Paragon Banking Share Discussion Threads

[the drewster] 28/3/2012 11:47

The uptrend appears to have broken. Ought to test 160.

[pammiekins] 21/2/2012 14:25

Take a look at Belvoir (BLV) listed on AIM this morning for a fresh, new approach without the antics of PAG directors.

[brownie69] 17/2/2012 19:47

As per my post 1970 having dipped a toe in the water i'm out if thats how management behave here.

More crooks by the looks of it and I've had enough of it. Voting with my feet.

Shame as this looks like an interesting space for the next couple of years which is the earliest that I can imagine things returning to anything like normal in the mortgage world.

[the drewster] 02/2/2012 09:27

So the three head honchos got an average of 500,000 shares each for nil consideration, and subsequently sold them all to boot - should give all holders immense confidence, not.

[future financier] 03/1/2012 17:15

Sounds like Clampit was tasked by his superiors to talk down expectations for the market as a whole (and thus PAG as well) due to PAG's underperformance in re-building its book of business. The market generally is expecting a 20% growth in BTL business for 2012 - but PAG appears to be lagging the more buoyant parts of the market and is reacting with extraordinary lag of vigour.

Having weathered my own personal private financial crisis I may well come back in to this one soon.

[techno20] 03/1/2012 11:02

For info, I've now exited.

I still think this business is well run and will in the medium term deliver good returns for investors. I just think that sentiment will turn against them in the short term - further pressure on financial institutions / wholesale markets, house prices dropping, arrears starting (albeit slowly)to rise, difficulty in originating new business etc. I've pasted an article from Paul Clampin Paragon's Underwriting Director below which paints a pretty sombre view on the year ahead. This appeared a couple of weeks before Christmas.

As a result I'm expecting a drift back downwards to £1.30'ish, at which point I'll happily re-invest.

Good luck to all.

Techno20



At this time of year most of us are starting to think about the new year's resolutions we will try to keep for the coming year. Some of these will be the same resolutions we made last year and which will once again undoubtedly fall by the way side once we hit mid-January.

One new year's resolution that I think buy-to-let mortgage lenders would be wise to keep, is not to fester unrealistic expectations for the new year. This is not a negative statement and should not be taken as one; it is simply an observation that within the market at the moment there seems to be a level of unsustainable expectations for the coming year.

It is my view that 2012 will be much the same as 2011. In terms of Paragon, 2011 for us was about re-establishing ourselves in the lending market and launching our first, successful securitisation since 2007.
click here

Next year will be about building on the foundations we have laid during the past 12 months, which I fully believe we have the expertise and stamina for.

In general, the last year has been a challenging one for the majority of lenders, large and small. What with the continuing difficulties within the eurozone and the general nervousness in the financial markets there has most definitely been a level of uncertainty throughout the year.

These issues are unlikely to go away anytime soon, so it is important that as an industry we continue to focus our energies on offering sustainable products and exceptional service to landlords so that they can continue grow their businesses in the new year.

It is essential for the future of the private rented sector that landlords remain optimistic about the market and have the right tools to be able to make their investments work.

Whilst 2012 will be challenging at times, I do believe that the buy-to-let market has set firm foundations to be built upon and will continue on the road to recovery

[the drewster] 03/1/2012 10:32

Not particularly inspiring results from their tips last year - the worst showed a loss of 82.6% against the price when it was tipped.

I think Paragon should be a solid if unspectacular buy, I just have a problem where the rewards for the management team seem so out of line with those enjoyed (!!) by the shareholders.

[texas tea] 31/12/2011 22:23

Telegraph share tips for 2012

[the drewster] 22/12/2011 12:20

More nil paids ... how lovely.

Director Award granted Exercise period Total awards
outstanding

N S Terrington 480,912 21/12/14 - 20/12/21 3,005,290
N Keen 360,114 21/12/14 - 20/12/21 2,250,665
J A Heron 256,410 21/12/14 - 20/12/21 1,597,254

[the drewster] 19/12/2011 14:38

Another earnings enhancing (claimed) portfolio to add to the mix. They give no indication of the discount they paid for the assets, which would have been interesting in todays market.

[brownie69] 05/12/2011 10:40

Just dipped a toe in the water here.

Thinking is that UK house prices are not going up in real terms in the forseeable future, yet people need a place to live thus increased rental demand...Paragon seem to be best placed as a play on that market dynamic.

[the drewster] 05/12/2011 08:33

I think they all benefit from the foundations and governance laid down by John Perry to be honest.
Well well off the highs of £7 plus, and that was pre-consolidation too (10:1).

[techno20] 26/11/2011 15:36

Another very positive write up in this weeks IC. Buy at 172p.

TD - don't disagree they've been well rewarded, but given that virtually every competitor operating a wholesale based funding model has crashed and burned, I reckon Terrington, Keen and Heron are worth every penny.

Techno

[the drewster] 15/11/2011 09:34

Top class management who have continually rewarded themselves incredibly well. Wonder how many new "nil paids" will be available to them this year. For the size of company, they must be in the very top tier of high earners I'd imagine.

[techno20] 13/11/2011 11:42

Great to see the securitisation over-subscribed - quite an achievement in the current Market. With the likes of LBG scaling back on BTL and Santander's launch delayed, PAG still have a great opportunity to drive business in what is pretty well the only positive part of the mortgage Market.

Buy a chunk of the Irish Life and Perm book at 70c in the € and the growth story could really accelerate.

The fact that PAG is still going is testament to the top class management team.

Techno.

[techno20] 07/11/2011 21:39

Two more broker buys today, this time at 233p and 220p.

Techno

[yupawiese2010] 06/11/2011 17:05

To complement what Techno20 wrote above

Here is the article uploaded from the I.C.

Paragon builds up its loan portfolioBy Jonas Crosland, 01 November 2011

Paragon is more readily associated with providing buy-to-let mortgages for professional landlords, but it also has a growing loan acquisition and servicing division. And through this vehicle, the business has been busy buying up consumer loan portfolios from major banks and building societies, most recently a package of unsecured loans from Royal Bank of Scotland for £43.2m.

The acquisition was made through the group's acquisition vehicle, Idem Capital, and the loan portfolio was already being managed by Moorgate Loan Servicing, Paragon's specialist loan servicing operation that offers third party clients a complete loan management outsourcing service. Paragon paid cash for the portfolio, which is immediately earnings-enhancing, having already generated £5.2m in principal and interest payments since the determination date set at 30 June this year, and management is targeting a 15 per cent post-tax return on equity. This is the sixth loan portfolio acquisition this year, bringing the total investment to £89.5m.

Selling loan portfolios also make sense for banks because they are keen to reduce their loan books in order to restore their capital adequacy ratios. And, while the rationale behind selling good loans and hanging on to the bad ones may seem odd, it makes sense because poor quality loans can be rolled over to avoid declaring a default. This gives banks time to wind down the bad loans in an orderly fashion.

IC VIEW:
Paragon has more than 20 years of experience in loan servicing, and during that time has dealt with over a million customer accounts. More details are expected on the six acquisitions when the company releases full-year figures on 22 November. At 160p, the shares are trading on just six times 2012 forecast EPS, and we reiterate our buy recommendation (143p, 10 September 2010).

[techno20] 04/11/2011 19:36

Sure enough, great piece in today's IC.

Conclusion "Paragon has more than 20 years experience in loan servicing. More details are expected on the six acquisitions when the full year figures are released on 22nd November. At 176p, the shares are trading on seven times 2012 forecast EPS, and we reiterate our buy recommendation"

Great vote of confidence and the article didn't even mention the securitisation.

Shares have been very resilient in the last couple of days, every time there's been some profit taking, they've recovered.

There's definitely further to go.

Techno

[yupawiese2010] 04/11/2011 09:45

Paragon buys loans from RBS



Sharlene Goff, Retail Banking Correspondent, On Thursday October 27, 2011, 6:07 pm

Paragon, the mortgage provider hit hard by the financial crisis, hopes to accelerate its return to other forms of lending after buying a portfolio of loans from Royal Bank of Scotland.

The buy-to-let lender bought £43.2m ($70m) of personal loans that were deemed non-core by RBS. Analysts expected the acquisition to generate about £6m of pre-tax profit over the next year.

Paragon was forced to stop lending altogether in 2008 as it struggled to obtain financing. It resumed buy-to-let lending a year ago and intends to broaden its offering to include personal loans providing its recovery continues.

Nigel Terrington, chief executive, said the purchase of the RBS loans could speed up that plan.

"We intend to do new consumer lending - that is a natural development. While it will not happen immediately, the purchase could accelerate it," he said.

Paragon has seized the opportunity to buy unwanted loan portfolios from lenders that are having to shrink their balance sheets to meet tougher regulatory requirements.

"This is a product of the great unwinding of the credit crunch," said Mr Terrington.

So far the group has bought six loan portfolios totalling £89.5m since the middle of 2009, four of which have been bought this year.

The RBS portfolio, which Paragon has managed for the past two years, is the largest to date. It includes unsecured personal loans from brands that the state-backed bank has decided to close down, including Mint.

Paragon expects to make further similar purchases in the coming months as it puts to use a cash pile it has built since it re-entered the wholesale funding markets last year. The group secured a £200m revolving credit facility a year ago.

[techno20] 04/11/2011 06:56

Another strong performance yesterday. Spotted 4 broker buy recommendations @ 276,267,225 and 225p whih will have helped.

Hopefully some positive coverage in IC today too.

[techno20] 02/11/2011 23:15

Nice jump today as a result of the securitisation announcement. Assuming it all goes to plan it should prove the originate and trade model is alive again!

Hopefully this combined with the RBS deal and decent results in a few weeks time should help propel them back towards NAV.

[techno20] 28/10/2011 08:08

Acquisition looks like a good move and the Market clearly liked it.

Collins Stewart reiterated BUY rating and moved target price from £2.70 to £2.76.

Results will be interesting. Not anticipating any surprises. The rental Market is on fire at the moment, so broadly PAG is in the right place as professional landlords start leveraging up again.

However, mortgage rates for BTL have been dropping, resulting in a jump in remortgaging. PAG may well have therefore seen more business coming off the books than for the last couple of years.

Still no news on who's buying the CHL book - PAG must be in the frame.

[yupawiese2010] 27/10/2011 12:56

Acquisition of loan portfolio from RBS announced, said to be earnings enhancing in the current year, as we have been managing these portfolio of loans for the last couple of years, there should not be any nasty surprises,no doubt hear further details when results announced on the 22nd Nov

[the drewster] 14/10/2011 08:59

I suspect that if 160 can't hold today, we are very likely to see a test of 140 again.

[techno20] 12/10/2011 20:10

Very quiet on here, but good to see the shares running up nicely.

£2.60 target price issued yesterday by Collins Stewart will have helped.

With NAV of £2.39, there should be some way yet to go.

But who knows!