What Banks Are Telling Us About Homebuilders [Housing Tracker]

by: Judy Weil

Conference Call Excerpts 

Fifth Third Bancorp Q2 2008 Earnings Call Transcript. “Mary E. Tuuk - EVP & CRO: If you look at our guidance for the remainder of the year, essentially what we are guiding you to is the fact that we do expect an increase in homebuilder charge-offs for the remainder of the year. And of that increase we would expect a larger proportion of that increase to occur within the third quarter. And we would give you that guidance based on our analysis of the migration of that portfolio. However, if you were to exclude home builder charge-offs, we would expect the remainder of losses to increase at a very modest pace.” (Seeking Alpha, July 22nd)


Bank of America Corporation F2Q08 (Qtr End 06/30/08) Earnings Call Transcript. “Ken Lewis, CEO: As expected, credit costs remained at high levels reflecting weaker housing markets, particularly in geographic regions that experienced significant home price declines. This weakening combined with the slower economy resulted in additional credit deterioration mainly across our domestic consumer, small business, and home builders portfolios… Joe Price, CFO: commercial portfolios net charge-offs increased in the quarter to $694 million or 84 basis points up 15 basis points from the first quarter. Most of the deterioration is driven by small business and to a lesser extent homebuilders, with the other portfolios remaining relatively sound. For example, commercial excluding small business and commercial real estate had a charge-off rate of 13 basis points, flat with the first quarter. Net losses in small business which are reported as commercial loan losses are up $113 million from the first quarter and the net charge-off rate has risen to 9.53%. As we’ve discussed before many of the issues in small business relate to the rapid growth of the portfolio over the past few years which is now compounded by current economic trends.” (Seeking Alpha, July 21st)


West Coast Bancorp F2Q08 (Qtr End 6/30/08) Earnings Call Transcript.  “Hadley S. Robbins, EVP, CCO: The banks Commercial and Industrial loans were $513 million at quarter end representing 24% of non two-step loans. We have seen a downward risk rating migration develop among commercial businesses that operate within the supply chain, a product and/or services used by housing industry. A number of these businesses contractors, wholesale suppliers, nurseries and wood products have experienced declines in sales volume, slower turnover of current assets and declining levels of profitability that have made some downgrades necessary. By in large most of these businesses are responding timely to changes in the economic environment by taking appropriate actions. Most are focused on conserving cash either by postponing expenditures, reducing expenses or selling non-contributing assets. At June 30, non-accrual commercial loans were $4 million or 78 basis points of total C&I loans. Loans 30 to 89 days past due were about 19 basis points of total C&I loans. This compares to non-accruals of $4 million or 75 basis points and past due loans of 47 basis points at March 31st.”  (Seeking Alpha, July 21st)


Seeking Alpha's Housing Tracker is a collection of housing-related excerpts from various sources, grouped by topic. Feel free to post any interesting links on the subject in the comments section below.

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