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  • It's Getting Harder To Pass On Popular [View article]
    Hello Netwall, BPOP acquired assets that had a loss share agreement with the FDIC, and this receivable represents the amount the FDIC would owe them if they sold the assets right now. As the underlying asset values improve, the FDIC's debt decreases and the accounting for this is the charge. It lowers current earnings but the assets under agreement have appreciated.
    OFG's earning reports include a little more detail on this if your interested in looking. 
    Aug 26 11:21 PM | Likes Like |Link to Comment
  • Exchange Bank: Hidden, With A Chance Of 60%+ Returns [View article]
    Thank you James. I think for the most part the acquisitive banks are getting premiums that give them incentives to issue shares and keep acquiring but, like you said, the deals are coming with small loan portfolios. My next article, about Glacier Bancorp, gives an example of how this could be beneficial (by using deposits to off-load debt), but this can only go so far, and the supply of deposits is costly and will make it hard to determine if and when a bank is starting to reach for yields by writing more risky loans. The dry powder is good, but I prefer the smaller banks that can scale up at a pace that doesn't require assets or the portfolio to grow at an unreasonable speed.
    Sound Financial is a similar example but they are acquiring branches with excess deposits they need to bring down their L/D ratio.
    As far as Texas goes, I have a hard time pricing the banks there because of how consistently high the premiums are and how consistently different each bank is operating. They are all surrounded with opportunity but I don't know how anyone could predict which one will make the most of it. I only hold IBOC, and opposite to the average financial down there, it has consolidated branches.
    From what I keep reading, I too think M&A in 2015 will increase, but I thought the same this time last year about 2014, and the same the year before about 2013. Really just going to have to wait and see.
    Thanks again!
    Aug 22 03:58 PM | Likes Like |Link to Comment
  • What Bank Of America Shareholders Might Be Missing [View article]
    Expert, you present very consistent and valid points. All risks may be inherent to all banks but the one I personally lay at the feet of BAC is financial inflexibility. The bank's hands are tied and a large upswing is tied to shares outstanding.

    I have been very pessimistic about the book value argument, but have a hard time wrapping my mind around earnings power, which is what I have been currently diving into to challenge my bearish thesis. In addition to this, I may have tried to value BAC over a time frame that was too long. In the context of a smaller time horizon, my thoughts are different, but then you fall into the what you yourself mentioned, most likely comes with additional market risk. A big reason for why my fear prompted me to sell all of my BAC warrants a few months back.
    Aug 21 04:46 PM | Likes Like |Link to Comment
  • What Bank Of America Shareholders Might Be Missing [View article]
    Expert, one trick pony may have been fair to say in the past but I encourage you to update your thoughts on this by briefly checking out the income streams for WFC on the below link to Trefis.

    http://bit.ly/1nfUClo#

    Far from a one-trick pony.

    Immediate price appreciation for BAC may be slightly larger than most financials, but in the long-term it is severely limited. That is, if you allow me to again compare it to WFC, who is allowed to buyback a ton of shares.
    Good luck to all! 
    Aug 21 04:30 PM | Likes Like |Link to Comment
  • It's Getting Harder To Pass On Popular [View article]
    Very fair observation and always something to consider. 
    Aug 14 11:12 AM | Likes Like |Link to Comment
  • Bad News Is Oversold At First Republic Bank [View article]
    Thank you. Definitely does look like the dividend is saving NYCB, but no telling how long that holds up..Especially if costs go up and help from interest rates is delayed.
    Aug 14 08:17 AM | Likes Like |Link to Comment
  • Bad News Is Oversold At First Republic Bank [View article]
    Thank you. Kind of like I said, this may be the reset but I think the bank has a lot of capacity to grow, much faster than NYCB, so this may just be the starting point for that. If that's the case, there won't necessarily be a large jump back to where they were, but they will get there in due time.
    Aug 14 08:15 AM | Likes Like |Link to Comment
  • Pinnacle Financial Now Has To Keep Eating Its Wheaties [View article]
    I really appreciate the compliments thank you. That is one strong growth trend on the graph from that link. Thanks for pointing that out.
    Aug 13 09:45 AM | Likes Like |Link to Comment
  • It's Getting Harder To Pass On Popular [View article]
    I will have to take another look at that one, so far I've stayed away because of the Oaktree maneuvering and attention.
    Aug 13 09:43 AM | Likes Like |Link to Comment
  • 3 Things Holding Back M&T Bank, Do They Matter? [View article]
    I'll have to check it out, thanks for the tip. The warrants have done pretty good too, trade at a discount from time to time.
    Aug 7 08:04 AM | Likes Like |Link to Comment
  • What Bank Of America Shareholders Might Be Missing [View article]
    I don't think you understand the accounting for a tax asset, I've written about BAC's a few times.

    Good luck!
    Aug 5 08:56 AM | 1 Like Like |Link to Comment
  • What Bank Of America Shareholders Might Be Missing [View article]
    Assets per share at WFC is higher and I see this difference increasing at a faster rate due to the massive share repurchases WFC continues to execute. Even if BAC earned the same amount, it would have a lower ROA/ROE and a lot lower earnings per share.
    Also, if you net out the tax asset from tangible equity, you will find the premium on adjusted tangible book value for BAC is a lot closer to WFC, who doesn't have a tax asset. This asset makes zero dollars and is not discounted when it could take up to 20 years to utilize, and it has already helped returns when a lower loss was reported upon its creation.
    BAC's debt portfolio is also more sensitive to increasing interest rates - concern?
    BAC's NIM is also lower which indicates that the portfolio duration is longer so assets also carry more interest rate risk. There are also more and the L/D ratio is higher.
    As rates rise, interest income could increase but I don't see it covering security losses, increased interest expenses, slow downs in portfolio growth, or potential credit deterioration that is typically associated with higher rates. This one is industry-wide, but a larger concern considering margins at BAC.
    Note I haven't included anything about continued litigation or legacy assets.
    Provisions at BAC also show a comparable coverage ratio but they include amounts for the PCI loans that are not included in the denominator. This is a relatively small issue, but worth 2.5 billion.
    I don't care about management, but I don't trust BAC's assets.
    I also don't know what Buffett would do if his warrants had a market value. He is long his investment in the warrants, not necessarily BAC.
    Aug 4 11:15 PM | 1 Like Like |Link to Comment
  • What Bank Of America Shareholders Might Be Missing [View article]
    Kai, they do pay taxes. A lot of the tax asset is only allowed to offset income overseas, and you have to remember that allowances and losses related to fines are not helping. In addition, the tax asset gets phased out of Teir 1 capital and this will severely limit growth, and any sort of future shareholder returns. I believe 1/2 is already phased out so the bank will need to add ~15 billion over the next couple years just to maintain its current ratio. 
    Aug 4 09:40 PM | 1 Like Like |Link to Comment
  • What Bank Of America Shareholders Might Be Missing [View article]
    Steve, I can only imagine how beneficial these comment sections would be if everyone valued differing opinions as you do. Thank you for sharing your thoughts.
    Aug 4 02:25 PM | Likes Like |Link to Comment
  • What Bank Of America Shareholders Might Be Missing [View article]
    Everything about your 1+2 points is about cleaning up. I'm writing about growing and earning money, which I hope we can agree also involves growth in assets per share. I presented how that has declined as assets grew. One thing is looking at a companies' financials, the other is what that means for your shares. Looking forward to your next article.
    Aug 2 08:54 AM | Likes Like |Link to Comment
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