Another local Bradenton Bank is shut down by banking regulators
Today's issue of Barron's Magazine had a great article on regional banks which might be safe to invest in now as their tangible book ratios are at their lowest in years. One of the banks worth looking into was Fifth Third Bank.
As I perused headlines on Fifth Third, I noticed it had taken over a failing Florida bank, Freedom Bank of Bradenton, last Friday.
Knowing that Bradenton has already had one bank failure this year (First Priority failed earlier this year), I went in search of FDIC news surrounding Freedom Bank.
I also looked for a newspaper article using the Herald Tribunes online resource.
Swamped by millions of dollars in sour loans, Freedom Bank of Bradenton was shut down Friday by banking regulators.
Fifth Third Bank acquired Freedom's $254 million in deposits, and its four offices will open Monday as Fifth Third.
Freedom is the second Bradenton bank to fail this year, falling three months after First Priority Bank. It is the nation's 17th bank failure of 2008.
"In my 27 years in Florida banking, I don't think I can recall two banks failing in the same year in the same town," said Sarasota banking consultant Tramm Hudson.
Both failures reflect the aftermath of the real estate boom-and-bust that has crippled banks here and nationwide. Critics have questioned the two Bradenton banks' fast-growth strategies and whether they traded caution for loan and growth deals.
The Florida Office of Financial Regulation seized Freedom at the close of business Friday.
The Federal Deposit Insurance Corp. was appointed receiver to liquidate its assets.
Deposit customers of Freedom automatically become customers of Fifth Third.
Some observers had circled Oct. 31 for Freedom's demise. On Friday, the bank issued its third-quarter earnings report and the FDIC released a cease-and-desist order showing Freedom had missed a deadline to replenish its capital base.
Freedom lost $3.2 million in the quarter, bringing its year-to-date loss to $18 million.
The cease-and-desist order, issued Sept. 5, directed Freedom to, within 45 days, raise millions of dollars in fresh capital and boost its basic "tier 1" capital ratio to 8 percent.
That key measure of financial health had evaporated to 2.0 percent, or $5.4 million, putting the bank just above the "critically undercapitalized" level.
"This bank was just too far gone to be saved," said FDIC spokesman David Barr. "It got to the point where the bank had to be closed."
To which I will add this question: Have any of you Key Westers who use Wachovia talked to your local branch manager since Wells Fargo took them over? I wonder, because I still see the Wachovia sign up on North Roosevelt Boulevard and I'm wondering when Wells Fargo will put their imprint on checks, savings deposit slips, and of course, the signage out front?
Lastly, none of you should be reminded to get out there and vote today. Polls open in about two hours in Key West. I'll be over there with Cafe con leche in hand.
As always . . . caveat emptor,
Rock
p.s. Soon after this election, I will be discussing stocks I've been buying during last month's crash. I've never seen so many bargains in blue chip/buy and hold for life stocks. When you have companies such as Con Edison which has never missed paying a dividend since 1885 or a company such as Proctor and Gamble selling for far less than their Enterprise Value (the cost it would take to set up all of the company's factories, supply lines, offices, inventory, work force staff, etc.) then you know panic selling by hedge funds, mutual funds, pension funds and other highly leveraged players are offering you one of those very rare open windows of opportunity which must be seized before it shuts.
These are the moments in History where you wade in like Warren Buffet (who is a big big buyer of equities at this moment) and buy sound companies you may have been holding off from buying for the past ten years.
I'm still gun shy on most financials, insurance and real estate issues, and I certainly think it's going to get much worse in retail land.
Thus, I am buying necessities and consumer staples. Some of the stocks I've been buying in these areas are paying double digit yields for dividends. The dividends alone will bail you out if the market goes sideways for another 5, 7 or 15 years.
Just remember the law of 72. Meaning if you find a investworthy stock throwing off say a 12% yield at this time, within six years (12 x 6) you will have doubled your gains by simply reinvesting your dividends back into the company's share's you originally bought.
I can help any of you set up automatic dividend reinvestment plans through your online brokers and without requiring you to contact the company you want to reinvest your dividends. It's a very simple process with Fidelity. Ameritrade takes a bit more work, but it is doable in one-half hour.
That said, I highly recommend everyone take a bit of your take home pay and invest it weekly or bi-weekly into a Roth IRA which you fund with necessity and consumer staple stocks which will not lose Enterprise Value as we go further into this Recession we are in (and which will get much worse going forward.)
If this Bear Market continues force stocks down or sideways for longer than a year, I will be a very happy investor as the longer my stocks reinvest dividends at cheap share price, the more shares I will have to amp returns when the market returns in 5, 10 or 15 years.
Hell, this could take 30 years to turn around. Meanwhile, my stocks selling necessities such as razor blades, electricity, water, oil, will be building a healthy nest egg throwing off more dividends quarterly and reinvesting those dividends into more shares which return even more dividends the following quarter.
No comments:
Post a Comment