HGH - Heartland Group Holdings

[Snoopy]

What a few days and a record close of 120. Wow

Good news Snoopy appears to have given Heartland a clean bill of health. Enough good capital cover to sink a ship

Heartland only has a tiny amount of Tier 2 capital. Yet weirdly, because of this and the way those NZ reserve bank covenants are written, it seems this has become the limiting factor as regards Heartland's Capital Adequacy going forwards.

The way I read this (and I could be wrong), Heartland must make sure their total Tier1 and Tier 2 ratio is in excess of 8+2.5=10.5. At the last balance date with declared results (30-06-2014) Heartland had a Total Tier 1&2 Ratio of 17. Total shareholders equity was $452.6m. If they only had:

$452.6m x (10.5/17) = $279.5m of equity.

that would have been (roughly) sufficent to cover the loan book at the time (with the benefit of retrospective application of today's new reserve bank sanctioned capital standards)

Then based on today's covenants, that leaves:

$452.6m - $279.5m = $173.1m of 'spare' capital that could be allocated to an expanded loan book. In practice no bank would 'go to the wire' in this kind of expansion. So lets say $150m of capital available for loan book growth.

The question is what kind of loan book could Heartland acquire with that? About $1.5billion in new loans perhaps? That's if they only paid book value for the new loans, of course.

SNOOPY

[Snow Leopard]

Snoopy you may want to consider this.

Heartland have a Home equity release business which is currently separate from the Bank.
They have stated (somewhere ?) that their intention was to bring the NZ part of the business into the Bank.

So how does that play out with respect to all this Capital Adequacy stuff?

Best Wishes
Paper Tiger

[Snoopy]

Snoopy you may want to consider this.

Heartland have a Home equity release business which is currently separate from the Bank.
They have stated (somewhere ?) that their intention was to bring the NZ part of the business into the Bank.

So how does that play out with respect to all this Capital Adequacy stuff?

Thanks PT for reminding us that the 'Heartland' you can buy on the sharemarket and 'Heartland Bank' are not the same thing! Back at EOFY2013 they used to be virtually the same thing. But the HER business acquisition seems to have changed that. Comparing the 'Heartland' balance sheet as at EOFY2014, and the 'Heartland Bank' balance sheet (from the Heartland Bank Disclosure Statement) as at EOFY2014 tells the story.

	Listed Heartland	Heartland Bank	Difference
Total Assets	$3,016.888	$2,390.749m	$626.139m
Finance Receivables	$2,607.393	$1,985.119m	$622.274m
FR Not past 90 days nor impaired (non securitized)	$2,321.630m	$1,693.063m	$628.567m

Declared cash cost of Seniors acquisition $NZ87m (14-02-2014), with an aggregate asset value of $NZ760m (including NZ$30.5 million of HER loans purchased by Heartland Bank in December 2013).

Exchange rate at 20-02-2014: $NZ1 = $A0.9283
Exchange rate at 20-02-2014: $NZ1 = $A0.9291

So $NZ730m worth of Austrlian dollar loans reports as $NZ729m on balance date.

SNOOPY

[percy]

PT is correct that they want to move more of the NZ REL business into the bank.

[Snoopy]

PT is correct that they want to move more of the NZ REL business into the bank.

So it looks like Heartland Bank are all set to make a reverse takeover offer for (drum roll) - Heartland! That would certainly allow them to operate with one board, not two. A good cost saving. Not sure who of Bruce Irvine, Nicola Greer and John Harvey would be retained from the bank on the slimmed down Heartland board. Probably Nicola to get more gender diversity. An important back up to newly appointed director Deborah Taylor, should Deborah's tea making skills not be up to scratch (if I might stir the pot a bit!).

SNOOPY

[Marilyn Munroe]

S Not sure who of Bruce Irvine, Nicola Greer and John Harvey would be retained from the bank on the slimmed down Heartland board.
SNOOPY

The provincial accountants who cheer-leaded CBS Canterbury shareholders into Heartland have served their purpose have thay not?

Boop boop de do
Marilyn

[percy]

So it looks like Heartland Bank are all set to make a reverse takeover offer for (drum roll) - Heartland! That would certainly allow them to operate with one board, not two. A good cost saving. Not sure who of Bruce Irvine, Nicola Greer and John Harvey would be retained from the bank on the slimmed down Heartland board. Probably Nicola to get more gender diversity. An important back up to newly appointed director Deborah Taylor, should Deborah's tea making skills not be up to scratch (if I might stir the pot a bit!).

SNOOPY

Not that I am aware of.
Should it happen it will not happen any time soon.
We must also remember Heartland owns a REL business in Australia.There is no intention to make that part of the [NZ] bank.

[janner]

My prediction .. For what it is worth..

Another consolidation stretch.. .. Followed by another " Burst ".

So far correct..

Not much action until the next report..

Take into account the overhang.. ( All ready spoken for... IMHO. )..

You have until April :-)))) Also IMHO..

Not increasing my holding.. Apart from DRP..

Having ridden this one from the early stages and not selling .. ( Aye percy )...

Feel there are other stocks available that will give better Dividend returns.. For my new SAVINGS !!....

[percy]

Just got to keep our daughters away from our profits.!!!! .
Just forked out for the grand daughters school uniform.!! not funny.
Have put off my retirement for another 35 years..!!!
Does the pension double when you reach 100.???

[Bobdn]

Just got to keep our daughters away from our profits.!!!! .
Just forked out for the grand daughters school uniform.!! not funny.
Have put off my retirement for another 35 years..!!!
Does the pension double when you reach 100.???

How come your children can't afford to pay for their kids' uniforms?