Important Updates for Investors
Carla Pasternak's Premiere Issue of High-Yield International Just
Released
Income expert Carla Pasternak's debut issue of High-Yield
International covers a Taiwanese manufacturer yielding 9.5%... a
rare Mexican monopoly yielding 13.4%... and other top-performing
investments yielding up to 19.0%.
Government's Biofuel Timetable Could Spell +15,900% Growth
+15,900% growth might seem far-fetched... but it's not. In fact, it
is mandated by law. And I've identified the ONLY stock positioned to
capture this growth.
The
Silver Lining to a Falling Dollar
Despite the U.S. national debt, there is a silver lining for income
investors. This massive spending, combined with movement out of U.S.
Treasuries, is going to take its toll on the dollar, and
international income investors could reap the rewards in the form of
higher dividends. |
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14.9% Yielder That is More
Secure than Common Stock |
Published:
June 17, 2008
IBC Capital 8.25% Trust Preferred (Nasdaq: IBCPO) was issued and is
guaranteed by Independent Bank Corp (Nasdaq: IBCP). The bank provides
commercial banking services as well as consumer lending, mortgage
lending, investment and insurance services primarily in urban and
suburban communities in Lower Michigan. With total assets of
approximately $3 billion, Independent Bank is a relatively small
regional Midwest bank. It was founded in 1864 and is based in Ionia,
Michigan.
IBCPO pays an annual dividend of $2.0625 in quarterly payments of 52
cents per share on the last day of March, June, September and December.
The stock was priced to yield 8.25% at a par value of $25. At today's
price, the stock currently offers almost twice that yield, or 14.9%
($2.0625/$13.85). Shares are redeemable by the issuer any time at $25
per share.
Trust preferred securities are backed by junior subordinated debt which
gives them a higher level of security than both common stock and regular
equity preferred stock. The bank has the right to defer dividend
payments for up to 20 quarters. However, since it is cumulative
preferred stock, the bank must pay all missed dividends once they get
back on their feet.
Prices of the bank's securities have plummeted along with most of the
banking sector during this credit crisis and recession. Shares of the
bank's common stock are $1.54, down from over $17 at the onset of the
credit crisis in mid 2007. IBCPO is down from over $25 in mid 2007 to
nearly half that price today.
Independent Bank, like most banks, has been hard hit. It lost $19.7
million in the first quarter of 2009 and over $90 million in 2008. The
primary culprit was provisions for commercial real estate loan losses.
Provisions for loan losses were $30.8 million in the first quarter of
2009, up from $11.3 million in the same quarter in 2008.
However, core operating earnings were up +34% for the same period and,
according to the bank, it still has a relatively strong capital position
with $650 million in unused borrowing capacity, $63.5 million in cash,
and $27.1 million in operating cash flow.
Worth noting is the fact that the bank doesn't have to earn obscene
profits for this investment to pay off; it just has to have enough cash
to pay the preferred dividends. Also, when the US economy recovers, loan
losses should improve and fortunes for most regional banks could vastly
improve. In fact, analysts are projecting IBCP's loss will moderate from
-$1.68 in 2009 to -$0.09 in 2010.
However, these shares are not for the faint of heart. The bank operates
in Michigan, a state with a staggering unemployment rate of 12.9% as of
the end of April. As such, it could be a while before the recovery takes
hold and the bank's financial performance gains traction.
IBCPO has already rallied over +30% from a low of about $10 in March.
Trading at a significant discount to its $25 par value, the shares still
have tremendous price appreciation potential.
Good investing!
[http://www.streetauthority.com/includes/editor-profiles-hy.htm]
Disclosure: Carla Pasternak does not own shares of
IBCPO.
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Investing Doesn't Get Any Easier Than This |
Stock picker Amy
Calistri's strategy is as simple as investing gets -- just one idea
a month designed to make money in today's market. Invest this way
and you don't have to worry about oil prices, automaker bailouts, or
what the Fed is up to -- because every "bad" economic development
actually helps some investment or another.Your investing life can
get a lot simpler -- starting today.
Go here to learn about Amy's simple investing strategy.
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