Financial Earnings Continue to Top Expectations

According to government accounting, seven banks have now paid back their TARP monies. And for many reasons a whole host of banks are now racing to pay back their obligations to the US Treasury.

To date $467,310,000 has been paid back. In addition those seven banks have paid the accrued dividends associated with the TARP program terms.

Treasury Secretary Geithner's testimony underscored the government program success on Tuesday stating that "the vast majority" of banks now have enough capital. Geithner also told a congressional committee that additional banks would be allowed to repay financial bailout funds once bank regulators give the nod.

And continuing the string of better-than-expected financial sector earnings, the following banking and financial firms beat First Call income estimates on Tuesday:

- First Cash Financial Services (FCFS)
- Huntington Bancshares Inc. (HBAN)
- Jefferies Group Inc. (JEF)
- Regions Financial Corp. (RF)
- State Street Corp. (STT)
- US Bancorp (USB)
- Western Union (WU)

More evidence that the stock market rally will continue to be fueled by earnings news that is clearly not as bad as expected - particularly in the financial sector that was decimated last year.

Comments

[Mad Hedge F...:]

Not at MS. I have to confess that when my alma mater Morgan Stanley (MS) announces earnings, it still tugs at the heart strings. We endlessly outperformed expectations but laughed because we knew there were tons of latent profits sitting on the back books. The stock would rocket, and we traded at a luxurious five times book. We were the invincible Masters of the Universe. Things have changed a little bit since the eighties. Today the company said it lost $190 million in Q1, and that revenues plunged from $7.92 billion to $3.04 billion. I have to confess that “risk adjusted returns” is a term that is new to me when applied to corporate earnings. The venerable white shoe company disclosed so many special onetime only provisions it almost earned a place in the Guinness Book of Records. Bizarrely, it lost money on marks because its own debt is trading higher than three months ago, wiping out unrealized gains on the theoretical short. Mark to market can be a bitch. Guess what? Lower risk taking means fewer profits. Thank goodness I’m not there anymore, now that the salad days are a distant memory. But if you had to name two firms that are going to survive this mess they are MS and Goldman Sachs (GS). They are, after all, still the smartest people in the room.

Apr 22 06:02 PM