Voice of Reason

Regional Banks: Too Small to NOT Fail

I question Seeking Alpha for allowing some the drivel that's been posted lately.

Pain in the Heartland: National City Bank

While this is a well written and balanced piece it seems like just another one too many watch out, watch out the sky is falling critque of the banking sector. I find more positive outlooks on transcripts of suicide prevention lines and that from the people calling in saying they are going to end it all.

It seems some think things by Labor Day will see bread lines and soup kitchens of the 1930's return, unemployment up to 40%, and 90% of the nation's banks boared up and the DOW hoving near 5000.

All the gloom and doom seems more like bears trying to shake out small investors so they can pounce.

Why Private Equity Shops Are Recapitalizing Banks

With the 7B injection of capital NCC went from one of the lower Tier 1 captialized banks to now one of the highest with a percentage North of 11%. As to the "why" that would imply to protect their bond ratings which are still good all things considered and who knows, perhaps because the regulators were sniffing around and hinting a half a percent over minimum wasn't enough padding.

No argument from me, NCC's management and board did a piss poor job the last 9-12 months. Of course they're not alone in that regard.

Why Private Equity Shops Are Recapitalizing Banks

Uncle Sam is doing pretty good. He's "just" 9.3 trillion in the hole and counting.

www.brillig.com/debt_c.../

Why Private Equity Shops Are Recapitalizing Banks

"At 6.65% Tier 1 capital, NCC has more than enough capital to be above the "the well-capitalized" threshold of 6%". I don't know how anyone with a straight face can claim .65% about the threshold is well capitalized. NCC as painful as it is needed a capital infusion which in my view in the main reason for the stock's recent sharp decline. Now that they are about to get 7B they have it. The irony is that now makes them more likely to find a suitor down the road.

No arguement NCC management can best be compared to a bunch of clueless monkeys more worried about keeping their fat paychecks than anything else. Still in my always humble opinion long term, NCC not only will survive but again prosper. Think at least 18 months down the road.

The rumor mill has it several banks liike FifthThird, Key and BOM DID take a look, all saying thanks but no thanks. Just be patient. ;-)

National City Corp. Story Unlikely to Have Happy Ending

Seems Clyde needs an investing basics lesson. Realized Losses or gains depends on you're costs. Maybe you want to write that down so you don't forget.

As I've said before I did't buy NCC directly, rather I was a long term MAFB investor. I got in just after their IPO many years ago. NCC bought MAFB last year. That's how I came to hold NCC.

So from a cost basis because of prior splits in MAFB my per share costs are under $2 a share meaning even at NCC's current depressed prices I'm still showing a substantial profit.

For all the goom and doom spreaders that put a negative spin on everything thicker than farmers spreading a certain brown substance on their fields about this time of year, you should understand at some point writedowns become writeups.

My guess... when we turn the corner many financials will stop writing down to market and revense the process as the excess home inventory starts to go away. It is a cycle that has repeated many times. I'm willing to wait. SMART investors are also patient. My goldern rule is I always buy low. I don't look at market downturns as bad, rather view them as opportunties to add to your positions. So I don't care what a stock closes at tomorrow or next week or next month even. I'm more concerned where it might be a year or two down the road. Accordingly buying financials at their current depressed values may be a golden opportuntity for those that don't panic everytime a stock retreats.

National City Corp. Story Unlikely to Have Happy Ending

You got a mighty fine crystal ball there Clyde, where did you buy it?
To me, it seems to be on the fritz, maybe you cracked it?

Reality Check:

NCC in the quarter set to be reported 4/22 has a windfall profit from a 40% sales of it's Vista IPO worth $530 million. That represents roughly 60% of what it still holds in Vista stock. That asset alone is why NCC has several suitors. It's a big juicy plum. Other banks would kill to have something like 600+ million in Vista stock.

Also it has a much sought after Wealth Management division.

It has 1400 locations with about 100B in customer deposits.

It's recent purchase of MAFB is another plum in the Chicago area, mostly in well to do Western and Southwestern surburbs. No serious subprime worries there.

It also has been around a long time predating the Civil War. It has weathered a lot of bad times, including three major wars and many stock market crashes and housing slumps.

Does it have problems? Sure. What bank doesn't these days? Few. It is obvious the constant screaming from bears showing a very transparent wish to drive its stock price lower.

Yes, as I've said in several threads I'm long NCC. Shame all the people throwing cold water on NCC and other financials don't have the ball to say up front their short.

National City Corp. Story Unlikely to Have Happy Ending

I have sympathy for Jura and other employees that might get the short end of the stick up and down the banking industry. Especially when the big shots that made the bad decisions likely will walk away with a golden parachute probably worth millions.

As far as banks making loans and getting sloppy with the paperwork and checking the borrower out, a few years ago when prime was around 4% I walked into my local Chase bank more on a whim than anything else to apply for a line of credit. There was a MAFB (now NCC) branch right next store and so I figured what the hell, two offers are better than one. I got approved the next day by both banks for a $250,000 ARM. They didn't even appraise the house and no I didn't show them non do I have any income except for my investments being retired. Not complaining, but seems a bit too easy. The only "requirement" was a clear title to the house and proof of home owners insurance so they could put on the policy.

National City Corp. Story Unlikely to Have Happy Ending

Oh, it was just "speculation and observation" and here I thought contributors unlike guys like me just commenting on what was said were suppose to offer up facts to back up their observations. Silly me.

No doubt about it NCC screwed up...big time. So did a bunch of other banks that should have known better. As long as anyone can jawbone, here's my opinion and I have a substational position (thousands of shares) in NCC so obviously I'm biased.

Something "good", a bail out of all or a substational portion, cash infusion between 4-5B, something, will happen and be announced by Tuesday at the latest when they are suppose to announce earnnings.

If a outright offer, no it won't be book value, maybe if lucky in the low teens at the high end. I'm just reading the tea leaves... I have no insider information any more than contributors do.

Seems there is considerable interest in NCC from several suitors, (always good) not just one nor is this a forced shotgun marriage ordered by the Federal Reserve like the Bears deal. While shakey NCC isn't about to go belly up.

I, like many don't view myself as a "trader" in fact I've come to hate that term. I'm an INVESTOR. I don't buy and hold, but I don't expect miracles either. NCC and most if the "big" banks this time next year will likely be much higher. But the heck what do I know.

National City Blew It

I agree NCC is worth way more than it's current badly battered stock price BECAUSE of it's underlying assets, deposit base and hundreds of location, some in very prime Chicagoland area locations.

I also have to say as a very long time Mid American Federal stock holder I have absolutely no use for NCC's gross mismanagement and will vote the entire board out on their stupid asses. They're lucky they don't face criminal charges for such grossly reckless conduct in not protecting shareholder interest while paying executive millions for running the bank into the ground.

I also take major exception with Townsend comments about MAFB.

Mediocre performance? Yea right over the time I've held the stock a 2 for 1 and if I rember correctly a 3 for 2 stock split and the stock price going from roughly $7 to $43 before the merger was announced and a $14 spike after. Don't you wish other banks did as well.

Is Bank of Nova Scotia Interested in National City?

National City is in play for either an outright buy or major capital infussion before it's scheduled 4/22 quarter reporting. Rarely does such a large bank stumble as badly in so short a time as NCC has this past year. This stock has been beaten far below it's book value and could be a steal for a larger fish and Scotiabank could be that shark or white knight depending on how things unfold.

Also don't count out Key Corp, Wells Fargo or Fifth Third. In fact while it may be a dark horse J. P. Morgan in spite of being busy swallowing Bears, easily has enough reserves to take on NCC as a second helping. My rational for JPM being interested is last year's takeover of MAFB, a Chicago area bank with a lot of prime locations. Chase also has a lot of Chicago area shops, some even right next store to what now are NCC locations so they could realize huge cost cutting savings and big up lots of deposits.

Wall Street Breakfast: Must-Know News

There are way too many 'the sky is falling' worrywarts in the market right now that don't have a clue how the "game" is played.

Take GE for example. Awhile ago I was watching some bubble headed blond bimbo "analyst" on CNBC having a hissy fit on air over GE calling their creditability into question.

Earth to all analysits... When a company "misses" all that really means is YOU fools got YOUR estimates wrong. I still can't figure out why so many get their shorts all bunched up over pennies quater by quater. INVESTING not moronic trading short term trading... is best judged over multiple quarters or years even.

Oh, by the way I just doubled my positoin on GE. Thanks to be dummies for the bargain basment price. GE rarely takes such a big hit. LOL!

Wall Street Breakfast: Must-Know News

I guess you have no idea what Chapter 13 means and doesn't mean.

National City Corporation Shopping for a Buyer

As so often happens NCC has been beaten down by the street far below it's true value. This is (was) the country's 9th largest bank with roughly 140 billion in assets. Oh wait a minutue, that subprime mortgage "problem" we keep hearing about.

Well it is really as bad as the fearmongers want Joe Average to believe?

The FACT is it seems to be the chicken little crowd getting their feathers all ruffled up over much of nothing again. NCC reports it big "bad" subprime mortgage holdings that are not performing at 4.4%. Well that mean 95% is STILL above water! Also factor in that banks including NCC have been stupidity and foolishly writing down book value of this paper probably far in excess of real value.

Get it? Sure the subprime mess isn't good, and NCC was damn stupid to get into subprime in the first place, but no way this is that bad a problem either. Better, with NCC one of the largest holders of the new Visa IPO it has/will rake in about 500 million from that which is a much needed shot in the arm.

Over the last week to 10 days the morons... oops I mean those next to useless moronic analysis crowd that can't find their rear ends with both hands behind their back have been upgrading NCC from underperform and hold to buy. That plus merger talk and much if not all the bad news already discounted and factored into the stock price and book value way higher than the current stock price, I'm holding. I'm long several so-called distressed bank stocks.

Disclosurer:

I got into NCC via backdoor being a very long term holder of MAFB which NCC bought last summer. Why didn't I sell? Oh, maybe because I have a cost basis of a little over a dollar. So, still sitting pretty all things considered.