No one was listening today, as financials plunged, but MF Global sees the foreclosure settlements announced yesterday as a positive for the banks involved, since the deal may make it harder for state attorneys general to collect from the banks to reduce loan balances for more troubled homeowners.
Federal regulators issue sanctions - no fines - against eight bank mortgage servicers and two third-party service providers for "unsafe and unsound practices" in residential mortgage loan servicing and foreclosure processing. The banks: BAC, C, HBC, JPM, MET, PNC, USB, WFC. Service providers: LPS (LPS -4.7%), MERS.
Royal Bank of Canada (RY) is trying to sell its U.S. banking operation after consistently losing money on it for several years. It marks a retreat from $4.6B invested over the past decade to establish a strong presence in the southeast. It's not clear which U.S. bank might be interested in the purchase.
Weeks after the Fed began allowing banks to resume normalized levels of stock dividends, PNC Financial (PNC +0.3%) pulls a surprise by raising its quarterly dividend 250%, to $0.35/share from $0.10. PNC also plans to buy up to $500M of common stock by the end of 2011. (PR)
Stock buybacks are usually ill-timed, ineffective and costly, David Weidner writes, so "if your bank is buying, maybe you should sell." The problem with many buybacks is that CEOs try to time the market - not a good idea with the Dow at 12,000 - and they’re often offset by new shares offered to employees as options - and banks have handed out lots of them after the financial crisis.
The Fed announces the completion of its stress test analysis of 19 big banks, clearing the way for some to increase dividends and buy back shares. Methodology included a requirement that banks test their revenue and capital against three different economic outcomes, including a severe recession in which unemployment rises to 11%. KBE +1.2%.
JPMorgan Chase (JPM +1%), Wells Fargo (WFC -0.1%) and US Bancorp (USB +0.5%) will be among banks announcing dividend payouts and possibly share repurchase plans on Monday, RBC Capital Markets says. State Street (STT +0.6%) may have the largest percentage increase in dividends, RBC says. Not on the list: Citigroup (C +0.9%), Bank of America (BAC +1.6%).
The Fed could tell major banks as soon as next week whether regulators' stress tests show they're healthy enough to boost stock dividends, Reuters says, in a move the markets are sure to view as a signal that the financial industry has passed the crisis. Among banks most likely to be given the green light: USB, WFC, JPM, PNC.
Not all banks will be in a position to start or raise their dividend payouts, Goldman Sachs says, expecting action from U.S. Bancorp (USB +2.5%), JPMorgan Chase (JPM +2.3%), PNC Financial Services (PNC +1.2%) and Wells Fargo (WFC +1.4%), with dividend prospects for Bank of America (BAC +1.6%) and Citigroup (C +1.7%) “uncertain."
A report in the South Florida Business Journal suggests PNC (PNC) is in active talks to buy Regions Financial (RF) and is also considering a deal with BankAtlantic (BBX). Premarket: RF +5%, BBX +16.3%.
Goldman Sachs (GS) thinks banks may start lending again, citing Bank of America (BAC +3.5%), Wells Fargo (WFC +2.8%) and PNC Financial (PNC +3.5%) as painting "an improved loan demand picture, with expectations for organic and market share driven growth in 2011 across various loan products." Regional banks up sharply: RF +6.3%, FITB +5.7%, STI +3.8%, KEY +3.4%.
Banks have sold more than $16B in non-performing assets so far this year, twice what they sold last year, according to a report published by investment bank KBW. Among the biggest sellers, Regions Financial (RF -2.2%), who sold $350M in commercial real estate loans during Q3 at "60% of par," was downgraded today by S&P. FITB -2.5%, STI -1.8%, PNC -1.4%.
PNC Financial Services Group Inc is a financial services company. It operates in six segments: Retail Banking; Corporate & Institutional Banking; Asset Management Group; Residential Mortgage Banking; BlackRock; and Non-Strategic Assets Portfolio.