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Strategies & Market Trends : Value Investing
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To: Spekulatius who wrote (53439)2/24/2014 8:35:20 PM
From: 56Chevy  Read Replies (2) of 78774
 
Spekulatius writes:

"This is a bank that is slowly fixing itself, but it still has very weak operating earnings, plus the TARP overhang. This might be interesting, if they do a secondary to pay of TARP."

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I don't own GRBS..I was asked about this bank and I gave a review which was very similar to yours.

I would agree that owning TARP going into 2014 isn't a desirable situation when evaluating a bank. On the other hand taking advantage of a 5% loan for as long as possible isn't the worst strategy the bank could have deployed either. TARP can and has carried certain stigma's for some banks..not to mention restrictions on managements' compensation/bonus packages which they hate.. but it was cheap, quick and easy money..so why not use it.

Only recently did their TARP loan rate jump to 9% ...which does change things... and yes I would agree something needs to be done.

GRBS is a fairly healthy bank and its unknown if the Treasury would consider accepting a discounted TARP repayment. They did for other banks for as much as a 50% discount (see FSWA bank up in Washington State for just one example). The Treasury Dept would like to wind the TARP program down...the quicker the better... and to expedite that has been in the mood to make deals.

I'm sure GRBS's BoD is working to do something about TARP but I've seen several bank M&A's happen involving banks that still owed TARP... and not only that but some of those banks had less than desirable P/BV numbers and yet were acquired at a premium price.

I wouldn't say to buy GRBS with M&A in mind (I know of a half dozen banks that are better acquisition targets..with much more upside potential in a merger/acquisition scenario) but buy it because its a bank on the mend... its still priced below BV ...decent size in assets...and should some large fish swim by and swallow them up..I think a shareholder be very happy with the terms.
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