Seeking Alpha

JPM's Lake: Stock cheap and buybacks will add value

  • Leading off JPMorgan's (JPM -1.1%) investor day, CFO Marianne Lake makes the case (presentation slides, pg. 13) for buying the stock, noting the current price is a 20% discount "to theoretical value" in that it implies a 13% ROTCE vs. the bank's target of 15-16%. Given that analysis, management fees repurchasing shares even at significantly higher prices than today creates shareholder value.
  • Expenses are "a focus and opportunity for us," she says, guiding to total headcount in 2014 falling 5K, with headcount in Consumer and Community Banking falling 8K (pg. 22).
  • Earlier: Presentation confirms another 6K job cuts in mortgage banking.
  • Whither bank branches? Following Lake, CCB heads Gordon Smith and Doug Petno say the branch build concept may be over (presentation slides), but 40% of new credit cards and 55% of retail mortgages are originated in branches. Nevertheless, bank tellers (and total branch staff) become more of an endangered species, with the number of tellers falling to 2 per branch vs. 4 historically, and total branch staff expected to be 20% lower in 2015 than it was in 2011.
  • As for the weak mortgage market, it's expected to continue to deteriorate - off another 34% this year before flattening out in 2015.
  • Jamie Dimon's closing remarks and Q&A are scheduled for 2:30 ET.
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