Different Perspectives

Different Perspectives

The following is a discussion that i am having with a fellow over Everbank in Jacksonville, FL.  This fellow had asked me how he was supposed to interpret Everbank’s true condition when one rating agent gave Everbank a D- or failing bank ranking, and another respected rating agent gave it a very positive “Four Start Status”.  The following is my explanation.


Here’s the answer to your question, S–, which by the way is a good one.   First of all, i went to my own list (of troubled banks) to see how Everbank looked from my list.  When i did this, i could not find Everbank on my list of “troubled banks”.

But don’t think that i just stopped there, but then i went into the fdic database to see what i could find out on Everbank there.   And here is what i found.  In the last year, Everbank has raised their asset base from $7.5 billion to $11.2 Billion–that is generally a good sign, and not something that you would have necessarily expected considering the times, which is a “positive”.  Then I also noticed that Everbank’s Equity had increased to $1.0 billion from $0.6 billion.  That is also good, equity is flowing in at a higher rate, than before–this somewhat goes along with an improving firm.

The rub, however, is in the NPA (or non-performing asset) category.  When you look at the NPA/Asset ratio, you see that Evergreen’s ratio is currently just “very slightly” below their Equity/Asset Ratio.  The positive view is that Everbank is trying to pull themselves out of a sticky situation, and so far the numbers show that they are moving in the right direction.  However, the future is the future, and it is important for Everbank to keep up their current strategy.  They are not out of the woods yet, and that is why i think the rating people show entirely different perspectives, both feeling right in their own views.

I will tell you this, if Everbank’s NPA/Asset level was just slightly higher than it is currently, they would have been on my own “troubled bank” list.  So, essentially what i am saying is that two different opinions can be viewed from the same numbers.  Sometimes, it only comes to one’s own perspective.  Personally, i am kind of one of the “middle roaders” on Everbank, and that is this, “Yes, we like what you are doing, but don’t fall into bad habits because we are watching.”

Hope this explanation works for you, S–.  It was a good question.

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