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FNBN is currently trading at $0.24 per |
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share and market cap around $3 mill. |
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Released on Wednesday, October 12, 2011, 8:00 AM ET
Pittsburgh, PA (SpeculatingStocks) - FNB United Corporation (NASDAQ:FNBN) is a company who has a bleak future. Even though the company just announced that it would acquire Bank of Granite Corporation last Friday, FNB United has failed to look to its own financials.
With an income statement bleeding in red the company reported a negative EPS of -4.21 per share last quarter, and has sustained consistent negative EPS' since the end of 2008. To make things worse the company has been quickly increasing its retained deficit, jumping from -$96 million last year to over -$229 million this year.
An in-depth look at the company’s financial statements would reveal that their largest asset class would be loans held for investments—not surprising considering it is a parent company of a bank. But what is surprising is that as much as 73% of these debts seem to be sub-prime level mortgage backed securities, judging by their current averaged interest rates as high as 37.1% for 1-4 family residential mortgage loans.
Even worse, deep buried in FNB United’s financial statements are total non-preforming assets of $309 million on their books. As well as some $200 million in impaired loans. Leading to a conclusion that a substantial proportion of those loans held for investment by FNB United are not necessarily profit conferring investments.
FNB United has a total debt ratio of 1.01, meaning that if the company were to go belly-up it would not be able to cover its debts with its liabilities, unfortunately, that 0.01 represents more than the common shareholders capitalization.
Back in June, when the company released that it was considering a merger with Bank of Granite, the stock price jumped considerably and has since trended down to rematch its former support. The company received regulatory approval from the Federal Reserve Bank of Richmond to acquire Bank of Granite as reported earlier today, so the stock could very well make a large jump over the next weeks considering the stocks historic trends.
But all things considered, unless Bank of Granite proves to be a savior asset for FNB United, the company does not seem to be on great financial foundations. And when these conditions present themselves most corporations’ stock values tend to trend lower and profits are captured from short-sales on those entities. FNB United is currently trading at $0.28 per share and has a market capitalization of around only $3 million making it a low end nano-cap. stock. With volume around 12,000 shares on a daily basis, whatever your stance on FNBN this is a risky investment with entrance and exit strategy, so be careful when playing on FNB United.
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