Deutsche Bank (DB -4.2%) is faced with a number of opposing forces in considering merger partners to bolster its position in the global financial industry.
Influential government officials want a deal with smaller domestic rival Commerzbank AG to create a national champion with the size and scope to support German exporters around the world, Bloomberg reports.
Some key regulators though, including the European Central Bank and German banking watchdog BaFin, worry that combining the country's biggest banks--both suffering from weak share prices and low profitability--increase risks.
Also, Deutsche Bank would need to raise as much as EUR 9B ($10B) to execute a deal with Commerzbank (OTCPK:CRZBF).
The ECB sees a cross-border merger as an opportunity to help integrate Europe's fragmented financial industry.
Deutsche Bank CEO Christian Sewing favors a European merger but wants time to build up earnings and share price before considering a deal.
The cross-border merger option would require more clarity on the EU's plans for banking union, which could take a few years. While Deutsche Bank execs concluded a merger with UBS Group (UBS -1.6%) would be the best option among potential European partners, they determined that the time isn't right.
JPMorgan Chase (JPM) shuffles execs at its corporate and investment bank to streamline the bank's trading and treasury operations, Bloomberg reports, citing a memo sent to employees.
The biggest change promotes Troy Rohrbaugh to head of global markets where he'll oversee all of fixed-income and equity trading; he had previously been head of macro trading.
That move will free up Co-President Daniel Pinto to focus more on strategy.
JPMorgan also cut the size of its CIB management team to 18 from 25.
Takis Georgakopoulos will head a new wholesale payments group that combines treasury services teams from the consumer and corporate bank; the group will handle cash management, payment solutions, and merchant services.
Marc Badrichani take a newly formed role as head of global sales and research.
Joyce Chang also takes a newly created role--chair of research, where she'll focus on building key investor relationships; she rose through the ranks as an analyst covering fixed-income and emerging markets.
Berkshire Hathaway's (BRK.A, BRK.B) NetJets reaches a new pact with its pilot union that increases pilots' pay and extends their contract for three more years, the Wall Street Journal reports.
The 2,500-member pilot's union ratified the measure in late December with 81%+ voting in favor of the package of amendments that extends the 2015 Collective Bargaining Agreement through 2026.
The agreement illustrates the shift in labor relations at the company since 2015, when contentious negotiations led to public protests by pilots. NetJets's former CEO stepped down in mid-2015 and current CEO Adam Johnson reached an agreement with the union by the end of the year.
This time around, negotiations started in late 2018 even though the pilots' existing contract wasn't scheduled to expire until 2023. Under the new contract, pilots who fly more can get paid more using a new compensation structure.
MGIC Investment (NYSE:MTG) advances 1.0% in premarket trading after Q4 adjusted net operating income of 42 cents per share beats average analyst estimate of 39 cents; compares with 43 cents in the year-ago quarter.
Sees insurance in force continuing to increase as a result of strong annual persistency and new business writing and expects number of new mortgage delinquency notices, claims paid, and delinquency inventory to continue to decline.
Q4 new insurance written of $12.2B, down from $12.8B in Q4 2017.
Insurance in force of $209.7B at Dec. 31, 2018, rose by 1.9% during the quarter and 7.6% from a year ago.
Persistency was 81.7% at Dec. 31, 2018 compared with 80.1% at Dec. 31, 2017.
Net premium yield was 47.3 basis points vs. 49.3 bps for Q3 and 49.2 bps for Q4 2017.
Primary delinquent inventory of 32,898 loans at Dec. 31, 2018 decreased 29% Y/Y.
Book value per common share rose 4.6% during the quarter to $10.08.
BB&T (NYSE:BBT) slides 1.3% in premarket trading even as Q4 adjusted EPS of $1.05 beat consensus estimate by a penny.
Compares with $1.03 in Q3 and 77 cents in Q4 2017.
Q4 total revenue of $2.94B, though, misses consensus of $2.97B; compares with $2.93B in Q3 and $2.87B in Q4 2017.
Q4 net interest margin 3.49%, up 2 basis points from Q3.
Insurance income was $487M, up $39M from prior quarter, and investment banking and brokerage fees and commissions were $139M, up $23M from Q3.
Average loans and leases held for investment were $147.5B, up 3.6% on annualized basis compared with Q3, as commercial and industrial loans rose 4.3%, average CRE loans decreased 3.6%, residential mortgage loans up 7.8%, and revolving loans up 17%.
Q4 provision for credit losses $146M vs. $138M in Q3.
Average deposits were $157.8B vs. $157.3B in Q3.
Return on average common shareholders' equity of 11.14% vs. 11.69% in Q3 and 9.10% in Q4 2017.
Morgan Stanley (NYSE:MS) slumps 5.7% in premarket trading as Q4 adjusted EPS of 73 cents misses the average analyst estimate of 89 cents as the quarter's market swings dented results in fixed income sales and trading.
Compares with $1.17 in Q3 and 84 cents in Q4 2017.
Q4 revenue of $8.55B fell from $9.50B in the year-ago quarter; pretax income of $1.86B fell from $2.47B Y/Y.
Institutional Securities revenue of $3.84B fell 15% Y/Y as lower performance in fixed income sales and trading more than offset strong results in investment banking, especially in M&A advisory.
Investment Banking revenue of $1.4B, essentially unchanged from a year ago.
Sales and Trading revenue fell to $2.5B from $2.7B Y/Y, with fixed income sales and trading revenue falling 30% to $564M Y.Y.
Wealth Management net revenue of $4.14B fell 6.0% from $4.41B a year earlier, with results reflecting a difficult environment, seasonality and certain compensation-related items.
Investment Management net revenue of $684M rose 7.4% to $637M; AUM of $463B.
Q4 net interest income of $989M vs $936M in Q3 and $995M in the year-ago quarter.
Q4 adjusted return on average common equity 7.1% vs. 11.5% in Q3 and 8.6% in the year-ago quarter.
Book value per common share $42.20 at Dec. 31, 2018 vs. $40.67 at Sept. 30, 2018.
Effective tax rate 16.2% vs. 24.4% in Q3 and 73.2% in Q4 2017.
The world is mourning the death of John Bogle, but the movement he helped start continued in force last year.
According to Morningstar, a full $174B was pulled from active U.S. equity funds in 2018, while $207B moved into passive U.S. equity funds.
Naturally, it was two Vanguard funds which saw the largest inflows last year - the Vanguard Total International Stock Market Index (MUTF:VTIAX) drew $50.2B, and the Vanguard Total Stock Market Index (MUTF:VTSAX) $49.2B.
Vanguard led fund families as a whole in 2018 with $161B in inflows. Second place went to iShares (NYSE:BLK), with $136B.
Active fund managers of interest include: AllianceBernstein (NYSE:AB), Franklin Resources (NYSE:BEN), Ameriprise (NYSE:AMP), Invesco (NYSE:IVZ), Legg Mason (NYSE:LM), Waddell & Reed (NYSE:WDR)
Compares with 45 cents in Q3; Q4 2017 EPS of 17 cents including notable items of 19 cents.
Chairman and CEO Beth Mooney notes that credit quality remains strong and net charge-offs to average loans of 0.27% are below KEY's target range and non-performing loans declined $100M from Q3.
Q4 net-loan charge-offs were 0.27% of average total loans, unchanged from Q3 and vs. 0.24% in Q4 2017.
Net interest income of $1.01B rose 1.5% from $993M in Q3 and 5.9% from $952M in Q4 2017.
Q4 net interest margin from continuing operations of 3.16% vs. 3.18% in Q3 and 3.09% in Q4 2017.
Q4 average loans $89.3B vs. $88.5B in Q3 and $86.0B in the year-ago period.
Key Community Bank income from continuing operations of $261M rose 8.3% from Q3 and 72% from Q4 2017; Key Corporate Bank income from continuing operations of $215M rose 8.0% from Q3 and fell 3.6% from Q4 2017.
Common equity Tier 1 ratio of 9.92% vs. 9.95% in Q3 and 10.16% in Q4 2017.
Book value at Dec. 31, 2018 of $13.90 vs. $13.33 at Sept. 30, 2018.
Bank of America's (NYSE:BAC) head of global investment banking, Diego De Giorgi, is stepping down four months after his boss Christian Meissner departed, the Financial Times reports, citing two people familiar with the situation.
He'll be replaced by two co-heads, technology banker Jack MacDonald and healthcare banker Tom Sheahan.
Oxbridge Re (NASDAQ:OXBR) expects Q4 results to include $3.1M in losses from Hurricane Michael and $2.9M in losses from California wildfires, both taking into consideration its quota-share pact through its reinsurance sidecar, Oxbridge Re NS.
Total notable large losses are expected to affect Q4 results by about $6M.
Gladstone Land (NASDAQ:LAND), a REIT that invests in farm-related properties, reaffirms its NAV methodology in response to a recent analyst research report.
In the report, the analyst estimated Gladstone Land's forward twelve months NAV per share based on a model typically applied to traditional commercial, office, or industrial REITs.
Gladstone Land, however, calculates NAV using a method based on appraisals by independent professional certified farm industry appraisers who conduct period appraisals of Gladstone's properties.
In its most recent 10-Q, Gladstone Land's estimated NAV per share at Sept. 30, 2018 was $13.79.
The analyst report also estimated LAND's 2018 dividend at 53 cents per share, 2019 dividend at 53 cents, and 2020 dividend at 54 cents.
In 2018, the company paid aggregate dividends per share of $0.5319, and recently declared dividends for January, February, and March 2019 imply a new run-rate on its dividend of $0.5334 per share for the year.
Maiden Holdings (NASDAQ:MHLD) rises 3.1% in after-hours trading after announcing the sale of AVS Automotive VersicherungsService GmbH and related European subsidiaries to Allianz Partners as part of Maiden's strategic review.
Proceeds from the sale include an undisclosed cash payment at closing and a three-year quota share reinsurance agreement with Allianz.
Maiden's AVS works with German and Austrian auto retailers, OEM, and related credit providers to design and distribute auto dealer and consumer insurance products.
Entegra Financial (NASDAQ:ENFC) will postpone its Q4 earnings release to complete the review of a potential impairment charge to its goodwill.
The company had planned to announce Q4 earnings on Thursday, Jan. 17, 2019 and will now postpone the announcement until after the close of trading on Jan. 24.
In connection with its recently announced merger agreement with SmartFinancial (NASDAQ:SMBK), Entegra may be required to take an impairment charge to goodwill, which if taken would reduce shareholder equity and increase charges against income for 2018.
Average real student debt load per capita for the age 24-to-32 demographic doubled to $10,000 in 2014 from $5,000 in 2005, according to the Federal Reserve's first issue of its Consumer & Community Context series.
That's affected their ability to take out mortgages to buy a home. The percentage of household heads in the 24-to-32 age group that own their own home fell to 36% in 2014 from 45% in 2005--a 9 percentage point drop.
"We estimate that roughly 20% of the decline in homeownership among young adults can be attributed to their increased student loan debts since 2005," according to the authors of the article, Alvaro Mezza, Daniel Ringo, Shane Sherlund and Kamilla Summer.
Tighter mortgage market conditions after the financial crisis may also have contributed, making it harder for people with student debt to get financing.
Deutsche Bank (DB +7.6%) confirms it launched a second internal investigation into its role in the Danske Bank money-laundering scandal that occurred at Danske's Estonian branch, the Financial Times reports.
From 2007 to 2015, Deutsche Bank cleared more than €160B in its role as correspondent bank for Danske's tiny Estonian branch.
Germany's biggest lender quit as Danske's correspondent bank for that branch after internal controls started to flag an increasing amount of suspicious transactions.
Citi (C +1.7%) is appointed custodian and tax services provider for the U.S. asset of Indeval's International Quotation System--or SIC.
Represents $39B of assets.
The SIC program was created by the Mexican Stock Exchange, Bolsa Mexicana de Valores, and Indeval, the Mexican Central Securities Depository, to provide investors access to international securities and develop the local capital market.
The consolidation of the U.S. assets under Citi as the single provider went live in December 2018.
MUFG Union Bank. a subsidiary of MUFG Americas Holdings which is a U.S. intermediate holding company of Mitsubishi UFJ Financial Group (NYSE:MUFG) signed an agreement with GE Capital to acquire Trade Payable Services , a leading supply chain finance platform, from GE Capital.
Terms of the transaction were not disclosed.
Following the close of the proposed transaction, MUFG Union Bank will assume management control of the systems and processes supporting the supply chain finance activities that GE Capital performs for GE.
Spirit Realty Capital (SRC -0.1%) says Spirit MTA REIT's (SMTA +7.4%) accelerated strategic plan will allow Spirit Realty to pull forward "significant proceeds" that can be redeployed into triple net assets and/or to strengthen its balance sheet by reducing leverage.
Also sees nearer-term expiration of Spirit's three-year management contract with SMTA improving organic growth by removing a flat income stream and removing uncertainty around the duration of that income stream.
The permanent separation of SRC and SMTA should benefit SRC's cost of capital as Spirit completes its transition to a simplified pure-play net lease REIT, says SRC President and CEO Jackson Hsieh.
Spirit MTA REIT (NYSE:SMTA) jumps 8.7% after the REIT's board decides to speed up its strategic plan and hires advisers to explore ways to maximize shareholder value.
Strategic alternatives to be considered may include a sale of the company or the Master Trust 2014, a merger, or other potential alternatives.
"Through the acceleration of our strategic plan, we will explore all available options to maximize shareholder value," says SMTA CEO, CFO and Treasurer Ricardo Rodriguez. "Our board of trustees also intends to continue paying dividends equal to 100% of CAD.”
As of Sept. 30, 2018, SMTA’s portfolio of assets consisted of 784 properties held through the Master Trust 2014, including 5 assets leased to ShopKo Stores.
SMTA continues to monitor its ShopKo Stores-related assets, including in connection with the filing by ShopKo Stores and its affiliates of petitions for relief under Chapter 11 on Jan. 16, 2019.
SMTA doesn't expect to get any additional cash flow going forward from any of the assets leased to ShopKo Stores, nor bear further meaningful expenses related to those assets.
Charles Schwab Corp. (NYSE:SCHW) gains 3.1% after Q4 EPS benefits from a surge in client cash allocations in December.
Q4 EPS of 65 cents beats the average analyst estimate of 64 cents and revenue of $2.67B beats consensus of $2.63B.
Q4 EPS increased from 41 cents a year ago and revenue rose 19% Y/Y.
"We grew our consolidated balance sheet 22% to end the year at $297B, reflecting client cash allocations through the year – including a December surge in the midst of heightened market volatility – and $72B of sweep transfers," CFO Peter Crawford said, commenting on 2018 results.
Total assets grew 9% during the quarter to $296.5B from $272.1B.
Net interest revenue increased 42% $1.63B from $1.15B a year ago, asset management and administration fees fell 13% to $755M from $863M, and trading revenue rose 34% to $206M from $154M.
Q4 return on average common stockholders' equity rose to 20% (annualized) from 14% a year ago.
Upgrading Annaly Capital (NLY +0.3%) to Overweight, analyst Richard Shane says the company's real estate portfolio could lead to outperformance in a cyclical downturn. His $10.50 price target suggests about 4% upside.
Also boosted to Overweight is Apollo Commercial (ARI +1%).
Downgraded to Neutral after a decent run over the past year is Granite Point Mortgage (GPMT -0.4%).
Q4 net interest income of $614M increases from $599M in Q3 and $545M a year ago; net interest margin of 3.70% improves from 3.60% in Q3 and 3.27% a year ago.
Q4 adjusted efficiency ratio of 50.70% vs. 51.59% in Q3.
Q4 average loans of $48.8B vs. $48.6B in Q3 and $48.9B in Q4 2017.
Q4 average deposits of $55.7B compares with $56.1B in Q3 and $57.6B in Q4 2017.
Q4 common equity Tier 1 capital ratio 11.12% vs. 11.68% in Q3.
FY2019 outlook: Sees average loans rising 2%-4% and average deposits declining 1%-2%; expects net interest income up 4%-5% as it benefits from higher rates ($130M-$150M) and securities portfolio repositioning.
U.S. Bancorp (NYSE:USB) up 1% premarket after Q4 EPS of $1.10 beats estimates by $0.04.
Total revenue of $5.82B up 3.9% as NII increased 4% on rising interest rates on assets, earning assets growth, and higher yields on reinvestment of securities, partially offset by higher rates on deposits and funding mix.
4Q18 Return on average assets of 1.59%; return on average common equity of 15.8%.
Return on tangible common equity of 20.2% vs. 18.8% in 4Q17.
Bank of New York Mellon (NYSE:BK) Q4 adjusted EPS of 99 cents increases from 91 cents a year ago; beats consensus by 7 cents.
BK +0.7% in premarket trading.
Q4 total revenue of $4.0B fell 1%, when excluding notable items; misses consensus by $20M.
Assets under custody and/or administration of $33.1T decreased by 1%, primarily reflecting lower market values and the unfavorable impact of a stronger dollar, partly offset by net new business.
Assets under management of $1.7T decreased 9%, primarily reflecting the unfavorable impact of a stronger U.S. dollar, lower market values, net outflows, the divestiture of CenterSquare Investment Management, and other changes.
Radian (RDN) acquired Five Bridges Advisors, LLC, a renowned developer of proprietary software, data analytics and predictive models leveraging artificial intelligence, machine learning and traditional econometric techniques.
Five Bridges will operate under its current brand and provide the same level of quality products and services to its customers through its offices in Bethesda, Maryland.
In 2019, Five Bridges will transition to the new One Radian brand identity as an integral part of the company’s Title, Mortgage and Real Estate Services.