Sunday, January 27, 2013

Morgan Stanley Earnings Review: Up and Down They Go


Morgan Stanley reported QE December 2012 financial results on January 18

Morgan Stanley earnings per share were $0.25. Though meager, this is a major rebound of +145% from the prior quarter (-$0.55 loss per share) and whopping +267% spike from the prior year (-$0.15 loss per share). In the past 16 quarters, the average earnings per share has been $0.15, consisting of 7 quarters of losses and 9 quarters of earnings. This has ranged from a low of -$1.10 in June 2009 to a high of +$1.15 in September 2011. Therefore, from a historical perspective, Morgan Stanley actually had an above average quarter!

Financial performance, or lack thereof, is flat with a return on assets just above break-even at +0.08% for 2012. Financial position is weak and capital is marginal. Risk management has been ineffective.





Morgan Stanley does this to themselves and to their clients. CEO James Gorman noted 4 quarters ago that MS continues "addressing a number of outstanding strategic and legacy issues." I guess that's one way to say it. Another way to say it is: we lie, cheat, and steal. The general public is not as familiar with Morgan Stanley as they are Goldman Sachs, JPMorgan, Bank of America, Citigroup, et al. in the Wall Street Banksters syndicate. They are just as criminally inclined if not more so.

At QE 12-31-12, I have rated Morgan Stanley a "G" on a scale of A+ to G-. This is a downgrade from "E-" at the prior QE 9-30-12. The median rating is "D" and the average rating at QE 9-30-12 was "C". Financial position is weighted more than financial performance. The QE 9-30-12 bank ratings review is here and the QE 12-31-12 bank ratings will be posted soon.





James P. Gorman, Chairman and Chief Executive Officer, said, "After a year of significant challenges, Morgan Stanley has reached a pivot point. We demonstrated meaningful progress in our Wealth Management Joint Venture, reaching the highest pre-tax margin since the inception of the JV. We charted a path to acquire the remainder of the JV. We are ahead of our risk-weighted asset reduction targets for Fixed Income and Commodities, while continuing to focus on our strengths within business and strategic linkages across the Firm and investing for the evolving regulatory environment. We continued to demonstrate leadership in Investment Banking and Equity sales and trading. Our Firm is now poised to reach the returns of which it is capable on behalf of our shareholders."

$MS $XLF

Capital One Earnings Review: Performance Slows


Capital One reported QE December 2012 financial results on January 17

Capital One earnings per share of $1.41 was a -30% drop from the prior quarter ($2.01) but a sizable +60% jump from the prior year ($0.88). CEO Richard Fairbank is expected to report an improved financial performance next quarter.

Financial position and capital remain very strong. Risk management appears very good. Operating expenses and losses continue somewhat high historically in relation to gross revenues.





At QE 12-31-12 I have rated Capital One an "A-" on a scale of A+ to G-. This is no change in the rating from the prior QE 9-30-12. The median rating is "D" and the average rating at QE 9-30-12 was "C". Financial position strength is weighted more than financial performance. The QE 9-30-12 bank ratings review is here.







"Capital One remains well positioned to deliver sustained shareholder value through sure-footed execution, substantial capital generation, and disciplined capital allocation for the benefit of our shareholders," said Richard D. Fairbank, Chairman and Chief Executive Officer. "As a first step, we expect to return to a meaningful dividend in 2013, following the completion of the current CCAR process."

"Seasonal expense and margin trends led to a reduction in fourth quarter earnings compared to the previous quarter," said Gary L. Perlin, Capital One's Chief Financial Officer. "With a few exceptions largely related to these seasonal patterns, fourth quarter 2012 results give us a good picture of what to expect in terms of pre-provision earnings in 2013, assuming little change in the external environment."

$COF $XLF

PNC Earnings Review: Poised to Perform


PNC Financial Services reported QE December 2012 financial results on January 17

PNC earnings performance slowed from the prior quarter yet was a solid increase from the prior year. Earnings per share of $1.24 was down -24% QoQ but up an impressive +46% YoY. CEO James Rohr overall delivered a good quarter.

Financial position continues impressive with very strong capital. Net loans are almost 60% of total assets, which should translate into ongoing profits. Risk management appears very good. Operating expenses and losses continue high historically in relation to gross revenues, mostly due to the RBC Bank (USA) acquisition and merger.





At QE 12-31-12, I have rated PNC Financial Services an "A-" on a scale of A+ to G-. This is an upgrade from "B+" at the prior QE 9-30-12. The median rating is "D" and the average rating at QE 9-30-12 was "C". Financial position is weighted more than financial performance. The QE 9-30-12 bank ratings review is here.







"PNC expanded its businesses significantly in 2012," said James E. Rohr, chairman and chief executive officer. "Our balance sheet strength along with our committed employees allowed us to grow customers, loans and deposits across our franchise and expand into Southeastern markets. While we are pleased with the progress we have made, our financial results do not yet reflect the full potential from our investments. Our commitment to revenue growth, expense reduction and efficient capital management in 2013 should position PNC to deliver even greater shareholder value."

$PNC $XLF

Saturday, January 26, 2013

Citigroup Earnings Review: Downtrend Reversed!


Citigroup reported QE December 2012 financial results on January 17

Citigroup earnings rebounded from the prior quarter and the prior year. However, current earnings per share of $0.38 is below the 16-quarter average of $0.58. Michael Corbat is now CEO, replacing Vikram Pandit, in this dawn of a new era.

Financial performance is stabilizing and slightly uptrending. Financial position is solid and capital continues strengthening. The problem is risk management has been proven incompetent over the years. Operating expenses and losses continue high historically in relation to gross revenues. Citigroup ($1.86 trillion total assets) is in the Trillion Dollar Assets Club with JPMorgan, Bank of America, and Wells Fargo.





At QE 12-31-12, I have rated Citigroup a "B-" on a scale of A+ to G-. This is an upgrade from "E+" at the prior QE 9-30-12. The median rating is "D" and the average rating at QE 9-30-12 was "C". Financial position is weighted more than financial performance. The QE 9-30-12 bank ratings review is here.







Michael Corbat, Citigroup's Chief Executive Officer, said, "Our bottom line earnings reflect an environment that remains challenging – with businesses working through issues like spread compression and regulatory changes – as well as the costs of putting legacy issues behind us. However, we did make progress on several fronts. At 8.7%, we reached the target for our year-end Basel III Tier 1 Common ratio. We continue to have a very liquid balance sheet and a high-quality credit portfolio in our core businesses. It will take some time to work through the challenges of the current environment but realizing our core earnings potential, as well as improving our returns on assets and tangible equity, are critical goals going forward."

$C $XLF

Bank of America Earnings Review: Limping Along


Bank of America reported QE December 2012 financial results on January 17

A Bank of America earnings prayer: How long oh Lord? How long, oh Lord, must this greatest banking debacle in history continue? When reviewing Bank of America, the World's Most Unstable Bank, we are talking pennies, as in pennies per share. This quarter earnings per share were $0.03, last quarter was $0.00 per share. The 18-quarter average has been a loss per share of -$0.03. Lowered expectations and a divine entreaty sum up financial performance.



CEO Brian Moynihan continues cleaning up the financial crisis carnage. Moynihan announced 2 quarters ago a Project New BAC: a multi-year, multi-billion dollar cost cutting plan which will include a workforce reduction of tens of thousands. The prior "banking" model had shattered and collapsed into rubble.

The foremost problem is contingent liabilities, ongoing legacy losses, that surface and the lawsuits and government regulatory actions that result. After reserving billions of dollars, the worst of the incredible and extraordinary losses appear accounted for. Only time and fate will tell.

The financial performance volatility has lessened in recent quarters. Risk management consists of all hands on deck searching the skies for incoming realized losses and hoping they are adequately reserved for. Financial position has stabilized and capital is actually strong. Operating expenses and losses are too high in relation to gross revenues.



At QE 12-31-12, I have rated Bank of America a "C+" on a scale of A+ to G-. This is a downgrade from "B-" at the prior QE 9-30-12. The median rating is "D" and the average rating at QE 9-30-12 was "C". Financial position is weighted more than financial performance. The QE 9-30-12 bank ratings review is here.





“We enter 2013 strong and well positioned for further growth,” said Chief Executive Officer Brian Moynihan. “Double-digit growth since last year in mortgage production, commercial lending, and Global Markets revenue demonstrates the power of deeper customer and client relationships as we intensify the focus on connecting all our capabilities.”

"We addressed significant legacy issues in 2012 and our strengths are coming through," said Chief Financial Officer Bruce Thompson. "Capital and liquidity remain strong and credit continues to improve. Our primary focus this year is to grow revenue, manage expenses and drive core earnings growth."

$BAC $XLF

Friday, January 25, 2013

BNY Mellon Earnings Review: Another Average Quarter


BNY Mellon reported QE December 2012 financial results on January 16

BNY Mellon earnings per share were about average at $0.53, compared to the 13-quarter average of $0.51. Net revenues ($3.62 billion), operating income ($853 million), and net income ($646 million) were also near the long-term averages.

CEO Gerald Hassell continues a conservative strategy and financial position which minimizes volatility and surprises in the long-run. Financial position is stable with a strong capital position. Risk management appears very good. A share repurchase program continues in effect.





At QE 12-31-12 I have rated Bank of New York Mellon a "B+" on a scale of A+ to G-. This is an upgrade from "B" at the prior QE 9-30-12. The median rating is "D" and the average rating at QE 9-30-12 was "C". Financial position strength is weighted more than financial performance. The QE 9-30-12 bank ratings review is here.







“We are pleased to report strong year-over-year growth in fees in our Investment Management, Asset Servicing, Clearing and Treasury Services businesses. We benefited from the improvement in market values and, more importantly, from our relentless focus on generating organic growth with our broad client base. We are also driving our operational excellence initiatives to improve our efficiency and help mitigate the impact on our high margin revenues due to the low interest rate environment and tepid capital markets activity. Our balance sheet and capital ratios strengthened in 2012 even after giving effect to the repurchase of approximately $1.1 billion of our common shares in 2012,” said Gerald L. Hassell, chairman and chief executive officer of BNY Mellon.

“I wish to thank all of my colleagues across the company for their tremendous dedication and ongoing focus on improving our performance, delivering excellence to our clients and creating shareholder value,” added Mr. Hassell.

$BK $XLF

Bank Failures 2013 Continue with 1st Regents Bank


Bank Failures 2013 continue with the FDIC seizing 1st Regents Bank, Andover, MN on Friday, January 18, 2013. This is the second bank failure of the year. Banks have now been closed in Minnesota and Washington in 2013.

#2 1st Regents Bank, Andover, MN
* First Minnesota Bank, Minnetonka, MN assumed all of the deposits and purchased most of the assets
* As of September 30, 2012, the bank had approximately $50.2 million in total assets
* FDIC estimates the cost to the Deposit Insurance Fund (DIF) will be $10.5 million
* The last bank closed in the state had been First Commercial Bank, Bloomington, on September 7, 2012

The FDIC closed 51 banks in 2012 in the following states: Alabama 1, California 1, Florida 8, Georgia 10, Illinois 8, Indiana 1, Kansas 1, Maryland 2, Michigan 1, Minnesota 4, Missouri 4, New Jersey 1, North Carolina 1, Oklahoma 1, Pennsylvania 2, South Carolina 2, Tennessee 3.

Florida, Georgia, and Illinois accounted for 26 total or 51% of all bank failures in 2012. Florida, Georgia, and Illinois accounted for 45 total or 49% of all bank failures in 2011.

USA Failed Banks by Year Bank failures skyrocketed in 2009 and 2010 to 140 and 157, respectively - a 2-year total of 297 compared to 32 from 2004 through 2008. Bank failures in 2011 continued at a high rate of 92. The 2012 closings decreased to 51. The total 2013 closings are currently estimated at 35. The 2013 annual bank failures are extrapolated from the weeks reported and failures year-to-date.



Cost of Failed Banks The total estimated cost to the FDIC Deposit Insurance Fund for 2013 bank closures year-to-date is $30.8 million. The total estimated cost in 2012 was $2.47 billion.

The most costly banks to the Deposit Insurance Fund (DIF) in 2012 were:
1 Tennessee Commerce Bank, Franklin, TN $416.8M
2 The First State Bank, Stockbridge, GA $216.2M
3 Inter Savings Bank FSB, Maple Grove, MN $117.5M
4 Fidelity Bank, Dearborn, MI $92.8M
5 NOVA Bank, Berwyn, PA $91.2M
6 First Guaranty Bank & Trust Company of Jacksonville, Jacksonville, FL $82.0M
7 Second Federal Savings and Loan Association of Chicago, Chicago, IL $76.9M
8 Plantation Federal Bank, Pawleys Island, SC $76.0M
9 BankEast, Knoxville, TN $75.6M
0 Montgomery Bank & Trust, Ailey, GA $75.2M


Failed Credit Unions

The NCUA closed and liquidated New Covenant Missionary Baptist Church Credit Union of Milwaukee, WI on January 7, 2013. This was the first credit union failure in 2013.

The NCUA closed 17 credit unions in 2012 in the following states: California 2, Colorado 2, Kansas 1, Michigan 1, New York 2, North Carolina 1, Ohio 1, Oregon 1, Pennsylvania 1, Texas 2, Vermont 1, Wisconsin 2.

$XLF $SPY $DIA $QQQ $IWM $MACRO $FED

Thursday, January 24, 2013

US Bancorp Earnings Review: Peaking Performance?

US Bancorp reported QE December 2012 financial results on January 16

US Bancorp earnings continue at excellent performance levels as CEO Richard Davis posts quarter after quarter of maximized profits in a difficult macroeconomic environment. In fact, 2012 was a record year. This quarter, Davis was able to maintain earnings per share, net revenues, operating income, net income, operating margin, net margin, and return on assets near last quarter's record levels. US Bancorp remains on top as the very best larger USA bank.

Diminishing returns is the uphill climb for US Bancorp. CEO Davis, through stellar performance, may have reached the summit of efficient profits. However, CEO Davis has proven me wrong in previous quarters so do not count US Bancorp out yet. There is only so high financial institution performance can reach without expansion or acquisitions. Risk management has proven excellent. Financial position and capital are very strong.





At QE 12-31-12 I have rated US Bancorp an "A" on a scale of A+ to G-. This is no change in the rating from the prior QE 9-30-12. The median rating is "D" and the average rating at QE 9-30-12 was "C". Financial position strength is weighted more than financial performance. The QE 9-30-12 bank ratings review is here.







U.S. Bancorp Chairman, President and Chief Executive Officer Richard K. Davis said, “2012 was a great year for our Company, as we achieved record annual earnings of $5.6 billion, or $2.84 per diluted common share. Further, our 2012 full year results included record total net revenue of $20.3 billion, representing growth in net interest income and fee revenues, as well as controlled expenses. Additionally, we achieved positive operating leverage for both the year-over-year quarter and full year. Our returns on average assets and average common equity for 2012 of 1.65 percent and 16.2 percent, as well as our efficiency ratio of 51.5 percent, surpassed our performance in 2011 and remain industry leading.

$USB $XLF

Goldman Sachs Earnings Review: Multi-Year High for Banksters!


Goldman Sachs reported QE December 2012 financial results on January 16

Goldman Sachs earnings have attained post-financial crisis peaks with a 12-quarter high for earnings per share ($5.60) and an 11-quarter high for net income ($2.89 billion). The World's Most Hated Banksters, led by CEO Lloyd Blankfein, have achieved redemption from shareholders, at least for now.

Financial position has been stable, but capital continues marginal. Risk management appears to be attempting to evade prosecution for criminal activities, settling without admitting guilt, and bribing Congress to keep the financial regulators away. Negative karma continues at epic levels but give the Devil his due for this quarter.





At QE 12-31-12, I have tentatively rated Goldman Sachs a "D" on a scale of A+ to G-. This is an upgrade from "F-" at the prior QE 9-30-12. The median rating is "D" and the average rating at QE 9-30-12 was "C". Financial position is weighted more than financial performance. The QE 9-30-12 bank ratings review is here.





“While economic conditions remained challenging for much of last year, the strengths of our business model and client franchise, coupled with our focus on disciplined management, delivered solid performance for our shareholders,” said Lloyd C. Blankfein, Chairman and Chief Executive Officer. “The firm’s strategic position provides a solid basis on which to grow and generate superior returns.”

$GS $XLF

Friday, January 18, 2013

JPMorgan Earnings Review: Strong Profits Continue


JPMorgan reported QE December 2012 financial results on January 16

Strong profits continue for CEO Jamie Dimon and accomplices with an impressive earnings per share of $1.39, near a post-financial crisis high. Financial performance continues strong and financial position improved. Capital is adequate.

Risk management is the uncertainty at the largest of the Wall Street Banksters ($2.36 trillion total assets). A consent cease and desist order regarding same was issued by the Federal Reserve and Comptroller of the Currency this week.





At QE 12-31-12, I have rated JPMorgan a "D" on a scale of A+ to G-. This is no change in the rating from the prior QE 9-30-12. The median rating is "D" and the average rating at QE 9-30-12 was "C". Financial position is weighted more than financial performance. The QE 9-30-12 bank ratings review is here.







Jamie Dimon, Chairman and Chief Executive Officer, commented on the financial results: “For the third consecutive year, the Firm reported both record net income and a return on tangible common equity of 15%. The Firm’s results reflected strong underlying performance across virtually all our businesses for the fourth quarter and the full year, with strong lending and deposit growth. We also maintained our leadership positions and continued to gain market share in key areas of our franchise. As we highlight upfront in this release, there were several significant items that affected our results this quarter, but they largely offset each other.”

Dimon added: “We continued to see favorable credit conditions across our wholesale loan portfolios and strong credit performance in our credit card portfolio, where charge-off rates remain at historic lows. The real estate portfolios, while at elevated levels of losses, continued to show improvement as the housing market and economy continued to recover. As a result, we reduced the related allowance for credit losses by $700 million in the fourth quarter and we are likely to continue to see reductions in the allowance as the environment improves.”

$JPM $XLF

Wells Fargo Earnings Review: Raises the Bar Higher!


Wells Fargo reported QE December 2012 financial results on January 11

Wells Fargo reported an excellent quarter and raises the bar higher. CEO John Stumpf has continued to improve both financial performance and position. Both capital and return on assets are strong. Risk management appears excellent. Earnings per share of $0.91 is yet another all-time high.





At QE 12-31-12, I have rated Wells Fargo an "A-" on a scale of A+ to G-. This is no change in the rating from the prior QE 9-30-12. The median rating is "D" and the average rating at QE 9-30-12 was "C". Financial position is weighted more than financial performance. The QE 9-30-12 bank ratings review is here.

Wells Fargo is easily the preeminent USA bank with assets greater than $1 trillion, now at $1.42 trillion. The other banks in the Trillion Dollar Assets Club are JPMorgan, Bank of America, and Citigroup.







"2012 was an outstanding year for Wells Fargo,” said Chairman and CEO John Stumpf. “We saw the continued benefits of our diversified business model and reported record full year and fourth quarter earnings, robust deposit and solid loan growth, and strong performance across our business units. The Company’s success is due to our more than 265,000 team members who remained focused on our customers and on our vision to satisfy all of our customers’ financial needs."

"This time last year, I said we would benefit from the many opportunities we saw for 2012 – and we did just that. From growing revenue, making strategic acquisitions and achieving efficiency improvements, I am extremely pleased with our 2012 performance. We also returned more capital to our shareholders through common stock dividends and common stock repurchases. We are very well positioned for and look forward to 2013, as Wells Fargo continues to work hard to contribute to a growing U.S. economy by doing what we do best: helping customers succeed financially."

$WFC $XLF

Thursday, January 17, 2013

Max Keiser: Germany Wants Their Gold Back from UK & US!

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Max Keiser

Keiser Report: Goodbye, German Gold?

In this episode, Max Keiser and Stacy Herbert discuss how it is that Gordon Brown's Bottom turned into an audit the gold movement in Germany. They also discuss the mother of all bond bubbles getting set to burst and all that will be left in the Bank of England 'gold' vaults are a big pile of gilts. In the second half of the show, Max Keiser talks to Dominic Frisby, author of Life After the State, about Germany's gold quest, the future of relations between the US and Germany if the gold is not there and about 'life after the state.



۩ ۩ ۩

Tuesday, January 15, 2013

Bank Failures 2013 Begin with Westside Community Bank


Bank Failures 2013 began with the FDIC closing Westside Community Bank of University Place, WA on Friday, January 11, 2013. This is the first bank failure in 2013.

#1 Westside Community Bank, University Place, WA
* Sunwest Bank, Irvine, CA assumed all of the deposits and purchased most of the assets
* As of September 30, 2012, the bank had approximately $97.7 million in total assets
* FDIC estimates the cost to the Deposit Insurance Fund (DIF) will be $20.3 million
* The last bank closed in the state had been Bank of Whitman, Colfax, on August 5, 2011

The FDIC closed 51 banks in 2012 in the following states: Alabama 1, California 1, Florida 8, Georgia 10, Illinois 8, Indiana 1, Kansas 1, Maryland 2, Michigan 1, Minnesota 4, Missouri 4, New Jersey 1, North Carolina 1, Oklahoma 1, Pennsylvania 2, South Carolina 2, Tennessee 3.

Florida, Georgia, and Illinois have accounted for 26 total or 51% of all bank failures in 2012. Florida, Georgia, and Illinois accounted for 45 total or 49% of all bank failures in 2011.

USA Failed Banks by Year Bank failures skyrocketed in 2009 and 2010 to 140 and 157, respectively - a 2-year total of 297 compared to 32 from 2004 through 2008. Bank failures in 2011 continued at a high rate of 92. The 2012 closings decreased to 51. The total 2013 closings are currently estimated at 26. The 2013 annual bank failures are extrapolated from the weeks reported and failures year-to-date.



Cost of Failed Banks The total estimated cost to the FDIC Deposit Insurance Fund for 2013 bank closures year-to-date is $20.3 million. The total estimated cost in 2012 was $2.47 billion.

The most costly banks to the Deposit Insurance Fund (DIF) in 2012 were:
1 Tennessee Commerce Bank, Franklin, TN $416.8M
2 The First State Bank, Stockbridge, GA $216.2M
3 Inter Savings Bank FSB, Maple Grove, MN $117.5M
4 Fidelity Bank, Dearborn, MI $92.8M
5 NOVA Bank, Berwyn, PA $91.2M
6 First Guaranty Bank & Trust Company of Jacksonville, Jacksonville, FL $82.0M
7 Second Federal Savings and Loan Association of Chicago, Chicago, IL $76.9M
8 Plantation Federal Bank, Pawleys Island, SC $76.0M
9 BankEast, Knoxville, TN $75.6M
0 Montgomery Bank & Trust, Ailey, GA $75.2M


Failed Credit Unions The NCUA closed and liquidated New Covenant Missionary Baptist Church Credit Union of Milwaukee, WI on January 7, 2013. This was the first credit union failure in 2013.

The NCUA closed 17 credit unions in 2012 in the following states: California 2, Colorado 2, Kansas 1, Michigan 1, New York 2, North Carolina 1, Ohio 1, Oregon 1, Pennsylvania 1, Texas 2, Vermont 1, Wisconsin 2.

$XLF $SPY $DIA $QQQ $IWM $MACRO $FED

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