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Sunday, February 19, 2012

Largest USA Banks Quarterly Net Income Drops

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Largest USA Banks Net Income Drops The 9 Largest USA Banks reported aggregate quarterly net income of $14.08 billion for the QE 12-31-11, which is the second lowest in the 5 quarters reviewed. This is a significant drop of -$8.82 billion and -39% from the prior QE 9-30-11. Bank of America and Citigroup reported the largest decreases. Goldman Sachs reported the largest increase.

Largest USA Banks Return on Assets Dip The 9 Largest USA Banks reported an average return on assets of 0.81% for the QE 12-31-11, which is the fourth lowest in the 5 quarters reviewed. This is a small decrease -0.04% from the prior QE 9-30-11. Goldman Sachs, Morgan Stanley, and PNC Financial Services reported the largest decreases. Bank of America reported the largest increase.

Largest USA Banks by Quarterly Net Income The Billion Dollar Club: Wells Fargo is #1 at $4.11 billion. JPMorgan Chase is #2 at $3.73 billion followed by volatile Bank of America with $1.99 billion. U.S. Bancorp, Citigroup, and Goldman Sachs are #4, #5, and #6 at $1.35 billion, $1.17 billion, and $1.01 billion, respectively. Next are PNC Financial Services $493 million and Bank of New York Mellon $478 million. Morgan Stanley is last and #9 with a net loss of -$250 million.



Largest USA Banks by Return on Assets The 1%+ Club: U.S. Bancorp continues leading at 1.51%, followed by Wells Fargo at 1.24% and PNC Financial Services at 1.16%. Bank of New York Mellon 0.88% and JPMorgan Chase 0.85% are #4 and #5, respectively. Next are #6 Citigroup 0.59%, #7 Morgan Stanley 0.51%, and #8 Goldman Sachs 0.48%. Finally Bank of America continues at #9 with an "improved" 0.06%, a 6-quarter high. This is the first positive ROA for Bank of America since the QE 6-30-10.



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Thursday, February 16, 2012

Largest USA Banks Report Stable Financial Position at Year End

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Largest USA Banks Assets Decrease The 9 Largest USA Banks reported aggregate total assets of $10.19 trillion for the QE 12-31-11, which is the second lowest of the 5 quarters reviewed. This is a decrease of -$222.34 billion and -2.1% from the prior QE 9-30-11. Bank of America, Citigroup, and Morgan Stanley reported the largest decreases. U.S. Bancorp and Wells Fargo reported the largest increases.


Largest USA Banks Capital Ratio Improves The 9 Largest USA Banks reported an average capital to assets ratio of 9.99% for the QE 12-31-11, the highest of the 5 quarters reviewed. This is an increase of +0.18% from the prior QE 9-30-11. Morgan Stanley, Goldman Sachs, and Bank of America reported the largest increases. Bank of New York Mellon reported the largest decrease.


Largest USA Banks by Total Assets The Trillion Dollar Club: JPMorgan Chase continues #1 with total assets of $2.3 trillion, Bank of America is #2 with $2.1 trillion, Citigroup is #3 with $1.9 trillion, and Wells Fargo continues #4 with $1.3 trillion. Next are Goldman Sachs at $923 billion and Morgan Stanley at $750 billion. U.S. Bancorp $340 billion, Bank of New York Mellon $325 billion and PNC Financial Services $271 billion are #7, #8, and #9.

 

Largest USA Banks by Capital Ratio The 10%+ Club: PNC Financial Services is #1 and well ahead at 13.73%. Bank of America is #2 at 10.81%, followed closely by #3 Wells Fargo 10.78%, #4 Bank of New York Mellon 10.51%, and #5 U.S. Bancorp 10.28%. Next are Citigroup at 9.59%, Morgan Stanley 8.27%, JPMorgan Chase 8.10%, and Goldman Sachs 7.85% at #6, #7, #8, and #9, respectively.

 

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Sunday, February 12, 2012

Bank of America Reports Poor Earnings: Down QoQ, Up YoY

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Bank of America Reports Poor Earnings: Down QoQ, Up YoY


Bank of America Summary Q4 2011 Bank of America Q4 financial performance faltered to a net income of $1.99 billion but this included a $2.9 billion gain on sale of shares of China Construction Bank and another $2.4 billion in gains on sales of securities. $3.7 billion in various expenses and charges also were recorded. The operating income before these sundry, extraordinary gains and losses was $390 million, which is break-even for a $2+ trillion bank. Financial position continues strong even with the ongoing legacy expenses, charges, and losses. Bank of America Chief Executive Officer Brian Moynihan continues a noteworthy cleanup of the biggest debacle in banking history, left behind by former CEO Ken Lewis. Lewis was arguably the worst banker in history. "Our fourth-quarter results reflect the aggressive steps we have been taking to strengthen the balance sheet and position the company for long-term growth." The volatile swings in the bottom line due to both valuation and extraordinary items prevent meaningful QoQ or YoY comparisons until the prior financial mess is history.


Bank of America Income Statement Q4 2011 Bank of America reported net revenues of $24.89 billion, net income of $1.99 billion, and earnings per share of $0.15. From the prior quarter Q3 2011, net revenues were down -12.53%, net income was down -68.05%, and earnings per share were down -73.21%. From the prior year Q4 2010, net revenues were up +11.12%, net income was up +260.05%, and earnings per share were up +193.75%. The operating and net margins were down QoQ and up YoY accordingly The Provision for Credit Losses of $2.93 billion is at a multi-year low. The operating expense ratio of 65.95% is historically high.


Bank of America Balance Sheet Q4 2011 Total assets decreased -4.08% QoQ and -6.00% YoY to $2.129 trillion. Bank of America is now "creating a fortress balance sheet" the same as JPMorgan Chase promotes. Bank of America continues below the total assets of $2.266 trillion reported by JPMorgan Chase for the current quarter. The capital to assets ratio increased to 10.81%, which is strong. The Tier 1 common ratios of 9.86% is adequate. Return on assets "improved" to +0.06%. Gross Loans decreased QoQ and YoY, but Net Loans are an increasing share of the asset mix. The ALL/Loans ratio (Allowance for Loan Losses divided by Gross Loans) was 3.65%, should be adequate, and is the lowest since the QE June 2009.


Bank of America (BAC) Rating Q4 2011 At December 31, 2011, we have rated Bank of America a "C+", up from "C" at September 30, 2011. Financial position continues strengthening. Financial performance continues well below average. Our rating weights financial position more than financial performance and emphasizes safety and soundness, not future earnings potential. Ratings range from A+ down through G-.

Bank of America Financial Performance by the Quarters (Charts)


Bank of America Earnings (Loss) per Share Current Earnings per Share of $0.15 are -73.21% QoQ, +193.75% YoY, but above the historical average. The chart average Loss per Share is -$0.01, which reflects the ongoing financial struggles of Bank of America.

 


Bank of America Net Revenues, Operating Income (Loss), Net Income (Loss) Consolidated revenues are reported net of interest expense. Current Net Revenues of $24.89 are -12.53% QoQ, +11.12% YoY, and a 2-quarter low. Current Operating Income of $2.43 billion is a 2-quarter low. Current Net Income of $1.99 billion is -68.05% QoQ, +260.05% YoY, and 2-quarter low. The chart averages for NR, OI, and NI are $26.94 billion, $234 million, and $457 million, respectively, which reflects the tenuous profitability of Bank of America.

 


Bank of America Operating Margin and Net Margin The current Operating Margin of +9.77% and current Net Margin of +8.00% are down QoQ but a significant improvement YoY. The chart averages for OM and NM are -4.45% and -2.02%, respectively, reflecting the ongoing, overall dismal financial performance of Bank of America.

 


Bank of America Capital to Assets Tier 1 Common Ratios The current Capital Ratio of 10.81% is strong and a 9-quarter high. The current Tier 1 Common Ratio of 9.86% is adequate and a multi-year high. The chart averages for CA and T1Common are 10.35% and 7.94%, respectively.

 


Bank of America Return on Assets Current Return on Assets of +.06% is finally positive after 5 consecutive negative quarters. The chart average for ROA is a marginal +0.03%.

 


Bank of America Income Statement Components Current NonInterest Expense, operating expenses, of $19.52 billion is a 2-quarter high and above the chart average. Current NonInterest Revenues of $14.91 billion is a 2-quarter low and below the chart average. Current Net Interest Income of $10.70 billion is a 2-quarter high and below the chart average. Current Provision for Credit Losses of $2.93 billion is a multi-year low. The chart averages for NIE, NIR, NII, and PCL are $19.18 billion, $15.01 billion, $11.94 billion, $7.54 billion, respectively.

 


Bank of America Asset Mix Lower yielding Cash & Securities decreased to 42.79%, a 3-quarter low. Higher yielding Net Loans increased to 41.92%, a multi-year high. The other categories (NonEarning Assets, Mortgages & Loans for Sale and Mortgage Servicing Rights combine for 15.29% of total assets, a multi-year low.

 


Bank of America Operating Expense Ratio The current Operating Expense Ratio of 65.95% is a 2-quarter high. The chart average for OER is 56.71%.

 

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Thursday, February 9, 2012

Morgan Stanley Reports Net Loss: Worst Performance Since March 2009

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Morgan Stanley Reports Net Loss: Worst Performance Since March 2009


Morgan Stanley Summary Q4 2011 Morgan Stanley's Q4 financial performance was the worst overall since the QE March 2009. Loss per share was the worst since the QE June 2011. A loss of $1.7 billion was incurred regarding a settlement with MBIA, which ruined the quarter. CEO James Gorman continues "addressing a number of outstanding strategic and legacy issues." Morgan Stanley has yet to prove the core business can sustain growth and investor confidence.


Morgan Stanley Income Statement Q4 2011 Morgan Stanley reported net revenues of $5.71 billion, a net loss of -$250 million, and loss per share of -$0.15. From the prior quarter Q3 2011, net revenues were down -42.29%, net income down -111.37%, and earnings per share down -113.04%. From the prior year Q4 2010, net revenues were down -26.87%, net income down -129.90%, and earnings per share down -136.59%, respectively. Both the operating margin of -8.00% and the net margin of -4.38% decreased QoQ and YoY.


Morgan Stanley Balance Sheet Q4 2011 The Capital to Assets Ratio has been historically inadequate. The Tier 1 Capital Ratio and Tier 1 Common Ratio of 16.60% and 13.00%, respectively, are adequate. More commentary will be posted about the Morgan Stanley financial position at a later date.


Morgan Stanley Financial Performance by the Quarters Morgan Stanley Earnings per Share Current Loss per Share of -$0.15 are -113.04% QoQ, -136.59% YoY, and the 3rd loss in 6 quarters. The chart average EPS is $0.24.

 


Morgan Stanley Net Revenues, Operating Income, Net Income Consolidated revenues are reported net of interest expense. Current Net Revenues of $5.71 billion are -42.29% QoQ, -26.387% YoY, and a 10-quarter low. Current Operating Loss of -$457 million is a 10-quarter low. Current Net Loss of -$250 million is -111.37% QoQ, -129.90% YoY, and a 12-quarter low. The NR, OI, and NI chart averages are $7.30 billion, $1.10 billion, and $847 million, respectively.

 


Morgan Stanley Operating Margin and Net Margin Current Operating Margin of -8.00% is a 10-quarter low. Current Net Margin of -4.38% is an 11-quarter low. The OM and NM chart averages are 10.96% and 9.58%, respectively.

 


Morgan Stanley Tier 1 Capital, Tier 1 Common, and Capital to Assets Ratios The current Tier 1 Capital Ratio of 16.60% is a 2-quarter high and adequate. The current Tier 1 Common Ratio of 13.00% is a 3-quarter low and adequate. The current Capital to Assets Ratio of 8.27% is a multi-year high, encouraging, and adequate. The capital ratio has been historically inadequate. The chart averages for T1 Capital, T1 Common, and Capital ratios are 16.06%, 11.04%, and 6.92%, respectively.

 

Morgan Stanley Return on Assets Current Return on Assets of 0.51% decreased QoQ and YoY from the prior quarter peak of 0.63%. The chart average for ROA is 0.52% which overall is acceptable but should be better.

 

Morgan Stanley Income Statement Components Current NonInterest Expense, operating expenses, of $6.17 billion is a 5-quarter low. Current NonInterest Revenue of $5.44 billion is an 11-quarter low. Current Net Interest Income  of $270 million, which is immaterial, is a 7-quarter high. The chart averages for NIE, NIR, and NII are $6.20 billion, $7.13 billion, and $168 million, respectively.

 

Morgan Stanley Operating Expense Ratio The current Operating Expense Ratio of 86.54% is a multi-year high. The OER chart average is 70.24%.

 

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Tuesday, February 7, 2012

Bank of New York Reports Earnings Drop: Revenues Decrease, Expenses Increase

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Bank of New York Reports Earnings Drop: Revenues Decrease, Expenses Increase


Bank of New York Mellon Summary Q4 2011 Q4 financial performance dropped from a decrease in revenues and increase in expenses. Financial position continues strong. CEO Gerald L. Hassell explained, "It was a challenging revenue quarter, as general uncertainty in the financial markets resulted in lower-than-normal levels of client activity. Our results were also impacted by seasonality in our Depositary Receipts business. We remained focused on driving our operational excellence initiatives and managing our expense base lower to offset weak market conditions."


Bank of New York Mellon Income Statement Q4 2011 Net revenues were a 5-quarter low $3.54 billion, net income the lowest since September 2009 at $478 million, and earnings per share a 9-quarter low $0.42. From the prior quarter Q3 2011, net revenues were -4.17%, net income -28.01%, and earnings per share -20.75%. From the prior year Q4 2010, these were -5.63%, -31.12%, and -22.22%, respectively. Both the operating margin of 19.46% and the net margin of 13.50% are multi-quarter lows. The operating expense ratio, traditionally high, soared to 79.89%.


Bank of New York Mellon Balance Sheet Q4 2011 Total assets were +1% QoQ and an incredible +32% YoY to $325.27 billion. The capital to assets ratio dipped QoQ to 10.51%, but continues strong. Return on assets decreased QoQ to a still respectable +0.88%. Gross Loans dipped QoQ, strongly increased YoY, and Net Loans are only 13% of the asset mix. The Allowance for Loan Losses to Loans ratio of 0.90% continues historically low.


Bank of New York Mellon (BK) Rating Q4 2011 At December 31, 2011, we have rated Bank of New York Mellon a "B+", down from "A-" at September 30, 2011. Financial position continues strong. Financial performance was sub-par for the current quarter. Our rating weights financial position more than financial performance and emphasizes safety and soundness, not future earnings potential. Ratings range from A+ down through G-.


Bank of New York Mellon Performance by the Quarters

















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Friday, February 3, 2012

U.S. Bancorp Reports Stellar Quarter: Record Revenues, Income, EPS

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U.S. Bancorp Reports Stellar Quarter: Record Revenues, Income, EPS


U.S. Bancorp Summary Q4 2011 U.S. Bancorp's Q4 financial performance was stellar. Financial position is very strong. Two extraordinary items were included for a net gain of $133 million, "a $263 million gain from the settlement of litigation related to the termination of a merchant processing referral agreement (“merchant settlement gain”) and a $130 million expense accrual related to mortgage servicing matters. per share was the worst since the QE June 2011. CEO Richard K. Davis said, “Throughout 2011, we remained focused on execution - prudently managing our businesses, investing in our franchise and producing consistent, solid growth and earnings. Today, I am very proud to report our fourth quarter and full year 2011 results, as they reflect the advantages derived from our diversified business model and, importantly, our ability to successfully implement our strategy and accomplish our goals."


U.S. Bancorp Income Statement Q4 2011 Net revenues were a record $5.05 billion, net income a record $1.35 billion, and earnings per share a record $0.69. From the prior quarter Q3 2011, net revenues were +6.57%, net income +6.05%, and earnings per share +7.81%. From the prior year Q4 2010, these were +8.14%, +38.60%, and +40.82%, respectively. Both the operating margin of 36.75% and the net margin of 26.74% are the second highest all-time. The only true negative about USB is the operating expense ratio of 47.71% is a multi-year high.


U.S. Bancorp Balance Sheet Q4 2011 Total assets were +3% QoQ and +11% YoY to a record $340.12 billion. The capital to assets ratio dipped QoQ to 10.28%, but continues strong. Return on assets increased QoQ to an outstanding +1.51%. Gross Loans increased QoQ and YoY and Net Loans are 60% of the asset mix. The Allowance for Loan Losses to Loans ratio of 2.27% is a multi-year low.


U.S. Bancorp (USB) Rating Q4 2011 At December 31, 2011, we have rated U.S. Bancorp an "A-", the same as at September 30, 2011. Financial position continues very strong. Financial performance is stellar. Our rating weights financial position more than financial performance and emphasizes safety and soundness, not future earnings potential. Ratings range from A+ down through G-.


U.S. Bancorp Performance by the Quarters










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