break $10 in time for Christmas, a nice little milestone going into the end of the year I would say.

Thanks for starting this board guys, I'm always interested in these California banks trading under BV. I would never find these microscopic opportunities otherwise probably.

Sorry to hear that, I usually try to post buys and sells everywhere I'm at on the Internet but simply didn't update this one in time. I hope your position was a small one like mine was.

Sorry I didn't mention I had sold my small stake here last week to put into other investments. Got out with a small gain at a hair above $5.

Eagle Hospitality's Secured Lender Takes Ownership of 13 Hotels

PR Newswire

PURCHASE, N.Y., Dec. 11, 2012

PURCHASE, N.Y., Dec. 11, 2012 /PRNewswire/ -- Eagle Hospitality Properties Trust, Inc. ("Eagle Hospitality") announced today that its secured lender, an affiliate of Blackstone Real Estate Partners VII ("Blackstone"), has taken ownership of Eagle Hospitality's entire portfolio of 13 hotels.

Eagle Hospitality entered into an agreement with Blackstone on September 7, 2012, that delayed foreclosure on its 13 hotels, permitted Eagle Hospitality to attempt to sell the hotels and provided Eagle Hospitality the right to repay its secured debt at a discount.

Eagle Hospitality, with the assistance of its chief restructuring officer and Lazard Freres & Co. LLC, engaged in an extensive process to sell its assets at an aggregate price that would exceed the discounted payoff amount.

Eagle Hospitality was unable to secure one or more definitive contracts to sell its assets by December 10, 2012, which triggered the secured lender's remedies. Pursuant to those remedies, Blackstone has taken ownership and control of substantially all of Eagle Hospitality's assets, including all of its operating and real estate assets.

With limited remaining assets, all of which will be used to wind up its affairs, and no remaining real estate or operating assets, Eagle Hospitality expects that no distributions will be made, now or in the future, to the holders of Eagle Hospitality's 8.25% Series A Cumulative Redeemable Preferred Shares or to the other equity holders of Eagle Hospitality or its operating partnership, EHP Operating Partnership, L.P.

Read more: http://www.digitaljournal.com/pr/970585#ixzz2Ekwg2Lik

Well that's the largest chunk taken off the market since mid-March it looks. Anyone from on here?

Chevy, EI - I shot you guys an email late last night, sorry if it was confusing or rambling in any way. It was almost midnight and I had just come home from a company holiday party if you get my drift :p

< Message deleted because it was fixed by Chevy :p >

-Not sure how posts are deleted without a moderator!

PS: Chevy got your PM and have a short story to respond with, will email then.

Still under the $2 capital raise price right? I'm intrigued and buying a basket of these tiny regional banks has already paid off, always room for one more maybe!

I was hoping our resident trader would chime in on the subject! And I agree...why not share? Most of what I post is just back of the envelope valuations on lunch break. No one really wants to verbalize an Excel document on a message board anyway.

I remember a few years back it cost about $30,000 a year to list on the NASDAQ. That's not even $.01 / share a year for BNCC and I'd gladly pay that for the increased visibility, exposure, liquidity, and inclusion into more investable universes. Is that NOT worth that amount in any way?

I would think so too. And using that I was just spit-balling numbers on lunch break, thinking about some scenarios.

Assuming going into 2013 they have about $50 MM of excess capital, I'll use some very conservative numbers. This creates a floor like the $12 I said before. Let's say they can generate .5% ROA and have asset growth of 10% (extremely conservative).

I won't go into the quarterly details since we all can do that, but extrapolating that out gives you appx. $1 MM / quarter in earnings (extremely conservative).

Next assumption, they can utilize those excess reserves.

Let's take it that TARP will be repaid over Q1 and Q2 and be gone, and they can actually redeem the $7.5 MM debt after, so let's knock that out then in Q3.

I'm skipping steps here but by EOY 2013 if they are earning $4 MM w/ a 10X multiple and 3.33 MM S/O we are at a $12.15 / share floor with still a few million in excess reserves to use. Could they buyback shares? Would liquidity be an issue? Hmmm what would a buyback do? Could they even buy shares without driving up the price?

Well, IF BV was still at $13.60 (yeah right) they could afford to easily buy back 6-8% of S/O. At that discount to book (if that's where it was trading around $12 and change) a buyback would raise BVPS up to around $13.75 and with the same earnings (no growth and a 10X multiple) the price should then bump to about $13.25.

And so a new floor of $13.50+ should be reasonable. What is included in that?

-.5% ROA (they can do better)
-Asset growth of 10% (they can do better in the Bakken)
-Earnings multiple of 10X (with a better ROA% in a growth area this should be higher)
-BV Multiple of 1X (any lower and that indicates a DECREASE in BV...I think not)

I like what we got going here, now let's just see how these guys execute. Sorry if I just rambled on too much but I know you all get the idea. If they pay off TARP before we reach BV then buy backs are still a great idea on the table I would think. If not, then we are sitting on doubles in about 8 months holding period for some of us, even better for others. Win-win.

Cheers.

-Pagz

Let's see where we end up with at various ROA%'s and a 10X earnings multiple, using $742 million in assets and 3.33 MM S/O:

.5% = $3.71 MM earnings X 10 / 3.33 = $11.14
.6% = $4.45 MM earnings X 10 / 3.33 = $13.37
.7% = $5.19 MM earnings X 10 / 3.33 = $15.60
.8% = $5.94 MM earnings X 10 / 3.33 = $17.83

Taking book value into account, I'm comfortable assigning a $12 floor as the valuation.

I had a small buy a little above $7 where 10 Bagger added and then another chunk at $7.85. I'm comfortable in a slow rise to my / our price targets and beyond, or a buyout as the Bakken attracts investors in many forms.

-Pagz

Bank of America downgraded ROIC to underperform from neutral with a $12 price target, came across about an hour ago:

http://www.benzinga.com/analyst-ratings/analyst-color/12/11/3101702/update-bank-of-america-downgrades-retail-opportunity-inv

Bank of America reduced its rating on Retail Opportunity Investments (NASDAQ: ROIC [FREE Stock Trend Analysis]) from Neutral to Underperform with a reiterated $12 price objective.

Bank of America commented, "At this point in the cycle, we prefer general merchandise anchored shopping centers over supermarket anchored. This is due to the increasing volatility of food retailing and the increased competition traditional supermarket retailers face from warehouse clubs (Costco), premium grocers (Whole Foods), discount operators (Aldi's), and the emerging Wal*Mart Neighborhood Supermarket concept. ROIC has the highest exposure to supermarkets relative to peers with 89% of their portfolio anchored by a grocer compared to REG (68%), EQY (56%), and WRI (43%). Of ROIC's top 10 tenants, 6 are supermarkets that account for 14.4% of ABR. We prefer the flexibility of larger, multi-format general merchandise centers."

Retail Opportunity Investments closed at $12.28 on Friday.

-Pagz

Hmm interesting. Here's what I got:

"Dear Mr. Pagano,

Please be advised that your order to Sell EHPTP which was executed at $5.92 today, 11/15/2012 was “ruled to bust” by the Market Center due to a bad execution. Please feel free to place a new order. Your Activity page will be incorrect until tomorrow. We apologize for any inconvenience that this may have caused you and thank you again for your valued business."

I made a quick call to my broker and the rep said there was an execution mistake at the exchange level. They were ordered to bust the trade and it would be correctly reflected overnight to still have the shares.

Wow, mine just reappeared too in the holdings column. Interesting. Now that we've closed I don't see anything that high either. I thought it had been a typo at $4.92 but that wouldn't have passed my limit.

Well someone really wanted shares, they knocked out mine at $5.92 today. I can't argue with a quick flip like that with a special situation based on a binary event.

Gotta love illiquid securities.

Forgot to also mention as capital ratio levels are reached, all extra earnings and cash can be used to buy back shares under book or as dividends to investors again. And when the dividends come, the income investors come to drive up the price even higher as the hunt for yield continues.

http://professional.wsj.com/article/SB10001424127887324595904578117190099158474.html?mg=reno64-wsj

KKR and their housing project in North Dakota.

At $300 Million X 8% (if DYNV had the same contract as before for example), this would be a gross profit of $24 MM. Not realistic, but you can't tell me the construction opportunities aren't there.

Any info at all out there?

Chevy, I think you and EI have created an inadvertently fantastic investment strategy. That being creating a basket of cheap, smaller banks. In a way you (and me if / when I follow you on positions) are playing simple time arbitrage really.
For many of these (I'm thinking BNCC, PCBC, FCAL, and others), if they don't get acquired they are sitting on a pile of catalysts.

If they are acquired, then you get instant takeover premium. If not, then you can wait for the market to re-price them higher accordingly. AND that doesn't count the benefit an eventual normalized yield curve will give them, adding to earnings power.

Oh and if we ever get back to the old multiples, some of these positions will be giving us serious returns.

PS: I opened a small position in WIBC and have been waiting unsuccessfully for BNCC. My biggest banking position will be the Bank of America warrants and LEAPs for some time however.

Chevy, got your PM and it's all good. You should tag along for the next European adventure I have to go on for work by the way. Let off some steam.

Maybe Santa will bring me an IHUB membership this year :)