I saw the earnings cuts listed on the Analyst Center offered by Schwab.
I spoke to Lee Wattcot, CFO of WFSI. He's told me a few things. Some are of concern and some are good.
In general, WES has added shares since the IPO and now holds about 84% and WES CEO Rady owns about 3% of WFSI and 60% WES, leaving a float of 13% or perhaps 3.5 million shares. Lee said there was one other large shareholder, but it wasn't in reporting range so he couldn't give details.
He said the short interest has been there for some time and they haven't been able to figure out who owns it.
Problem loans continue. They have announced 3% range of bad loans which will continue and may rise. They are slowing growth to 10 to 15% range to improve loan quality.
Interesting note about computer systems. In many recent mergers of banks, they cite the cost of converting systems to handle the Year 2000 problem. Wescorp has designed many internal systems to handle the approval of loans and managing accounting. This was an area which intrigued my father, an exprogrammer years ago.
So, I asked Lee what was the risk of conversion WES faced? He said they had fortunately used a 5 digit format for dates which negates the Y2K issue. So, on the upside they have saved a lot of expense on an issue that has worried many companies.
So, I believe WFSI is still in trouble with the risk of bad loans rising. Maybe their program to improve loan quality and reduce operating expense by closing offices will lead to a better picture. Should the share price continue to fall, I'll by my shares back.
As far as the short interest goes, I wonder what it will take for them to cover? If they didn't cover at $9, I wonder what their goal is? I would seem nearly impossible to cover without a huge block trade. Who would supply these shares?
Regards,
Mark |
