siegfried

Banking: Will the New Be Better than the Old?

Prudent? Comerica has $15 billion in loans to commercial real estate of which more than 1/3 are in CONSTRUCTION loans. and another $5+ billion in loans to auto dealerships mostly in california and the midwest. Toxic balance sheet, watch this stock go to $0/share.

These 32 Commercial Banks and Thrifts May See the Dung Hit the Fan

agree--the home equity crisis is a ticking time bomb. now take your list and cull it for banks that have already taken the hit, raised additional equity and moved on, then adjust the remainder for banks "hidden assets" like the KO stock on STI's balance sheet that will add $1 billion of equity this quarter and then cull out the banks operating in geographies that have not been hard hit. You will get banks like CMA, BBT, and SNV. Still trading above book and still under reserved. Then its a race--will they have to write down before the recession turns. If the recession lasts through the year and they have to do year end house cleaning (again) then they will trade down 20% to 30% from here. If not, then you are stuck with watching them trade between their 50 day MA and their 200 day MA for the next 2 quarters.

Jim Rogers' Picks and Pans - Barron's Interview

there are two china closed end funds trading a significant discount to net asset value. CAF which is pure China and TDF which is the Templeton Dragon Fund.

Securitization Market Q1 Report: Dramatic Pullback

Last 2 Fed Reserve CMBS for Treasuries indicate rising demand to dump paper for cash--at higher interest rates

Release Date: April 8, 2008
For release at 10:00 a.m. EDT

On April 7, 2008, the Federal Reserve conducted an auction of $50 billion in 28-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 2.820 percent

Total propositions submitted: $91.569 billion
Total propositions accepted: $50.000 billion
Bid/cover ratio: 1.83

Number of bidders: 79

Bids at the stop-out rate were prorated at 67.70% and resulting awards were rounded to the nearest $10,000 (except that all awards below $10,000 are rounded up to $10,000).

The awarded loans will settle on April 10, 2008, and will mature on May 8, 2008. The stop-out rate shown above will apply to all awarded loans.

Release Date: March 25, 2008
For release at 10:00 a.m. EDT

On March 24, 2008, the Federal Reserve conducted an auction of $50 billion in 28-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 2.615 percent

Total propositions submitted: $88.869 billion
Total propositions accepted: $50.000 billion
Bid/cover ratio: 1.78

Number of bidders: 88

Bids at the stop-out rate were prorated at 98.87% and resulting awards were rounded to the nearest $10,000 (except that all awards below $10,000 are rounded up to $10,000).

The awarded loans will settle on March 27, 2008, and will mature on April 24, 2008. The stop-out rate shown above will apply to all awarded loans.

Financial Stocks: A Look at the Big Picture

As of 12/31/05 BBT had $11.94 billion in construction and land development loans. As of 12/31/07 BBT had $19.47 billion. The $7.53 billion in construction and land development loans underwritten in the last 2 years represent commercial and residential construction projects underwritten during the boom years of real estate expansion and are now being finished--just in time for the biggest contraction in real estate values since BBT was created. This portfolio of construction loans is now turning into devalued real estate assets. This means the $7.53 billion might be a 50% write off in 2008. Current loss reserves for BBT are slightly over $1 billion. These construction loans are the bomb that could sink BBT just as sure as sub prime mortgages sank Bear Stearns. Don't say you weren't warned.

I'm on Meredith Whitney's Side

Do you think these situations have improved or worsened since 12/31/07?

Synovus Financial: construction loans as a percentage of shareholder's equity as of 12/31/07: 233%
BB&T: construction loans as a percentage of shareholder's equity as of 12/31/07: 154%
Regions Financial: $7.2 billion in residential construction loans in Florida as of 12/31/07. Total reserve for losses for entire loan portfolio on same date: <$1.4 billion.
Comerica: $3.5 billion of real estate construction loans on "watch list" as of 12/31/07. Total reserve for losses for entire loan portfolio: $557 million.
SunTrust: $3.6 billion in residential construction to perm loans, $2.9 billion in land acquisition and development loans, $1.7 billion in Alt A residential mortgage loans, $14.9 billion in home equity loans , $13.8 billion in construction loans, total loan portfolio: $122.3 billion.

Financial Stocks: A Look at the Big Picture

BBT has 21.24% or $19.5 billion of its loan portfolio in construction loans. This is 153% of shareholder's equity, which by the way has a bunch of goodwill in it. As of 12/31/07 BBT had $3.3 billion of Alt A loans. BBT's loss reserve as percentage of its loan portfolio was 1.11%. Does valuation even matter any more?