Replies to post #36 on BNCCORP, Inc. (BNCC)

[vpagano]

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

[56Chevy]

re: TARP repayment. That's a bold prediction EI but I agree...and I'd love to see it.

re: other future possibilities for BNCC in 2013. I thought the company may consider moving back to the NASDAQ in 2013. The company hasn't said a word about it so it was pure speculation on my part but I have conflicting thoughts now that that would be on managments' to do list for 2013...or ever.

BNCC voluntarily delisted (and deregistered w/SEC) its stock from NASDAQ and moved to the OTC in January of 2008.

Most of the time when we see a delisting from a major exchange it wasn't done voluntarily ...its usually done because the stock has fallen below exchange pps thresholds over a pre-set period of time...but in BNCC's case that wasn't the reason.

Oddly enough when BNCC delisted in Jan 08 the pps was approx what it is today in the $7 ~ $9 range. It had been at $13+ just 6 months ealier so its true the pps was in a free-fall state when the decision was made but the BoD (I think very wisely) made the decision to immediately shut down all un-necessary expenses asap..and one of those was the cost of reporting to the SEC.

As I said, the company wasn't under pressure from NASDAQ to delist and even though the pps was in fact falling quickly they were still well above minimum NASDAQ pps standards and yet that didn't stop the BoD from doing what they did.

The reasons given by the BoD in January of 2008 to delist were:

The decision of the Company's Board of Directors to deregister and delist its common stock was based on the consideration of numerous factors, including (1) the disproportionately large costs of preparing and filing periodic reports with the SEC, (2) the substantial increase in accounting, audit, legal and other costs and expenses associated with being a public company, particularly due to the Sarbanes-Oxley Act of 2002, (3) the additional demands placed on management and Company personnel to comply with requirements required of registrants, (4) the historically low trading volume in the Company's common stock, (5) the lack of any analyst coverage of the Company's common stock, and (6) the concentration of stock ownership in relatively few holders.

"Our Board of Directors made the decision to delist and deregister the Company's common stock only after extended deliberations by a special committee consisting entirely of non-employee directors and advice of our financial and legal advisors and careful consideration of the advantages and disadvantages of no longer being a public company. We believe that the cost savings and relief from administrative burdens to be achieved through deregistration will be substantial and will allow management to focus more of its time and resources on our continuing operations and enhancing stockholder value," stated Mark W. Sheffert, the Company's Chairman of the Board. "We understand that numerous publicly-traded companies, including many with much larger market capitalizations and better liquidity than BNC, have chosen to voluntarily delist and deregister for many of the same reasons that our Board has chosen to do so."

http://www.prnewswire.com/news-releases/bnccorp-announces-plans-to-voluntarily-deregister-its-common-stock-with-the-sec-and-deregister-with-the-nasdaq-global-market-56895157.html

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We're now in 2012 soon to be 2013 but the circumstances are vastly different now. 1) the pps isn't in free-fall as it was in 07-08. We see dramatic moves up now. 2) The Bakken Oil field influence on BNCC in 08 wasn't nearly as advanced as it is today. 3) Although BNCC remains to be an unknown on Wall St they can't stay hidden much longer. ND is now on everybodies map!

You have no way of knowing if management would consider it, or is quietly considering it, but I need you to put your Bankers hat on and put yourself in their shoes - Looking forward, does a NASDAQ listing for BNCC now outweigh the cost saving benefits? Has anything really changed on this front?