Bank Of America: Diamonds Are Forever
Fairlight Capital • 107 Comments
Fairlight Capital • 107 Comments
Thu, Jun. 2, 11:24 AM
- In separate public comments today, Fed governors Daniel Tarullo and Jerome Powell said the Fed will require the eight largest U.S. banks to hold even more capital if they want to pass stress tests.
- The goal, says Powell, is to make capital requirements so difficult that the largest lenders have to honestly assess whether it would be a better idea to break themselves up.
- For now, the Fed is going to make 2015's capital surcharges permanent, which alone makes things tougher. "Really quite significant, probably the most significant additional potential capital requirement on the horizon." says former OCC Director John Dugan.
- The eight: Bank of America (BAC -0.1%), Citigroup (C -0.3%), JPMorgan (JPM -0.4%), Morgan Stanley (MS -0.7%), Wells Fargo (WFC -0.5%), State Street (STT -0.7%), Goldman Sachs (GS -0.7%), BNY Mellon (BK -0.5%)
Thu, Jun. 2, 10:09 AM| Thu, Jun. 2, 10:09 AM | 5 Comments
Thu, Jun. 2, 7:45 AM
- May monthly performance was: +1.13%
- 52-week performance vs. the S&P 500 is: -3%
- No dividends were paid in May
- Top 10 Holdings as of 3/31/2016: JPMorgan Chase & Co (JPM): 2.92%, US Treasury Note 1.125%, Citigroup Inc (C): 2.72%, US Treasury Note 0.5%, General Electric Co (GE): 2.16%, Bank of America Corporation (BAC): 1.79%, Morgan Stanley (MS): 1.36%, Target Corp (TGT): 1.36%, US Treasury Note 1.625%, Carnival Corp (CCL): 1.29%
Thu, May 26, 3:15 PM
- All banks in the team's coverage universe have plenty of room for capital return, says analyst John McDonald, expecting some to have sufficient cushions to be able to move payout ratios (dividends and buybacks) to close to 100% of earnings.
- Those most likely to have solid increases in payouts are Bank of America (NYSE:BAC), BB&T (NYSE:BBT), PNC FInancial (NYSE:PNC), and Citigroup (NYSE:C). Those with the least cushion are U.S. Bancorp (NYSE:USB), JPMorgan (NYSE:JPM), and Regions Financial (NYSE:RF).
Wed, May 25, 10:28 AM
- About half of all share sales by public companies this year have been block trades, writes Corrie Driebusch, versus an average of about one-third over the past five years, and just one-fifth over the past decade.
- To review, a block trade involves a bank buying a large chunk of stock from a company or its P-E backers at a discount, in the hopes of unloading it piece-by-piece later that day at a markup.
- The increase in block trades, of course, comes as business slows at any number of other bank profit centers, particularly fixed-income trading.
- For the most part, block deals have mostly proved profitable this year, with an average one-day return of 0.5%, according to Dealogic. The leaders in U.S. block trades this year are Credit Suisse (NYSE:CS) and JPMorgan (NYSE:JPM), with Deutsche Bank (NYSE:DB), Bank of America (NYSE:BAC), and Citigroup (NYSE:C) also notable participants.
Tue, May 24, 10:22 AM
- Stocks had already started the morning nicely in the green, but a blowout new home sales number for April has the homebuilders higher by about 2.5%, and the major indexes up by more than 1%.
- It's also got traders upping bets on a June rate hike, with another move to follow before year-end. That's boosting the yield-starved financials (XLF +1.5%), particularly the banks (KBE +2%).
- Among the financial movers: Bank of America (BAC +1.4%), JPMorgan (JPM +1.9%), Regions Financial (RF +1.8%), Fifth Third (FITB +2.1%), E*Trade (ETFC +2.9%), Interactive Brokers (IBKR +2.6%), MetLife (MET +1.8%), Prudential (PRU +2.2%), Lincoln National (LNC +1.8%), State Street (STT +2.1%)
Mon, May 23, 3:10 PM
- The ruling from the Court of Appeals for the Second Circuit reinstates previously thrown out private antirust lawsuits against 16 banks for allegedly rigging Libor.
- There are a number of groups of plaintiffs, including Baltimore, Houston, and San Diego.
- For now, the case goes back to lower court for further proceedings. If the suits are successful, the bill to banks could be several billion dollars.
- Roughly a dozen financial companies have already settled official charges of rate manipulation, with some pleading guilty to criminal charges.
- The defendants in line from today's ruling include: Bank of America (NYSE:BAC), Barclays (NYSE:BCS), Credit Suisse (NYSE:CS), Deutsche Bank (NYSE:DB), HSBC, JPMorgan (NYSE:JPM), Lloyds (NYSE:LYG), Royal Bank of Canada (NYSE:RY), SocGen (OTCPK:SCGLY), UBS, and Royal Bank of Scotland (NYSE:RBS).
Mon, May 23, 11:30 AM
- A U.S. appeals court today threw out a $1.27B verdict in a fraud case over Countrywide's "Hustle" mortgage program. The decision is a nice victory for Bank of America (BAC) and a big setback for the Justice Department, with the court saying proof at the trial was insufficient to establish liability in connection with the "Hustle" program.
Fri, May 20, 12:11 PM
- "The days of negative provisioning are pretty much dead," says D.A. Davidson's Kevin Reevey. "Now, they're going to have to take provisioning expense and build up reserves based on loan growth."
- Total bank loan loss reserves were north of $250B in Q1 2010, before falling to about $24B at the end of last year. Amid the energy crash, they edged higher in Q1. Naturally, those lenders with the most exposure to energy posted some of the largest reserve increases in Q1. "It wasn't just the levels that [oil] went to, it was the speed at which prices dropped," says Peter Guilfoile, chief credit officer at one of those banks - Comerica (NYSE:CMA). Colorado-based National Bank Holdings (NYSE:NBHC) posted the largest Q/Q increase in reserves-to-loans, jumping 39 basis points to 1.43%.
- Meanwhile, there were plenty of other banks which actually saw declines in that ratio, notably Bank of America (NYSE:BAC), Wells Fargo (NYSE:WFC), and U.S. Bancorp (NYSE:USB). These and other lenders in that bucket can thank denominator of that ratio growing quickly enough to offset reserve builds.
- Source: SNL Financial's Zach Fox and Venkatesh Iyer
- ETFs: XLF, FAS, FAZ, KRE, UYG, VFH, KBE, IYF, BTO, IAT, IYG, FNCL, SEF, FXO, KBWB, QABA, KBWR, RYF, FINU, KRU, RWW, XLFS, FINZ, KRS, WDRW, DPST, FAZZ
Wed, May 18, 1:08 PM
- The meme of rates lower for longer has been stood on its head in the last 24 hours thanks to some decent economic data, but also surprisingly hawkish Fedspeak yesterday.
- The fixed-income world now believes remarks from the Fed's Williams and Lockhart yesterday may have been a preview of what we'll get when the real power speaks tomorrow - Fischer and Dudley - and then on May 27, when Janet Yellen gives a speech.
- Up at 2 ET are the minutes from the FOMC's April meeting.
- The 10-year yield is higher by five basis points to 1.82% and short-term rate markets have upped expectations for a Fed move this year.
- XLF +1.85%, KBE +3.15%, KRE +3.3%
- Bank of America (BAC +3.7%), Citigroup (C +4.2%), JPMorgan (JPM +3.2%), Wells Fargo (WFC +2.1%), U.S. Bancorp (USB +2.1%), Regions (RF +3.3%), KeyCorp (KEY +3.7%), PNC Financial (PNC +2.7%), Fifth Third (FITB +3.7%), Capital One (COF +1.9%), E*Trade (ETFC +4.4%), Schwab (SCHW +4.8%), MetLife (MET +2.9%), Prudential (PRU +3.4%), Lincoln National (LNC +4.2%), BNY Mellon (BK +2.3%), Northern Trust (NTRS +2.9%)
Wed, May 18, 11:12 AM
- Sweeping new compensation rules released by six federal agencies last month would free up pay restrictions for the BlackRock's (NYSE:BLK) of the world, while tightening them for banks like JPMorgan (NYSE:JPM), Wells Fargo (NYSE:WFC), Bank of America (NYSE:BAC), Morgan Stanley (NYSE:MS), and Goldman Sachs (NYSE:GS).
- Source: Bloomberg
- The result is likely an even stronger flow of talent exodus from the big banks and to outfits like BlackRock, Vanguard, Pimco, and Fidelity, to name four.
- “They keep making it more difficult to be a big bank,” says a D.C. attorney.
- At those lenders with more than $250B in assets, top management would have 60% of their bonuses deferred for four years. Tough, but even tougher are clawback provisions allowing banks to take back money up to seven years after bonuses vest.
- Though mammoth in size, the overwhelming majority of assets at BlackRock and the like are client, not proprietary assets. Thus, they aren't subject to the same restrictions. Franklin Resources (NYSE:BEN), for instance, has $743B in AUM, but only about $16B of its own assets. Blackstone (NYSE:BX) manages $344B, but only $22B of its own money.
Tue, May 17, 4:11 PM
- Managing Director Megan Messina filed suit last night, accusing Bank of America (NYSE:BAC) of "egregious pay disparity," and of condoning bias by her superior which made her feel unwelcome in a "bro's club" of sycophants. She also accuses the bank of violating Dodd-Frank whistleblower protects by suspending her for complaining about illegal activity.
- Among the details: Her boss treated her "like a summer intern," spent more time with the other structured products chief, banned her from client events, and peppered her with questions like "have your eyes always been that blue?"
- As for illegal activity, she says her counterpart engaged in "front running" by buying bonds for BofA despite knowing clients wanted them.
Mon, May 16, 8:09 AM
- Alongside a transfer in coverage from Chris Mutascio to Brian Kleinhanzi, KBW pulls its Outperform rating on Bank of America (NYSE:BAC), citing a lot of work still to be done to improve returns and drive shareholder value long term.
- Kleinhanzi's price target is $16.
- Shares -0.15% in active premarket trade to $13.86.
Fri, May 13, 5:52 PM
- David Tepper and Appaloosa have filed their 13F, and while it shows new positions in Valeant (NYSE:VRX), Bank of America (NYSE:BAC), Facebook (NASDAQ:FB) and Fox (FOX, FOXA), a source told CNBC that he's already sold that Valeant stake.
- Shares in Valeant moved accordingly after the release: First up as much as 2.9% after hours, then back again to a 0.6% gain.
- Meanwhile, the firm notes dissolved stakes in Apple (AAPL, sold 1.26M shares), HP Enterprise (HPE, sold 3.66M shares) and Eastman Chemical (EMN, sold 700K shares).
- In energy bets, Tepper heavily increased stakes in Williams Partners (WPZ, +10.87M shares) and Energy Transfer Partners (ETP, +11M shares), while cutting a stake in Kinder Morgan (NYSE:KMI) by 4.95M shares.
Thu, May 12, 12:33 PM
- Value-at-risk at JPMorgan (NYSE:JPM) jumped 50% amid Q1's volatility, reports Bloomberg. It's a figure standing in sharp contrast to declines of 25% or more at Bank of America (NYSE:BAC), Citigroup (NYSE:C), and Deutshce Bank (NYSE:DB), and smaller falls at UBS, Goldman Sachs (NYSE:GS), and Morgan Stanley (NYSE:MS).
- For Bank of America, it says the risk in its trading portfolio in Q1 was the lowest in any quarter since the Merrill Lynch merger in 2009.
- While cutting VaR reduces risk, it also limits profits, and in past times. notes a former Fed bank examiner turned college teacher, banks used episodes of higher volatility to step in and make money. In a Dodd-Frank world, making money in this fashion may not be received well by regulators.
Wed, May 4, 2:49 AM
- Seven of the world's largest banks have agreed to pay $324M to settle a U.S. lawsuit accusing them of rigging the "ISDAfix" benchmark for their own gain from 2009 to 2012.
- The illegal deals included the execution of rapid trades just before the rate was set each day, called "banging the close," to delay transactions and post rates that did not reflect market activity.
- The settlement resolves claims against BofA (NYSE:BAC), Barclays (NYSE:BCS), Citigroup (NYSE:C), Credit Suisse (NYSE:CS), Deutsche Bank (NYSE:DB), JPMorgan (NYSE:JPM) and the Royal Bank of Scotland (NYSE:RBS).
Bank of America Corp. operates as a bank holding company, which provides banking and nonbanking financial services and products through its banking and various nonbanking subsidiaries throughout the U. S. and in certain international markets. It operates through five segments: Consumer and... More
Industry: Regional - Mid-Atlantic Banks
Country: United States
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