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Tanya Azarchs

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  • Normalized Bank Earnings Indicate Further Gains [View article]
    You're right. I was conservative partly because I don't see NIM improving at all for a good while, basically until short rates rise (affecting Libor-based loan pricing). The NIM each bank can achieve is going to be different based on their balance sheet mixes. For example a bank with lots of high rate credit card loans and interest free checking accounts can get over 4%, while a bank with large investment banking operations and lots of government bonds may not get much over 2% (the new regulatory liquidity requirements don't help here either). In addition, the higher NIMs in 2010 also included consumer fees that can no longer be charged, so we not see a return to those levels.
    Feb 4 08:50 AM | Likes Like |Link to Comment
  • Bank Of America: 6.7% Yield And Free Upside Potential [View article]
    I might point out that Merrill is owned by BAC and therefore its capital trust certificates (quasi preferred instruments) carry the same risk as BAC's preferreds.
    Nov 6 11:09 AM | 1 Like Like |Link to Comment
  • Bank Of America: 6.7% Yield And Free Upside Potential [View article]
    While this analysis is correct, investors should be aware of the special risks of investing in preferred stocks of banks, namely that regulators have the power to dictate an interruption in dividend payments if earnings are impaired, and the "bail-in" policies of the regulators could mean heavy losses if the bank is ever seen to be in danger of insolvency.
    Nov 5 08:47 AM | 8 Likes Like |Link to Comment
  • Affymetrix: A Multi-Bagger Turnaround Story [View article]
    This is really good stuff. Truly insightful.
    Aug 7 11:41 PM | 1 Like Like |Link to Comment
  • CCAR Winners And Losers [View article]
    I believe it is problematic. Usually in this part of the credit cycle (positive trends) you would expect to see mergers as uncertainly over potential hidden loan portfolio problems diminishes. However, the ultimate impact of regulatory changes (Dodd-Frank, Basel III) should keep the potential acquirers distracted and unsure of capital impacts of mergers. Also, becoming larger now has real capital and regulatory penalties. In thinking about the potential for break-ups and divestitures versus mergers and acquisitions, the divestitures seem more likely.
    Mar 18 11:22 AM | Likes Like |Link to Comment
  • Hopes Of Bank Shareholder Bonanza Dashed By Regulators [View article]
    You may be right. However, C this time pretty well nailed the stress estimate, meaning that they were one of those that the Fed said really understood the process this time, implying that some did not. Their conservative request is understandable given past experience, but may also be a better read of Fed mood, especially with regard to banks that needed more bailout than others.
    Mar 11 10:37 AM | Likes Like |Link to Comment
  • Hopes Of Bank Shareholder Bonanza Dashed By Regulators [View article]
    Yes, hopefully the CCAR process will bring other factors to bear in the decision. However, the Fed will have to manage public perceptions about caving in to bank requests...
    Mar 9 10:57 AM | Likes Like |Link to Comment
  • With U.S. Expected To Be Largest Oil Producer By 2017, Is It Time To Buy Energy Stocks? [View article]
    It depends on what you mean by "good for". Clearly the Obama administration has been good for the supply side -- that is how we turned around the import reliance. But that is "bad for" the pricing aspect. So it seems we should stick with the industrials part of the S&P index. Also, if independence is going to really happen then it means NG infrastructure will have to develop to absorb the production. Does anyone have an opinion on attractive NG infrastructure plays?
    Nov 13 11:42 AM | 1 Like Like |Link to Comment
  • Some Banks Lag On Mortgage Repurchase Provisions [View article]
    Is there not a difference between rules based and principles based law? Putting back a loan on a technicality of underwriting is not an issue if the loan turns out to be good. Banks generally have the liquidity to carry such loans. But if the put-back is prompted by a perceived deterioration because of changed personal circumstances for the borrower--e.g. job-loss, divorce, health (all common issues)--can you really blame that on faulty underwriting? or is the issue really the turn of the wheel of fortune?
    Jul 24 01:49 AM | 1 Like Like |Link to Comment
  • Some Banks Lag On Mortgage Repurchase Provisions [View article]
    Somehow, it seems that legally speaking, Countrywide has been more integrated into BAC's operations than ResCap was into Ally Bank's. Hard to see but that's the way it goes.
    Jul 24 01:37 AM | Likes Like |Link to Comment
  • Some Banks Lag On Mortgage Repurchase Provisions [View article]
    I think BAC will take the biggest write-offs (thanks to Countrywide), and don't believe that they can win a fight with the GSE's. But I think that JPM will have a little catching up to do since they under-provisioned this quarter. The others are chugging along at a pace that will likely need to be sustained for a while longer.
    Jul 24 01:34 AM | Likes Like |Link to Comment
  • Risks Of Bank Ratings Downgrades Can Be Seismic [View article]
    I agree with you completely. This is a test of the power of the rating agencies, and one day into it, it seems that the market has blown them off. However, it is still too early to say that there won't be a real impact to the availability of funding. And on BAC, their liquidity is partly a function of their shrinking balance sheet. How that intersects with the downgrades and the truly enormous legal issues will be "interesting" to watch in the Chinese sense of the word.
    Jun 22 10:58 PM | Likes Like |Link to Comment
  • JPMorgan's (JPM) CIO unit had looser risk controls than the rest of the bank thanks to its direct reporting line to Jamie Dimon, say sources, remaining fairly free from oversight despite warnings stretching back to 2005. Until recently, the group used its own Value-at-Risk model, which likely allowed the over-sized positions which led to the losses.  [View news story]
    I am no friend of VaR models. They are at best a final check for a risk manager to get a daily snapshot of positions on some kind of an integrated basis, and a way of communicating complicated issues to senior management. They must always be taken with a grain of salt: that their predictive value is based on an assumption of steady state markets, which at best may continue for a day or two. They should never be a basis for long term capital allocation. At worst, they are merely an exercise in regulatory compliance.

    The big HOWEVER here is that they were not the issue in JPM's losses. Those who think they are ignore a few basic facts:

    1. VaR measures are only one of a plethora of risk measures used to set trading limits. They are a final check and never the main check.
    2. VaR is not a "predictor" of risk but only a backward-looking measure.
    May 16 09:40 AM | Likes Like |Link to Comment
  • It's taken a year, but states and five banks are on the cusp of finalizing a $25B deal over problematic foreclosure practices after California returned to negotiations following a four-month absence and New York - another hold-out state - signaled it could support an agreement. State AGs must indicate today whether they will sign on to the deal.  [View news story]
    A deal would clear the air and lift a meaningful pall of uncertainty from the big five mortgage lenders. That should be very positive for the stocks. The important thing to watch will be how much indemnity from further litigation the banks extract. The other consideration is whether the markets have adequately discounted the impact of the settlement on the banks' financials (see US Banks Third Quarter Earnings here at Seeking Alpha for my estimates). Litigation reserves are unlikely to be sufficient especially for Bank of America, which should also be the hardest hit. Citibank may surprise by being less hit.
    Feb 6 08:34 AM | Likes Like |Link to Comment
  • Weekly Preview: Banking Sector Holds The Key [View article]
    Tim

    The markets seem to agree with you today. But why do you think they did not realize the inadequacy of the summit resolutions right away on Friday?
    Dec 12 04:30 PM | Likes Like |Link to Comment
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