Today, I sat down to do the financial report and I personally do not like what I see. Due to the limitations in the system and the timeliness of implementation in key components, the ROI has been slow. Our products are innovative but the previous runs on other banks have caused a few of our key marketing opportunities to run sour as well. While the bank still maintains 30% liquidity and will probably go back up to 65-85% liquidity in the next 60-90 days, I am not secure that the bank will be able to maintain itself. Lowering the interest rate helped a lot but the interest gained on some of our investments has recently dropped and one of our funds in undergoing restructuring at a November 15th shareholder meeting in which we have a proxy.
As a result, I have asked that trading be halt while I discuss with shareholder what they would like to see. I am rather proactive and like to address issues before they become to far gone to be repairable. I have a few things in mind but it is ultimately up to shareholders. This is open for discussion and I would like to come to a resolution before trading is resumed. Here are my ideas.
Maintain as is and lower interest rates until profit margin increases and the banking industry of SL solidifies itself a bit more. Personally, this could be a band-aid and I believe the U.S. economy is about to face a recession which will affect our RL investments. I could be jumping the gun a bit with all of this but I am just not seeing the profit margin I projected.
Sell LLBT to another bank. L&L Corporation will maintain all software and rights with the understanding that the bank could possibly reopen in the future without the issue it had previous and be in a better position than the months of waiting we went through to get where we are now. This would mean customers would go through the process of conversion to another banking system and shareholders paid a final dividend on the sale.
Merge LLBT with LLRS. LLRS just had a record quarter with profits (minus the 800k spent on sims on the last day of the quarter) and does well in SL and just launched in There and will launch in Red Light Center in the next 90 days. LLRS has a budgeted dividend of .10/share through Q4 and typically does better. The land sales would be the backbone for the bank as well as profits made in other metaverses. LLBT shareholders would get 3/1 share conversion to LLRS and would trade on WSE with founder and alt shares being retired. LLBT customers would not see any change on the operation end as LLBT would run as a division of LLRS.
I am posting this notice in my blog for discussion at http://lindsaydruart.blogspot.com so please check things there to give insight on what you would like to see as a shareholder. I am also interested in the opinions of non-shareholders as long as they are volatile and noteworthy. Keep in mind, the bank is NO WHERE NEAR bankrupt. I simply don’t want a potential problem to turn into closed ATMs and scandals. I prefer to act while I still can than wait something out. I pride myself on dealing with sure things and right now, I am not sure so I am listening to shareholders, customers, and members of the market. I can have all the logic in the world but more brains on the same thought works best.
Had LLBT started under different circumstances and gotten a fair run, I would not feel the way I do now because I would have had more control over operations from the beginning. Nevertheless, this are running smooth but they could have been much better. Feel free to post on the blog and as we come to a conclusion, trading will be resumed at that time. Thank you for your support.
Subscribe to:
Post Comments (Atom)
23 comments:
One concern I just thought about was the LLCA dividend. LLCA will still run as a separate entity if option 3 is chosen.....hmmmm I have go back to the drawing board on that one.
LLBT was doomed as soon as you started giving away its assets to line your pockets, LLCA should be 100% owned by LLBT and you know it. You claim to listen to shareholders, the only posting I saw that believed in your solution for LLCA came from the owner of LLBT - you.
You again claim you want shareholder suggestions, why should we bother, you've no doubt already decided. Cayman Beaumont.
Well Cayman LLCA has no profit or even income for that matter so how was it benefiting LLBT? And how did I line my pockets? The only reason I did that third party is because the providers in line for the product would not do it being run solely by the bank.
It's obvious that you are still peeved with me about the LLCA thing but the product never launched under LLBT so its not like a revenue stream was taken away. If you were are bank, would you seriously give your database information to another bank?
I have done this to death on the SLCX forums. LLCA should be owned 100% by LLBT. If you needed to create a separate entity then the majority of the shares should have been owned by LLBT.
This would then make LLBT a viable and hopefully profitable company. The alternative is todays predicament, that you couldn't see this coming worried me hence my recent share sale.
So what are the numbers?
Liquidation - what is the price per share?
Sale to another bank - have you had any discussions? Has a price been discussed?
Without numbers there is no way could I support any course of action.
Cayman Beaumont
Price tags have not been discussed as of yet since there is no movement to a decision currently. I still do not see how LLCA could be so profitable to bring in enough revenue monthly even with LLBT being a majority shareholder or LLBT owning LLCA so support the interest payments. LLCA would have to bring in at least 50% of interest paid out to make a profit which would be at around L$300k which would be impossible considering the provider customer would not buy into the product with it being owned by LLBT. With LLBT being a majority shareholder, even that wouldn't come from dividends.
And in all honesty, I have no problem with LLBT being majority shareholder in LLCA but I am not seeing how that fixes the problem. And I did see this coming but I wanted to finish the system and guage the ROI and it has not been what I wanted to see. I understand that businesses have times when they take a loss but loss in banking in SL is not good so I am trying to be a bit proactive here.
LLBT/LLCA I suppose we'll agree to disagree. As I've said it's been done to death on SLCX forums.
You need to come up with some numbers, what's the banks financial position now? We need some numbers to work from, attempting to provide a solution when the problem is so vague is impossible.
Are you ready for a run on the bank?
Cayman Beaumont
First, the US is a long way from a recession. The job report showing 166,000 new jobs and strong corporate profits strongly argue for continued expansion of the US economy.
All banks are having profit problems. Why? The interest rates charged and reluctance to give loans. If you don't take risks loaning money, you won't get a return. I'd suggest all banks, not just yours actually loan money and take risks. You might be shocked that while you will have defaults, you'll also have profits.
In large measure, the bank should provide the money for your own land company—via loans, etc. without having to merge. That way you would control the risk, but also have access to reliable capital.
Trading on the WSE is a joke. Everyone knows the WSE is the least reliable trading platform available due to the fickle and petty nature of its CEO.
Selling the bank to another institution might be a good idea. What are your total deposits now?
Well the financial industry in the US is taking a hit and that affects the RL investments that we have.
We do provide loans and loans for our land companies but I haven't even had a request for a loan in forever and most of LLRS residents have been there for a while and bring in people via referral or expand what they have.
As far as WSE, LLRS has been there since the first days of WSE and does quite well which is the only reason it was even mentioned.
Right now there is a little over 10 million on deposit with 30% in actual lindens. There is the sim that is an asset and the USD holdings.
Are we ready for a run on the bank? No. No bank is ready for a run. Even RL banks aren't ready for that.
One thing that would make tremendous profits is if people actually USED the services we offer rather than just depositing money to collect. Now with fraud so rampant in SL, the wrong loan could do more damage than no loan at all. But we aren't getting many loan requests and the ones we did get were a bit frivolous. In the beginning we were able to successfully collect on the loans we did give, even the defaults for the most part but since then there has been a tremendous decline in the need or the want rather.
The credit card product we have is there but I think I have only seen 5 people of the 700 people we have as customers apply. We have maintained mostly through our land holdings and USD investments and in the short run that is fine but long term not sustainable.
One thing I have been looking at and doing a bit of research on for LLCA is an interest rate projection for SL similar to that of the Federal Trade Commission. In hindsight, I seriously think that SL banks are paying way more in interest than we can afford to sustain in the long run. Short term, yes but who wants to put so much work in a business for it to last a year or so? I don't.
I have also been doing a bit of research on a debit card system with overdraft protection along with ATM network collaboration where an avatar can withdraw from any ATM in a network for a fee. RL banks make money on investments and fees. Why can't SL banks?
The buyback stifled a bit of what I wanted to do but I never wanted that many shares on float but it was the only way the company could be listed per Investor Allen when we ran the SPO back in June.
A lot of clean up has been done and I am even considering looking into financing any further technical developments through my personal assets to alleviate expenditures.
In no case i would merge the bank with LLL. I would ether maintain as is or sell the bank. A merge would result in a middle-rate company created from one very profitable and one unprofitable company. Please do what a good CEO's would do and disassociate with a unprofitable company. (if the bank is unprofitable, i don't know because you didn't announced the numbers). Regards, Eric
"Today, I sat down to do the financial report and I personally do not like what I see"
Lindsay,
Can you please post a financial breakdown of LLBT?
Thank you,
CB
Understandable Eric. I do not think LLRS shareholders want the merger but it was listed as an option and would go to resolution before it would be accepted. So far just thinking over everything, and the few comment made so far, sustaining is probably going to be the end result but I would like a little more discussion.
Sure CB. I am going through the USD stuff now.
It will be posted in a few hours. I am looking back through the past reports to correct that error that iVentures caught and compiling the USD data.
OMG! Was this all started to drive your bank into the ground? How can you halt your stock and post this doom and gloom forcast about your company? I have always thought of you as a say what's on your mind person. That has had advantages and disadvantages in the past; however, this is some of your worst judgement to date. What a business nightmare you have caused yourself here.
I totally agree with Cayman that we need some real numbers to evaluate any course of action.
I should have dumped this puppy a long time ago. I thought you might be able to turn it around with all the energy you seemed to have. This self sabatoge is not what I had hoped would be the direction you would take.
Sando Haller
Sando, I am saying what's on my mind. And no this is not meant to be self distructive. I have a ton of enthusiasm for the bank and I want this to be a long term sustainable entity. L&L Bank and Trust is a long term sustainable entity but banking in SL depends on a lot of factors that are currently negatively effecting the bank. Over the last week I have been doing a ton of research into RL banking to see what can we offer as a service that would turn things around. It's not doom and gloom. For me, I am recognizing that a change needs to happen and trying everything in my power to make the necessary change with sound judgement and objective reasoning.
Would you rather me hold on until the last minute and just hand off worthless bonds? I don't want to do that. Businesses have disaster plans and this is my point where I want to make sure one is in place. Preparation is important and I would rather prepare for the worse when the worse doesn't exist than wait until it does and shrug my shoulders and so "oh well" like Ginko did.
Do I want shareholders to bail? No
Do I want a run on the bank? No
I want a profitable entity that is a sound and evident force in SL via its numbers and the numbers don't impress me at all right now. Current forecasting with our RL investments up in the air with the ING Direct Shareholder meeting coming shows a decline on the USD side.
SL forecasting is so iffy right now.
What I want to see here.....and this is the investor side of me talking here....
1. LLBT should have majority share in LLCA and the chairman should have no stake in LLCA since there is already stake in LLBT. Thats double dipping.
2. LLBT should be sustained as is with modifications to current products to lessen the payout.
3. Trenuous marketing done to increase customer base, offer better affiliate incentives and referral programs.
4. Lower loan interest rates and offer personal and business loans.
5. Diversify RL investments outside of the financial sector and drive more RL business in game via enhanced marketing and cross marketing.
Now, can this be done as the CEO? Yes. Will it be profitable at first? No. It won't be profitable for a while. Am I willing to do it? Yes. Are shareholders willing to deal with it is the question here.
I was rereading my posts here and I wanted to clarify what I meant by frivilous loans. I had a few loans from people that joined SL like a week before and been a customer for 2 days and wanted a 100k loan. I have a few similar to that. I did have some viable ones but since we havent started business loans yet, we didn't want to get into certain loans.
Whoa, I head off to work for a couple of hours and come back to see a storm brewing. I've read through the original post and the several comments, and I'm a bit surprised where all this came from.
At the same time, I'm wondering if the planned expansion into other metaverses may affect the long term dedication to LNLBT?
I see the future of LNLBT as such :
Lindsay has been working on the numbers and she is not pleased with the profitability. Even though we can (and probably should) analyze them for ourselves, she wouldn't cry wolf if she didn't deem it necessary.
While lowering interests (and thus costs for the bank) will affect the sign up rate for new customers or deposits from current customers, it sounds like a very reasonable and necessary measure to take. With projected income possible coming in lower, it would be a very bad business decision not to act on it right now. You can't give out L$100 if you only bring in L$90.
Selling LNLBT to another bank may sounds like a good solution at first, but I chose to invest in LNLBT for specific reasons. If I wanted it to just merge with another bank, I'd have invested in them, and not in LNLBT.
Merging LNLBT with LLL would take away some of the concerns I have to a merger or sale, but as was expressed by someone else : why merge a profitable company with one that doesn't cut it right now?
Pushing out more services in order to increase profits could work either way : make us, or break us.
Anyway, a lot of rambling from me, but to wrap it up :
- cut costs, don't expand services unless we know it is safe to do so (which I believe is not the time with the instability in SL financial markets)
- don't sell or merge
- supply loans and services to LLL at market rates, so both companies get to grow safely
- diversify RL investments and stay away from higher risk/high profit investments. We're better off with solid low profit investments then we are with gambles of any kind. If this means cutting back interests offered by LNLBT, so be it.
Slow and steady she goes/grows...
I am not a shareholder, so my comments are worth what you want to take them for. Also, I just read your post on SLCAPEX so my comments may be moot by now.
Given all that, my vote would be to sell the bank to another bank.
Why? Well I think the banking business in SL is weak and will continue to stay weak. I think people who want somewhere to put their money will put it in exchanges where it is relatively (and I use the term loosely) safe. What money they do not intentionally invest they will keep liquid or else cash out.
I think the concept of a bank as a safe haven is long gone from SL! People, who wish to invest, will look for instruments to invest in, although there is a lot of controversy about whether or not those investment instruments are valid (another post), people will invest in companies, ideas, concepts, etc. that look promising.
Given all the bank brouhaha that we have had, I can only see a bank dragging down your profits for your other company. Given what real estate is doing right now, if you are having good success with real estate even in this market, why would you want to tie a potential loss to that success?
As I said I am not a shareholder. Just an opinion.
Arnaud Villota
Thank you ServMe. I can always depend on you to be consistently reasonable. The There and RedLight project will not interfere with anything being done with L&LBT. I have established a time management schedule to tackle things and for the last few weeks it is working very well.
As for Arnaud's post, I do agree to a certain extent.
While the conventional bank, as we have seen is no longer fitting to the SL economy, that doesn't mean banks have to close up shop. That just means banks have to reinvent themselves.
I had to do this with L&L by launching in other metaverses as well as the RPG sector. Since banking is much more indepth than real estate, I have to do a bit more research but I am coming close to my plan for reinventing L&L so a buyout is no longer an option.
I must say that I am breathing an air of relief as I go back to the drawing board. L&LBT was a baby I gave birth to on my own so I am very attached and have high expectations of the company. Please keep posting here while I compile the company goals.
I would like to add to my post the latest I just read from Nobody Fugazzi who I have the greatest respect for:
http://www.your2ndplace.com/node/715
While this post does not directly relate to the subject at hand, I think it represents a bigger picture to the overall SL economy.
Lindsay, I know that the bank was and is your baby. But given SL time, your baby has grown up. It is time to let her choose her own course. :)
With respect,
Arnaud
I frequent Y2P and I did read that....and I El Oh Eled at the baby thing.
She's a teenager now and momma has taught her well....I think she will do fine....
Who knows where to download XRumer 5.0 Palladium?
Help, please. All recommend this program to effectively advertise on the Internet, this is the best program!
Post a Comment