HeartstarterBank?
:cool:
This seems like a good bolt on product. But with market dominance already established, where will growth come from. I didn't see any mention of it in the ann
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HeartstarterBank?
:cool:
This seems like a good bolt on product. But with market dominance already established, where will growth come from. I didn't see any mention of it in the ann
I did see adverts (on TV) on the field side hoardings at eden park NRL 9's in the weekend - not so many "oldies" there I would have thought
Good to get their name out there
An article on Interest.co.nz this morning below for those who can't log-in to view it. Seemingly good news regarding the legacy property portfolio, but looking forward to confirmation that the contracts are unconditional.
- Heartland boss Jeff Greenslade confident victory over dud legacy property portfolio is near Gareth Vaughan, 0 comments
By Gareth Vaughan
Heartland Bank CEO Jeff Greenslade appears confident victory has been won over the bank's dud legacy property portfolio.
Geeenslade told interest.co.nz that, if conditional contracts come to fruition, Heartland will only have to use $5 million of a $15 million provision for the loans by June 30. Heartland had been able to shift the assets "quite effectively," he said.
"You may recall we set up a provision of just under $15 million to assist in this process. If all those conditional contracts come to fruition by the end of June, we will have only tapped into $5 million out of that $15 million. That’s ahead of expectations," Greenslade said.
"Pleasingly for us the impairment line is no longer the one to watch out for."
The non-core property portfolio comprises loans and investment properties inherited from Marac Finance when the previously Pyne Gould Corporation (PGC) owned finance company merged with building societies CBS Canterbury and Southern Cross Building Society to create Heartland in January 2011. The portfolio was valued at $107.4 million at June 30 last year.
Last June Heartland revealed a $24 million hit because of the property portfolio. This stemmed from a one-off non-cash asset write-down of $18 million before tax, plus a pre-tax hit of $6 million from writing off the balance of an $11 million fee being paid to a unit of the George Kerr controlled PGC as management of the portfolio was brought in-house.
'Even the ugly stuff is shifting'
At that time Heartland said the loan portfolio had been split into three categories labelled "performing", "accelerating" and "extend". Performing loans or assets would be held unless an attractive offer was received, the stuff classed as "acceleration" would be exited within 18 months, and loans in the "extend" portfolio would be converted over time to real estate to be better positioned for sale and held for up to five years.
"Even the rump, which is the bad stuff which was $11 million when we started, we’ve got that down to $7 million" Greenslade said. "We thought that was the bit we were going to be left with. So even the ugly stuff is actually shifting."
Charts provided by Heartland in its reverse equity mortgage deal presentation (see below) detail progress with the portfolio. As of June 30 last year the portfolio was valued at $122.3 million, excluding general provisions of $14.9 million. Based on conditional contracts, the portfolio is forecast to be valued at $67.9 million at June 30 this year. The drop in value sees its "rump" decline from $11.1 million to $7 million, the "performing loans" rise slightly in value to $28.9 million from $28.6 million, and the "for sale" portion fall to $32 million from $82.5 million.
High capital requirements 'something to think about'
Meanwhile, Greenslade said Heartland was "comfortable" with its Reserve Bank capital requirements being higher than those for other banks, but this would be something "we will be thinking about in the future."
Heartland's conditions of bank registration set out that it must have a minimum total capital ratio equivalent to 12% of total risk-weighted exposures, minimum tier one capital ratio of 12%, and common equity tier one capital ratio of 10%. Other banks have a minimum total capital ratio of 8%, minimum tier one capital ratio of 6%, and minimum common equity tier one capital ratio of 4.5%.
"We’re comfortable where we are, it hasn’t caused us any problems," Greenslade said. "And I think generally speaking all banks are going to be carrying more capital going forward, so we don’t feel alone in that regard."
"That is something between us and the Reserve Bank but that’s not an issue right now."
Since January 1 this year banks also require a buffer ratio for common equity tier one capital of at least 2.5%. This buffer ratio is described by the Reserve Bank as a counter-cyclical capital buffer that can be applied in times of excessive credit growth. It's part of the Reserve Bank's version of the global Basel III bank capital adequacy standards, which have been endorsed by the G20. Heartland isn't required to maintain this buffer.
Heartland provided the following chart (from here) on the reduction of its non-core property holdings
[IMG]file:///C:\Users\dah\AppData\Local\Temp\msohtmlclip1\01\cl ip_image001.gif[/IMG]
Heartland says both the June 30, 2014 forecast and the value of its total property book at December 31, 2013 are based on conditional contracts.
The value of its total property book given above excludes general provisions of $14.9 million at June 30, 2013), $12.1 million at December 31, 2013, and about $10 million at June 30, 2014.
Confirmation that the planned acquisition has no affect on their Standard & Poor and Fitch credit ratings.
https://www.nzx.com/companies/HNZ/announcements/247068
Fitch give a nice summary of what they perceive as the potential risks:
As most of New Zealand's population holds its wealth and future pension in property, Fitch believes there is reasonable potential for further growth. Potential risks are mostly, but not exclusively, of an operational nature. HBL has put in place tight guidelines to limit these risks and protect its reputation. Fairly strict loan-to-value (LVR) limits should protect HBL from any potential house price corrections. However, longer life expectancy could create repayment pressure.
As the transfer will take place over time, the impact on HBL's capital should be manageable, and Fitch expects HBL will improve its retained earnings. The loan book is well seasoned and diversified, with Sentinel's average LVR standing at 32.7% in December 2013
Mike what's his name on his weekly note on chrislee.co.nz is suggesting inside trading / leaks last week that saw the rise in hnz shares
Probably came from other side as hnz run a really tight ship
I lost a lot of money and my confidence during GFC.
Posters on NZ thread such as Phaedrus,Papertiger, Lizard,Ratkin,Winner69,Xerof,StrangerDanger,Sauce, Forest,Balance,Roger, and others have helped me regain both my confidence and my money.I will also mention the fantastic help I have received on Australian threads.
Yes,some of the recent posters are a concern [some I don't read],yet overall I think I am still learning and making money by reading most posts.
What does concern me is the posters who leave after being subjected to stupid comments.
Offcourse I forgot to thank Sparky The Clown and Belgarion and the many others whom I have learnt so much from.
what is figure of NTA after accquition? i guess would be between $0.95-$1.0.
Edited because I got the original NTA wrong by about 4cps :blush: (Deferred tax asset is not tangible?)
I think that is too high.
NTA at 30 June 2013 was about $0.85 (originally said $0.89!)
Add in $16.5M profit 4.2cps and subtract the 2.5cps dividend and call it $0.87 at 31 Dec 2013
So roll forward another three months to 31 Mar 2014 and say 2.1cps profit and subtract 2c dividend paid (cash and new shares) so still $0.87 ish.
Acquistion is a swap of cash for other assets possibly including some goodwill?
So call it around $0.87.
Roll forward again to 30 Jun 2014 and add another 2.1c profit and NTA will be $0.88 to $0.90
Best Wishes
Paper Tiger