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HenryTo
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 Posted: Wed Nov 30, 2005 3:24 pm Post subject: Bank Index |
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The Philadelphia Bank Index closed down 1.6% today - failing to burst through the resistance line that we discussed in last weekend's commentary.
My guess is that financial stocks will begin to underperform again going forward - suggesting a further decline in global liquidity.
Best,
Henry |
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HenryTo
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HenryTo
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HenryTo
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| Posted: Fri Oct 21, 2011 2:15 pm Post subject: |
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Morningstar on City National's 3Q earnings:
| Quote: | | City National CYN earned $41.4 million, or $0.77 per common diluted share, in the third quarter, 20% higher than in the prior year. While several of our competitors were expecting higher numbers in the quarter, we were more conservative in our predictions and therefore weren't disappointed by the results. Long term, we think our competitors and the stock market discount City National's earnings power, and we continue to model higher earnings in the coming years. Our fair value estimate is unchanged. Our optimistic view on the bank partially stems from its ability to grab market share from peers and expand its loan book even when economic conditions are uneven. We think this played out well during the quarter, as total loans grew 3%, mainly due to 5% growth in commercial loans. We think there is more loan growth in the cards for City National even if lending activity in its markets remains depressed. Higher loans--partially offset by a lower interest margin (a result of lower loan yields)--led to 6% rise in net interest income from the prior-year quarter. Noninterest income increased 4%, or 24% excluding special items. We think City National's cheap deposit base, asset-management business, and loan book are well positioned to augment net income when interest rates rise. However, we think that even in a low-rate environment, revenue should rise as more clients join the bank. Another source of upside for shareholder should come from lower expenses. We weren't pleased to see expenses grow slightly faster than revenue, but we were encouraged that the pace of expense growth has slowed from previous quarters; operating expenses in the third quarter were 7% lower than in the second quarter. We don't expect a material improvement in the fourt h quarter, but we think a material improvement in the bank's cost structure should occur in 2012. Credit quality is one area were we see only limited upside for earnings. Nonperforming assets, excluding covered assets, increased 5% over the quarter, with total nonaccrual loans/total loans ratio rising to 1.20% from 1.14% at the end of the second quarter. We think recent credit-quality trends prove that loan losses at City National could rise in 2012 and a large release of reserves for loan losses is unlikely. |
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HenryTo
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HenryTo
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| Posted: Tue Apr 26, 2011 1:19 am Post subject: |
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Morningstar on SunTrust's 1Q earnings:
SunTrust Reports 1Q Earnings, Names New CEO
| Quote: | SunTrust STI reported first quarter earnings of $0.08 per share -- after taking a $0.14 non-cash charge related to its redemption of its TARP preferred stock. Credit performance improved, low-cost deposits continued to grow, and non-interest income was down from lower overdraft fees and lower mortgage results. Overall, the bank's results were line with the industry and our expectations. Additionally, the bank announced the retirement of CEO James Wells, naming COO William Rogers to take his place by June 1. We are maintaining our fair value estimate.
SunTrust's first quarter was dominated by its redemption of $5 billion in TARP funds. The company received approval to repurchase the funds after passing the government's second round of stress tests. The bank raised $1 billion of common stock and issued $1 billion of debt in connection with the repurchase. Consequently, the bank's Tier 1 common equity ratio improved to 9%, while its Tier 1 and Total Capital levels dropped to a still high 11% and 13.4%. The company remains well capitalized and with the return of sustainable profitability, we believe the bank may seek approval to raise its dividend by the end of the year.
Credit quality improved across the board -- early stage delinquencies, nonperforming assets and net charge-offs. The bank released about $125 million of loan loss reserves during the quarter, but its allowance remains adequate at 2.5% of average loans. We expect additional loan loss reserve releases as charge-offs continue to drop. Net interest income was fairly flat with the fourth quarter -- although increased non-interest bearing deposits and lower high-cost CDs allowed the net interest margin to expand. Loan growth was nominal -- with small increases in commercial and consumer lending offset by reductions in real-estate related loans.
Outside of the first quarter earnings, SunTrust announced its new CEO. Bill Rogers has been with SunTrust for more than 30 years, having risen through the ranks from management trainee. He has been in charge of almost every form of banking business during his tenure and is deeply engrained in SunTrust's culture. We believe the transition will go well -- Jim Wells is staying on as Executive Chairman until December 31 to help. Wells -- retiring after four years as CEO -- oversaw SunTrust through a very difficult time. He was named CEO right as the financial crisis hit. His tenure was marked by the sale of Coca-Cola stock, acceptance of TARP funds, billions in loan losses, and finally - a path of sustained profitability. Rogers is starting his tenure as CEO in a much better economic environment, but he will face the difficult task of improving SunTrust's results. The bank has a solid footprint, scale, and brand recognition. Roger's will need to turn that into competitive shareholder returns. |
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HenryTo
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| Posted: Wed Oct 20, 2010 3:30 pm Post subject: |
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Morningstar on USB's 3Q earnings:
| Quote: | | U.S. Bancorp USB reported earnings of $908 million or $0.45 per share for the third quarter. The bank continues to perform admirably in this tough operating environment. Loan losses and nonperforming assets declined for the second straight quarter, giving the management the confidence to suggest losses have finally hit a tipping point. However, as a conservative company, U.S. Bank did not release reserves, but rather matched provisions with charge-offs. We suspect the bank will start releasing reserves in the fourth quarter. This will help cushion the full impact of the CARD Act and Overdraft Protection, which U.S. Bank estimates will cost as much as $200 million in the fourth quarter and have an annual run rate of up to $730 million going forward. That, combined with higher compliance costs associated with banking reform, probably means U.S. Bank's efficiency ratio going forward will be slightly higher than its historical 50% rate. However, we still expect it to be one of the most efficient banks among its peer group, allowing it to return to a return on equity north of 16% in the long run. U.S. Bank remains very well capitalized and expects to be one of the first banks to reinstate a meaningful dividend--it hopes in early 2011. Overall, results were in line with our expectations, and we are maintaining our fair value estimate. |
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rffrydr
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rffrydr
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| Posted: Mon Sep 13, 2010 9:42 am Post subject: |
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So JPM and Co. (excepting BAC and their damned china investment) are now (unintentionally) free to kick back some of that cash pile as early as Christmas. Nice basis for Santa Rally, yes?
Got a nice fat plumb with the taxloss credits which will be nice write-up totally written off by the markets:
| Quote: | The most important benefit of delay is in the deductions in respect of deferred tax assets. The Basel 3 deductions are to be phased in between 2014 and 2018, at a rate of 20% of the deductions cumulatively per year. Since the majority of banks in the European coverage universe calculate their deferred tax assets on the basis of a 7 to 10 year lookahead,
the slow phasing in of this deduction should mean that nearly all of the DTAs
currently on balance sheets should have been earned out before the new regulatory regime comes into place. A policy of delaying the introduction of the DTA deduction until 2018 is de facto a decision to allow the European banking sector to make full use of the tax losses carried forward from the 2007-9 crises for regulatory capital purposes. |
Also note: Trust Preferred live. 15% in Europe over complete phase out here. That's been the bank trade.
And, if we really are past the reserves build we'll have that long delayed rally in the financials--from where they were, not where they are!
The "punishment" rules have yet to be articulated so look for some more hedge-fund escape funny stuff to come. But we'll take it.
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diesel
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| Posted: Tue Sep 07, 2010 7:41 pm Post subject: |
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Yeah but Spain was missing the fiscal side of the equation. Where was the fiscal response to take the punch bowl away in that boom? A race to maximum leverage and minimum margins benefits nobody in the end.
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rffrydr
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| Posted: Tue Sep 07, 2010 4:17 pm Post subject: |
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Spain had rough real-world counter cyclical program and see where that got em. The truth is that there is no level of equity a bank can carry to be "safe." In a panic depositors and lenders want their money back and if you got it, you're not a bank. Que japan postal.
It's a feature of good times that more and more "stuff" counts is "as good as cash" 'cause it is. And the reverse is true: if banks can't lever money into money assets into money you won't be doing it either. Wagons ho!
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diesel
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rffrydr
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rffrydr
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rffrydr
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rffrydr
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| Posted: Mon Apr 26, 2010 10:33 pm Post subject: |
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More on de-banking via the new "supra-bank":
Using the bank levy
Published: April 26 2010 09:40 | Last updated: April 26 2010 16:52
| Quote: | What keeps bank chiefs awake at night? The mechanism for calculating the proposed industry-wide bank levy is a sure bet. But before anything is agreed, the question that needs to be answered is what to do with the proceeds of the tax. In the US alone, a 1 per cent tax on banks’ liabilities minus tier one capital and insured deposits could yield about $22bn every year. Assuming no annual growth, in only 15 years time this pot of cash could swell to $330bn, bigger than the market capitalisation of ExxonMobil, the world’s largest company by that measure.
The money could be stored in a bank guarantee fund or merely thrown into government coffers. But an idea HSBC has peddled around Europe is to allocate some of the funds to a government-sponsored venture capital agency. This concept is not new. After the second world war, the UK government established what is now 3i, Britain’s largest quoted private equity company, to provide capital to small and medium enterprises. And given that more than half of UK companies that sought bank finance last year were declined, according to the Institute of Directors, a SME targeted fund could tap this demand. |
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