The three banks with local offices that seem to have the most difficulties these days, Horizon Bank, Frontier Bank and Sterling Savings Bank, are also having difficulties with investors, but in different ways.
All three are trading around 52-week lows and are operating under cease-and-desist orders, but the movement has been different. Everett-based Frontier Bank was trading at 36 cents this morning, but has seen a steady decline for the past week. Bellingham-based Horizon Bank has been hovering around 53 cents, much like it has been for the past week. The only difference between those two, news-wise, is Frontier announced its latest quarterly results last week; Horizon is expected to release its results later this month.
Spokane-based Sterling Savings saw a big drop after getting hit with a cease-and-desist order last month, but is trading around 77 cents, up 15 cents from its 52-week low.
So, thoughts about what’s next for these banks?
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November 3rd, 2009 at 7:45 pm
Although Horizon Bank has not publicly announced its 3rd Qtr results, the bank has filed its Sep 30 “Call Report” with the FDIC, and the results are not pretty.
Horizon lost lost more than $34 million this past quarter and has seen its Tier 1 capital plummet from $45 mil as of Jun 30 to just over $10 mil as of Sep 30. Its Tier 1 ration has fallen from 3.2% to under 1% (0.8%). In order to meet the 10% Tier 1 capital ratio by the end of November - as required by the FDIC in its March 2009 cease & desist order - Horizon Bank will need to raise $125 million in new capital in 30 days. To appreciate how daunting this task is, the bank currently has just over 12 million shares outstanding. At $0.52, the bank’s total market value is only $6.24 million. In other words, you can purchase the entire bank for just over $6 mil.
How will Horizon raise the $125 million needed to meet the requirements of the FDIC order?
FDIC Call Reports are available at no charge online at:
https://cdr.ffiec.gov/public/ManageFacsimiles.aspx