Nov. 7, 2014, 3:19 PM
- Banks with as little as $50B in assets are currently subject to the Fed's CCAR - fairly absurd as there's roughly zero systemic risk from the failure of a bank with $50B in assets (or even $100B). While health, immigration, and tax reform in D.C. are getting a lot of headlines, banking industry reform may also now be on the way.
- A KBW report finds banks with between $50B and $100B in assets have been limited to a dividend payout ratio of 40% or less, compared to ratios far higher for those lenders with less than $50B. The $50B line is front and center for New York Community Bancorp (NYSE:NYCB) - which currently has $48.7B in assets and a 93% dividend payout ratio. CEO Joseph Ficalora would like to get back to doing acquisitions, but knows the bank can kiss that high payout goodbye if it does so under the current regulatory regime.
- Should a Republican-led Congress push to boost the threshold to, say, $100M, it would find a friend in the Fed's Daniel Tarullo who has already mused about doing so. "I would not expect President Obama to exercise veto power over this," says a financial services attorney.
- Among the players with $50B-$100B in assets: HBAN, KEY, MTB, ZION, CMA.
- ETFs: KRE, KBE, IAT, KBWB, RKH, QABA, KRU, KBWR, KRS
Oct. 20, 2014, 9:48 AM
- Nomura and Bernstein ring the register on their Sell/Underperform calls, upgrading Comerica (CMA +1.8%) to Neutral/Market Perform, and Sandler O'Neill upgrades to a Buy.
- The stock slid on Friday after earnings fell short of expectations, and one issue on the conference call (transcript) was the bank's large exposure to Texas and thus recently slumping energy prices.
- "We are not concerned at this time," says Chief Credit Officer John Killian. "We’ve been in this business for 30 years so we have seen lots of ups and downs." He notes the energy portfolio accounts for about 7% of loans outstanding. "Most of our customers are well hedged on average 50% are hedged for two full years and many are for longer periods."
Oct. 17, 2014, 9:57 AM
- EPS of $0.82 vs. $0.78 in Q2. 3Q14 EPS reflects net benefit of $15M or $0.03/share after tax on certain items.
- Recent dividend of $0.20
- Net interest spread of 254 bps down from 265 bps in Q2.
- Average total loans up 7% y/y to $47.2B
- Tier I common capital ratio of 10.69% vs. 10.5% in 2Q
- Repurchased approx. 1.2M shares during 3Q14
- Conference call. Webcast here.
- CMA -2.1%
- Previously: Comerica misses by $0.01, misses on revenue
Oct. 17, 2014, 6:49 AM
Oct. 16, 2014, 5:30 PM
Jul. 18, 2014, 6:48 PM
- The big banks aren't quite ready to let go of their reserve releases: The big four - JPMorgan Chase (NYSE:JPM), Citigroup (NYSE:C), Bank of America (NYSE:BAC) and Wells Fargo (NYSE:WFC) - released a combined $2.25B of their bad-loan reserves in Q2, up nearly 20% from the $1.88B they released in Q1.
- The banks continue to see improvement in their customers’ credit quality, but their earnings continue to rely in part on freeing up some of their rainy-day cushions, rather than being able to generate strong earnings from their operating businesses.
- Even with the Q2 uptick, the banks are releasing less in the way of reserves than they have for most of the past four years, and analysts see the practice ending before too much longer.
- Some regional banks such as Comerica (NYSE:CMA) and Huntington Bancshares (NASDAQ:HBAN) that had been releasing reserves started building their reserves up again by small amounts during Q2.
Jul. 16, 2014, 8:16 AM| Comment!
Jul. 15, 2014, 6:48 AM
Jul. 14, 2014, 5:30 PM
Jul. 11, 2014, 3:58 PM
- Wells Fargo’s (WFC -0.7%) disappointing Q2 results could be good news for PNC Financial Services (PNC +0.4%), Fifth Third (FITB +1%), KeyCorp (KEY +0.1%) and Comerica (CMA +0.5%), according to Nomura analysts.
- The strength in WFC’s commercial loan portfolio - total core loan growth came in at 6.9% Y/Y, up from 5.6% last quarter - bodes well for other regional banks, given high C&I growth correlations (~80% or higher); total loan growth correlations also exceed 90% for PNC, FITB, KEY and CMA.
- The firm notes that the R-squared between earning asset growth and net interest income growth is 98% for regional banks, suggesting that stronger loan growth will lead to positive EPS revisions.
Jul. 10, 2014, 11:57 AM
- Guggenheim cashes in its chips on a trio of Buy calls, downgrading Washington Trust Bancorp (WASH -2.1%), Investors Bancorp (ISBC -1.7%), and S&T Bancorp (STBA -2.8%) to Neutral. The team also finds a name to upgrade, boosting Comerica (CMA -0.5%) to a Buy, noting the lender's exposure to Texas and California.
- Sandler O'Neill chimes in with a couple of upgrades, lifting SVB Financial (SIVB) and Square 1 Financial (SQBK +0.5%) each to Buy. Peapack-Gladstone Financial (PGC -0.5%) is started with a Buy.
May 30, 2014, 8:56 AM
May 14, 2014, 10:17 AM
- Among those started at Buy is M&T Bank (MTB -0.9%), with analyst Bill Carcache noting the usually strong performer has lagged over the past 16 months amid regulatory issues and the delay of the Hudson City Bancorp (HCBK -1%) acquisition. Carcache expects approval this year, along with meaningful operating efficiency improvements. "We believe MTB shares are trading at a significant discount to their intrinsic value and expect to see meaningful share price appreciation through 2015."
- Also a Buy is Wells Fargo (WFC -0.8%), with Carcache seeing the bank as well-positioned if the economic recovery remains muted thanks to a combination of fee income and expense control.
- Started at Reduce with $40 price target is Comerica (CMA -1.7%), with Carcache saying the stock price has gotten ahead of itself.
- See also: More on Nomura's wide-ranging new bank coverage
Apr. 15, 2014, 6:45 AM
Apr. 15, 2014, 12:05 AM
Apr. 14, 2014, 5:30 PM
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