Capital One Small Business Survey: Showing Signs of Recovery

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Capital One Small Business Survey

Small business owners are planning for the long term, with more plans to hire and more revenue toward business development and investments, according to first quarter 2012 survey data.

MCLEAN, Va. - (BUSINESS WIRE) - May. 24, 2012 - Small businesses are showing signs of recovery after a difficult year in 2011, according to the Capital One Small Business Barometer for the first quarter of 2012, released by Capital One Small Business today in conjunction with National Small Business Week. This quarterly survey of small businesses across the nation examines general economic indicators and small business perceptions of the economic environment, gauging current financial conditions and business projections for the following six months. Survey results for the fourth quarter of 2011 showed that small companies planned to take a deliberate and cautious approach to investments and hiring for 2012. First quarter 2012 results suggest this strategy has led to a strong start for small businesses this year, with many reporting increased liquidity and plans to increase spending on investments and growing their business.

Small business perceptions toward local economic conditions have improved significantly. Four out of five small businesses surveyed said their companies’ financial performance met expectations for the quarter. For the first time since the second quarter of 2011, the number of small businesses reporting better financial performance compared to a year ago is higher than those reporting that their financial performance is at the same level. The national business outlook indicates small businesses are upbeat about their current financial situation and improvement over 2011, but concerns over cash flow and the ability to acquire new customers are tempering their confidence about prospects for the remainder of 2012. Additionally, 15 percent of small businesses across the country currently have job openings that they are unable to fill.

"The latest survey results show some positive signs that more small businesses are beginning to focus on hiring, with the increase in the number of small businesses making plans to hire compared to the previous quarter at the highest level in over two years," said Jon Witter, President of Direct, Consumer and Small Business at Capital One. "It is an encouraging sign that many businesses are looking to make long-term investments, and we are optimistic this trend will continue in quarters to come."

Capital One Bank Quarterly Small Business Barometer Survey Reveals Small Businesses Are Looking Up

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Bank Failure Friday: FDIC Seizes 1 Bank, NCUA Closes 1 Credit Union

The FDIC closed 1 bank (Alabama Trust Bank NA) on Friday, May 18, 2012. Total bank failures for 2012 increased to 24. The NCUA liquidated and sold 1 credit union (Wausau Postal Employees Credit Union). Total credit union failures for 2012 increased to 7.

#24 Alabama Trust Bank NA, Sylacauga, AL
* Southern States Bank, Anniston, AL assumes all of the deposits
* As of March 31, 2012, the bank had approximately $51.6 million in total assets
* FDIC estimates the cost to the Deposit Insurance Fund (DIF) will be $8.9 million
* The last bank closed in the state had been Superior Bank, Birmingham, AL on April 15, 2011

States where banks have been seized by the FDIC in 2012 (in alphabetical order): Alabama 1, California 1, Florida 3, Georgia 4, Illinois 3, Indiana 1, Maryland 2, Michigan 1, Minnesota 3, New Jersey 1, Pennsylvania 1, South Carolina 1, Tennessee 2. Georgia and Florida accounted for 36 total or 39% 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 annual bank failures are extrapolated from the weeks reported and failures year-to-date. The total 2012 closings are currently estimated at 62.






Failed Credit Unions


#7 Wausau Postal Employees Credit Union of Wausau, WI
* NCUA sold to CoVantage Credit Union of Antigo, WI on May 18, 2012

 The National Credit Union Association (NCUA) has seized 7 credit unions in 2012:
2 are in conservatorship and managed by the NCUA
* Telesis Community Credit Union of Chatsworth, CA
* A M Community Credit Union of Kenosha, WI

3 have been liquidated and sold
* Wausau Postal Employees Credit Union of Wausau, WI
* Saguache County Credit Union of Moffat, CO
* People Community Development Credit Union of Philadelphia, PA

1 has been liquidated and merged
* Eastern New York Federal Credit Union of Napanoch, NY

1 has been liquidated and closed
* Shepherd’s Federal Credit Union of Charlotte, N.C.

States where credit unions have been seized by the NCUA in 2012 (in alphabetical order): California 1, Colorado 1, New York 1, North Carolina 1, Pennsylvania 1, Wisconsin 2.




FDIC Deposit Insurance Fund: Cost of Failed Banks The total estimated cost to the FDIC Deposit Insurance Fund for the 2012 bank closures year-to-date is $1.54 billion.



The most costly banks to the Deposit Insurance Fund (DIF) in 2012 year-to-date:
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 First Guaranty Bank & Trust Company of Jacksonville, Jacksonville, FL $82.0M
6 Plantation Federal Bank, Pawleys Island, SC $76.0M
7 BankEast, Knoxville, TN $75.6M
8 Central Bank of Georgia, Ellaville, GA $67.5M
9 Premier Bank, Wilmette, IL $64.1M
0 Bank of the Eastern Shore, Cambridge, MD

USA Consumer Credit Increases, Fueled by the Government and Sallie Mae

Federal Reserve Board: Consumer Credit (Not Seasonally Adjusted)


USA Consumer Credit (Not Seasonally Adjusted) Total consumer credit slightly increased +0.17% and +$4.39 billion in March 2012 from the prior month and increased +5.01% and +$120.26 billion from the prior year March 2011.

However, this is not the story, exclude public sector credit, the U.S. Federal Government and Sallie Mae, and total consumer credit slightly decreased -0.12% from the prior month and slightly increased +0.74% from the prior year. The government has been supporting the total consumer credit increase via student loans, since September 2010. Private sector lending by commercial banks, finance companies, and credit unions has been decreasing, after  peaking in December 2011.

USA Consumer Credit Holders (Not Seasonally Adjusted) As can be seen from the chart below, any and all significant credit growth has been fueled by the U.S. Government and Sallie Mae. Commercial Banks (-0.15%), Finance Companies (-0.24%), Credit Unions (-0.34%), and NonFinancial Business (-0.27%) lending decreased from the prior month. U.S. Federal Government & Sallie Mae (+1.53%), Securitized Pools (+1.05%), and Savings Institutions (+0.09%) increased lending during the month.








USA Consumer Credit Components (Not Seasonally Adjusted) Below are the monthly charts for total consumer credit and the two components, revolving credit and nonrevolving credit. A significant portion of the increase in nonrevolving credit can be attributed to student loans by the government.








[Editor's Note] Effective with the September 2010 data, the law changed and the U.S. federal government became the primary lender to students. Previously, the U.S. federal government had been the guarantor of student loans and private lenders provided the credit.

Big Banks Earnings Increase: JPMorgan, Wells Fargo, Citigroup Most Profitable

9 of the 10 Largest USA Banks reported net income for the QE 3-31-12, with only Morgan Stanley reported a net loss. Aggregate quarterly net income for the Big Banks was $19.4 billion, which was +$5.1 billion and +36% from the prior QE 12-31-11 ($14.3 billion). Citigroup (+$1.98 billion), JPMorgan (+$1.66 billion), and Goldman Sachs (+$1.10 billion) reported the largest sequential QoQ increases. Bank of America (-$1.34 billion) reported the largest sequential QoQ decrease.

Regardless of the recent minimum $2 billion in trading losses incurred by JPMorgan Chase & Co., that is less than half of their most recent quarterly net income ($5.38 billion). No doubt this misstep materially impacts JPMorgan's financial performance for the current quarter, but to-date the losses do not appear life-threatening. See my recent post Too Big To Fail: JPMorgan Rolls the Dice, Loses $2 Billion.

The Billion Dollar Club: JPMorgan Chase led the way at #1 with $5.38 billion in quarterly net income. Wells Fargo was #2 at $4.25 billion. Citigroup ($2.93 billion) and Goldman Sachs ($2.11 billion) were next. Capital One ($1.40 billion) and U.S. Bancorp ($1.34 billion) followed. Below $1 billion in quarterly net income were #7 PNC Financial Services ($811 million), #8 Bank of America ($653 million), and #9 BNY Mellon ($631 million). Morgan Stanley was last and #10 with a net loss of -$94 million.



The 10 Largest USA Banks reported an average return on assets of +0.78% for the QE 3-31-12, which was a small decrease -0.03% from the prior QE 12-31-11 of +0.81%. The 1%+ Club: Capital One and U.S. Bancorp were the clear leaders with an ROA of +1.61% and +1.57%, respectively. Wells Fargo at 1.27% and PNC Financial Services at 1.12% were #3 and #4. BNY Mellon and JPMorgan Chase were next at +0.83%. Trailing were Citigroup +0.57%, Goldman Sachs +0.41%, and Morgan Stanley +0.38%. Finally Bank of America continues last at #10 at 0.00%, a decrease from the QE 12-31-11 of +0.06%.



Too Big To Stop Growing: Largest USA Banks Get Bigger

Largest USA Banks Ratings: U.S. Bancorp Tops, Goldman Sachs Last

Big Banks Profits Slow: Capital One, US Bancorp, Wells Fargo Shine

$XLF $USB $PNC $WFC $BK $BAC $JPM $C $MS $GS $COF

Too Big To Fail: JPMorgan Rolls the Dice, Loses $2 Billion

JPMorgan CEO Jamie Dimon and accomplices, who are Too Big To Jail, discovered their proprietary trading operation not only made bad bets but was running amok. Dimon then had to come to the altar of the financial world and confess only sins that had to be publicly disclosed. In an extraordinary press conference on Thursday, May 10, CEO Dimon revealed that the corporate investment office, the prop trading desk, had suffered losses of $2 billion dollars from synthetic derivatives, 'credits'. Just in the past 6 weeks. A minimum net loss of $800 million was expected to be recognized in this current quarter, the QE 6-30-12. The remaining losses were being offset by realizing gains on available for sale securities, selling securities with unrealized gains.

JPMorgan Chase & Co. is the largest bank in the United States with total assets of $2.3+ trillion and is Too Big To Fail in the USA and global financial system. The privately held USA central bank, the Federal Reserve, has laid hands and anointed them a bank holding company. Both the Federal Reserve explicitly and United States taxpayers, via Congress and the President implicitly, have guaranteed JPMorgan and all the big banks against financial failure. This is due to the Wall Street Banksters effectively paying off, er, I mean lobbying, Congress and the President. In past, simpler times these were called bribes.

The big banks of America can legally gamble via proprietary trading. That is, the big banks can play the market, any market these criminals can think of, on their own behalf and hope they make some extra money. In short, this Mafia operation called the President, Congress, and Big Banks expect USA taxpayers to pick up any resulting tab ultimately, if they lose everything to the casino.

Wouldn't the regulators prevent all this obviously illegal mayhem? Forget the revolving regulatory door called the SEC, FRB, FDIC, et al. The boards and leaders of these regulatory agencies are the Banksters themselves. Yep, the old story of the fox watching the hen-house. They showed how incompetent and corrupt they were when the entire financial system almost melted down in 2008! They were on deck steering the Titanic. Turning a blind eye was renamed systemic risk. Certain corrupt Congressmen have even said if the rules are too strict they will push to cut funding to regulatory agencies so they couldn't effectively enforce any pesky rules against their masters.

The solution to this taxpayer-guaranteed greed is very simple. Reinstate the Glass-Steagall Act of 1933, which separates banks from all this nonsense. The separately funded trading company can gamble all they want - with their own damn money - their capital. The bank is separate, behind a firewall, with its own capital and operates as a traditional bank. But nooo, the Mafia Banksters don't want that. Then came the Dodd–Frank Wall Street Reform and Consumer Protection Act and the Volcker Rule. The original Volcker Rule would prohibit proprietary trading by banks. But nooo, the Mafia Banksters don't want that either, of course. So the foot-dragging, proposals, lobbying, pay offs, and bribing continues as the Volcker Rule is threatened, debated, and watered down.

The Banking Act of 1933 (Glass–Steagall Act) limited commercial bank securities activities and affiliations between commercial banks and securities firms. Slowly exceptions were made to the Act, creeping favoritism. The Gramm-Leach-Bliley Act in 1999 was the nail in the coffin for the already weakened Glass-Steagall Act. The 2008 financial system meltdown was then inevitable and just a matter of time. It can also happen again as the Wall Street Banksters are still in command of the political and regulatory system.

From my review of JPMorgan earnings reported April 13, 2012: "The traditional banking business is a component, but not all of JPMorgan, no matter how much management talks about banking. About 30% of total assets are net loans and 36% are trading assets and investment securities. Cash, cash equivalents, securities, and trading assets combined are 60% of total assets. Ultimately that leaves 10% in non-earning assets such as goodwill and buildings. Just keep in mind when trading JPM stock, you are trading their traders for a portion of the quarterly earnings per share lotto".





JPMorgan Disclosure and Confession Filed via SEC Form 10Q on May 10, 2012

In Corporate, within the Corporate/Private Equity segment, net income (excluding Private Equity results and litigation expense) for the second quarter is currently estimated to be a loss of approximately $800 million. (Prior guidance for Corporate quarterly net income (excluding Private Equity results, litigation expense and nonrecurring significant items) was approximately $200 million.) Actual second quarter results could be substantially different from the current estimate and will depend on market levels and portfolio actions related to investments held by the Chief Investment Office (CIO), as well as other activities in Corporate during the remainder of the quarter.

Since March 31, 2012, CIO has had significant mark-to-market losses in its synthetic credit portfolio, and this portfolio has proven to be riskier, more volatile and less effective as an economic hedge than the Firm previously believed. The losses in CIO's synthetic credit portfolio have been partially offset by realized gains from sales, predominantly of credit-related positions, in CIO's AFS securities portfolio. As of March 31, 2012, the value of CIO's total AFS securities portfolio exceeded its cost by approximately $8 billion. Since then, this portfolio (inclusive of the realized gains in the second quarter to date) has appreciated in value.

The Firm is currently repositioning CIO's synthetic credit portfolio, which it is doing in conjunction with its assessment of the Firm's overall credit exposure. As this repositioning is being effected in a manner designed to maximize economic value, CIO may hold certain of its current synthetic credit positions for the longer term.

Accordingly, net income in Corporate likely will be more volatile in future periods than it has been in the past.

JPMorgan Trading Loss Own Words May 11 (Bloomberg) -- Jamie Dimon, chief executive officer of JPMorgan Chase & Co., and Bloomberg's Dawn Kopecki and Christine Harper talk about JPMorgan's $2 billion trading loss after what Dimon said was an "egregious" failure in the firm's chief investment office. This report also includes comments from Bloomberg Television contributing editors William Cohan, Thomas Brown and Neil Barofsky, Portales Partners' Charles Peabody, Aegis Capital's Stanley Crouch, Fifth Third Asset Management's Keith Wirtz and Rochdale Securities' Richard Bove. (Source: Bloomberg)

Watch video here.

$XLF $JPM $DIA $SPY $QQQ $IWM

Big Banks Profits Slow: Capital One, US Bancorp, Wells Fargo Shine

Only 3 of the 10 Largest USA Banks reported gains in net income from the prior year Q1 2011. The other 7 reported year over year decreases. Shining were Capital One (+38%), U.S. Bancorp (+28%), and Wells Fargo (+13%). Near break-even with small YoY decreases were Citigroup (-2%), PNC Financial (-2.5%), JPMorgan (-3%), and BNY Mellon (-6%). Those dropping more significantly were Goldman Sachs (-23%), and Bank of America (-68%). Last-place was Morgan Stanley (-110%), reporting the only quarterly loss at -$94 million.



Sequential quarterly net income results, the change from the prior quarter Q4 2011, were much better. 8 of the 10 Largest USA Banks reported increases with Capital One, Citigroup, and Goldman Sachs at  the top with +245%, +207%, and 108%, respectively. Next were PNC Financial (+65%), Morgan Stanley (+62%), JPMorgan (+44%), and BNY Mellon (+32%). Near break-even were Wells Fargo at +3% and U.S. Bancorp at -1%. Bank of America trailed with a -67% decrease in quarterly net income.



Largest USA Banks Ratings: U.S. Bancorp Tops, Goldman Sachs Last

$XLF $USB $PNC $WFC $BK $BAC $JPM $C $MS $GS $COF

Too Big To Stop Growing: Largest USA Banks Get Bigger

Remember Too Big To Fail? That issue has been relegated to American history books. The trend is now Too Big To Stop Growing. The 10 Largest USA Banks reported aggregate total assets of $10.74 trillion for the QE 3-31-12. This is an increase of +$345 billion and +3.3% from the prior QE 12-31-11.

Capital One, Citigroup, JPMorgan Chase, and Bank of America reported the largest increases as the biggest got bigger. BNY Mellon reported the only decrease in total assets. The Capital One increase was due to the ING Direct acquisition completed during the quarter.  The PNC Financial Services increase was the result of the completion of the RBC Bank (USA) acquisition.

Largest USA Banks by Total Assets The Trillion Dollar Club: JPMorgan Chase continues #1 with total assets of $2.32 trillion, Bank of America is #2 with $2.18 trillion, Citigroup is #3 with $1.94 trillion, and Wells Fargo continues #4 with $1.33 trillion. Next are Goldman Sachs at $951 billion and Morgan Stanley at $781 billion. U.S. Bancorp $341 billion, Bank of New York Mellon $300 billion, PNC Financial Services $296 billion, and Capital One at $295 billion round out the top 10.



The 10 Largest USA Banks reported an average capital to assets ratio of 10.3% for the QE 3-31-12, about average for the 5 quarters reviewed. BNY Mellon and U.S. Bancorp reported the largest increases. Capital One, PNC Financial Services, Morgan Stanley, Bank of America, and Citigroup reported decreases

Largest USA Banks by Capital Ratio The 10%+ Club: PNC Financial Services, Capital One, BNY Mellon, Wells Fargo, U.S. Bancorp, and Bank of America all have capital ratios greater than 10%, which is very good. Citigroup, JPMorgan, Morgan Stanley, and Goldman Sachs are below 10%.



Largest USA Banks Ratings: U.S. Bancorp Tops, Goldman Sachs Last

$XLF $USB $PNC $WFC $BK $BAC $JPM $C $MS $GS $COF

Federal Reserve Explains How Borrowers Can Apply for Free, Independent Foreclosure File Review

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Independent Foreclosure Review PSA

The Federal Reserve Board on Wednesday announced the availability of a new video that explains how borrowers who believe they were financially harmed during the mortgage foreclosure process in 2009 and 2010 can apply for a free, independent foreclosure file review.

The brief announcement reminds borrowers that, as part of the enforcement actions taken in April 2011 by federal banking regulatory agencies, they may be eligible to receive compensation if the independent review finds evidence of direct financial injury due to servicer error. Borrowers are eligible for a review if their primary residence was in the foreclosure process in 2009 or 2010 and their mortgage loan servicer is participating in the Independent Foreclosure Review.



The Federal Reserve Board issued enforcement actions against four large mortgage servicers (GMAC Mortgage, HSBC Finance Corporation, SunTrust Mortgage, and EMC Mortgage Corporation) in April 2011. Under those actions, the four servicers were required to retain independent consultants to review foreclosures that were initiated, pending, or completed during 2009 or 2010. The review is intended to determine if borrowers suffered financial harm directly resulting from errors, misrepresentations, or other deficiencies that may have occurred during the foreclosure process. The servicers are required to compensate borrowers for financial injury resulting from deficiencies in their foreclosure processes.

If you had a mortgage loan on your primary residence and believe you were financially harmed during the mortgage foreclosure process by any of the four servicers in 2009 or 2010, you can request an independent review and potentially receive compensation. The four servicers are required to make the independent reviews available to borrowers as part of their compliance with the April 2011 enforcement actions.

Eligibility for Review

Borrowers are eligible for an independent foreclosure review if they meet the following criteria:
=> The property securing the loan was the borrower's primary residence;
=> The mortgage was in the foreclosure process (initiated, pending, or completed) at any time between January 1, 2009, and December 31, 2010; and
=> The mortgage was serviced by one of the following mortgage servicers:

America's Servicing Company
Countrywide
National City Mortgage
Aurora Loan Services
EMC Mortgage Corporation
PNC Mortgage
BAC Home Loans Servicing
EverBank/EverHome Mortgage Company
Sovereign Bank
Bank of America Financial Freedom
SunTrust Mortgage
Beneficial
GMAC Mortgage
U.S. Bank
Chase
HFC
Wachovia Mortgage
Citibank
HSBC
Washington Mutual (WaMu)
CitiFinancial
IndyMac Mortgage Services
Wells Fargo Bank, N.A.
CitiMortgage
MetLife Bank
Wilshire Credit Corporation

The list of participating servicers can be found at:
www.IndependentForeclosureReview.com
www.federalreserve.gov/consumerinfo/independent-foreclosure-review.htm

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Largest USA Banks Ratings: Capital One & U.S. Bancorp Tops, Goldman Sachs Last

The Largest USA Banks have reported first quarter 2012 financial results. In the prior post, I reviewed the market cap of the American mega banks. In this post I rate them. There was little change from the prior quarterly ratings. There is one downgrade, Morgan Stanley drops from D- to F-. There are no upgrades.

Above Average Capital One and U.S. Bancorp are the leaders at A, followed by PNC Financial Services and Wells Fargo at A-. These 4 banks have moved positively beyond the 2008 financial crisis. Bank of New York Mellon is a respectable B+. Bank of America is next, perhaps a surprise to some, with a ranking of C+. Despite the negative media hype, capital is strong. However, return on assets is inadequate. Bank of America financial performance has been extraordinarily volatile and the ranking could move up or down in the next QE June 2012.

Below Average JPMorgan Chase follows at D, despite CEO Jamie Dimon's trumpeting of the JPM "fortress balance sheet" of $2+ trillion. However, financial position and performance are adequate. Next is Citigroup at D-, just below the median rating of D. Morgan Stanley dropped from D- to F-. Trailing the field is the once mighty Goldman Sachs at a dismal G+. Capital is questionable. The Average Rating for the 9 Largest USA Banks is C for this quarter, above the median score of D in the overall rating system.

Rating, Bank, Change
A    Capital One
A    U.S. Bancorp
A-   PNC Financial Services
A-   Wells Fargo
B+  BNY Mellon
C+  Bank of America
D    JPMorgan Chase
D-   Citigroup
F-   Morgan Stanley (down from D-)
G+  Goldman Sachs
C    Average

Largest USA Banks Rankings The Largest 10 USA banks ratings are presented below in a percentage format. The ratings range from A+ (100%) to G- (0%).



Based on fundamental analysis of both financial position and performance on a short-term and long-term basis, the largest 9 USA banks rankings have been updated with a composite score. There is no subjectivity involved from quarter to quarter, just objective data. The ratings are the result of the output from a model, with March 31, 2012 financial statement data input.

The score can range from a high of A+ to a low of G-, a total of 21 tiers. The median score is D in this rating system. The average score varies each quarter.

Financial position strength, notably the capital ratio, is weighted more than financial performance. Therefore, the rating is primarily a gauge of financial position, balance sheet strength, which indicates the ability of the bank to withstand a downturn in financial performance from either internal or external events. The rating is secondarily a gauge of financial performance, both short-term and long-term. A measure of financial safety and soundness, not future financial performance, is the predominate intent of the ratings.

$XLF $USB $PNC $WFC $BK $BAC $JPM $C $MS $GS $COF

Morgan Stanley Posts Operating Profit, Loss Per Share Continues

Morgan Stanley ($MS) reported Q1 2012 financial results on Thursday, April 19.

I previewed Morgan Stanley earnings as "Nowhere to go but up" and they almost proved me wrong! The Gang That Couldn't Shoot Straight did report a slim operating gain of $203 million, but that unraveled into a loss per share of $(0.06) by the bottom of the income statement. That's losses per share for 2 consecutive quarters, in 3 of the past 4 quarters, and in 4 of the past 7 quarters.

Oh sure, there are plenty of reasons why this cursed fate has befallen management and they let you know in detail each quarterly press release. Ultimately, the gods are not so much to blame as the Morgan Stanley mindset and culture. They do this to themselves and apparently to their clients. CEO James Gorman noted in the prior quarter that Morgan Stanley continues "addressing a number of outstanding strategic and legacy issues." I guess that's one way to say it...

The current quarterly excuse was, "Results for the quarter included negative revenue of $2.0 billion compared with negative revenue of $189 million a year ago related to changes in Morgan Stanley’s debt-related credit spreads and other credit factors (Debt Valuation Adjustment, DVA)".

For the sake of the embattled MS stockholders, I plead with the directors and management to come here to our small rural community on a lake peninsula and talk to the local bait shop owner. He's quite the entrepreneur and could explain the finer points of making a profit, staying out of debt, and how important honesty is. He's well-known for shooting at burglars who were breaking into his store in the middle of the night. They were trying to steal his money!

Which brings us to the February 13, 2012 proposed settlement for fraud. This was a "shareholder derivative action" which means Morgan Stanley was ripping off clients by selling them junk and then got sued. There's even a website here. Part of the settlement is Morgan Stanley promises to do and be better while trying not to get caught again.

Morgan Stanley Balance Sheet Q1 2012 Total assets increased to $781 billion. The capital ratio decreased to 7.98%, which is less than desirable. Return on assets sunk to +0.38%, which is sub par and downtrending.

Morgan Stanley Income Statement Q1 2012 Morgan Stanley reported net revenues of $6.94 billion, a net loss of -$94 million, and a loss per share of -$0.06. From the prior quarter Q4 2011, these were +21%, +62%, and +60%, respectively. From the prior year Q1 2011, these were -9%, -110%, and -112%, respectively. Both the operating margin of +2.93% and the net margin of -1.36% increased QoQ but decreased YoY. The operating expense ratio is historically high at 79%.

BNY Mellon Financial Performance Rebounds

BNY Mellon ($BK) reported Q1 2012 financial results on Wednesday, April 18, 2012.


BNY Mellon Summary Q1 2012 Q1 financial performance rebounded from the poor Q4 results. Financial position continues strong. CEO Gerald Hassell explained, "We enjoyed solid sequential growth in investment management and services fees, as we benefited from new business wins and improved equity values".

BNY Mellon Income Statement Q1 2012 Net revenues were $3.65 billion, net income $631 million, and earnings per share $0.52. From the prior quarter Q4 2011, these were +3%, +321%, and +24%, respectively. From the prior year Q1 2011, these were 0.00%, -6%, and +4%, respectively. Both the operating margin of 24.27% and the net margin of 17.31% increased QoQ and decreased YoY. The operating expense ratio, traditionally high, decreased to 75.59%.

BNY Mellon Balance Sheet Q1 2012 Total assets dropped to $300.17 billion, mostly the result of a decrease in non-interest bearing deposits. The capital ratio increased to 11.60% and is strong. Return on assets decreased again,but is still a respectable +0.83%. Net Loans are only 14% of the asset mix while Cash & Investments are 67% of total assets.

Bank of America Earnings Miss, the Crapshoot Continues

Bank of America reported Q1 2012 financial results on Thursday, April 19.

Reports are in this morning for the quarterly crapshoot from Bank of America, the World's Most Unstable Bank. CEO Brian Moynihan continues cleaning up the carnage from the biggest debacle in banking history, left behind by delusional former CEO Ken Lewis, corrupt former Treasury Secretary Henry Paulson, inept former FDIC Chair Sheila Bair, and the numerous morons at the SEC. However, it's becoming obvious that the mindset hasn't changed and Moynihan is most likely the second coming of bankster Lewis.

The foremost problem is contingent liabilities, ongoing legacy losses, that surface and the lawsuits that result. After reserving billions of dollars, the worst of the incredible and extraordinary losses appear accounted for. But who really knows the extent of the losses plus who might someday go to prison as the fall guy?

GAAP earnings per share of $0.03 missed QoQ, YoY, and was short of the projected $0.12. There was some hype over excluding valuation adjustments and reporting EPS at $0.31. Pay no attention to management,  the stock pumpers and starry-eyed headline writers behind the curtain. For Bank of America management, rejoice in the day and be glad in it, you squeezed a few pennies from the junk pile. You had earnings per share, not loss per share! This is the third consecutive quarter of positive EPS, albeit humble, after the disastrous -$0.90 per share in Q2 2011.

Let's clarify the gawd awful, incredible mess that is called Bank of America: even the auditors don't know if their was net income or loss for this quarter. By the time a GAAP EPS of $0.03 is crafted, countless assumptions have been made regarding contingencies, reserves, valuations, accruals, and the finer points of accounting rules. Some of these are negotiated with management. Therefore the earnings per share is built upon reasonableness, materiality, estimates, and exorbitant auditing fees to pay for the liability insurance and sweet lifestyle.

All we can hope for is consistency each quarter to create a baseline. This same scenario also applies to Citigroup, among others. All this talk about DVAs, CVAs, FVOs and the wild quarterly multi-billion dollar swings as a result. Markets go up or down, then the valuations go up or down, then EPS goes up or down. This volatility overwhelms the core banking operations. CEO Moynihan talks about customer and client relationships and all sorts of nonsense while the traders, algorithms, and greed are churning away in the background.

Core banking operations diminished in the asset mix. Apparently there is not enough upside in this boring endeavor.  Net loans decreased to 40% of total assets while cash & investments rose to 45%. The inmates have rallied and taken over the asylum. Credit losses have down-trended and are not a drag on net income. Therefore, core banking performance is actually good but an aside to the glamour of being a world player in the markets.

Return on assets dipped from a meager +0.06% last quarter to - (drum roll, please) - to zero, yep, 0.00%. The saving grace for Bank of America is an adequate platform from which to operate. That is, capital is strong at 10.66% of total assets.

Bank of America Income Statement Q1 2012 Bank of America reported net revenues of $22.28 billion, net income of $653 million, and earnings per share of $0.03. From the prior quarter Q4 2011, these were -10%, -67%, and -80%, respectively. From the prior year Q1 2011, these were -17%, -68%, and -82%, respectively. The operating and net margins dipped QoQ and YoY to 3.23% and 2.93%, respectively. The Provision for Credit Losses of $2.42 billion is at a multi-year low. The operating expense ratio of 71.17% is historically high.

Bank of America Balance Sheet Q1 2012 Total assets increased to $2.18 trillion. Bank of America continues below the total assets of $2.32 trillion reported by JPMorgan Chase for the current quarter. The capital ratio was flat at 10.66%, which is strong. Return on assets dipped from +0.06% to 0.00%. Net Loans are a decreasing share of the asset mix.

PNC Financial Services Reports Mixed Quarterly Results

PNC Financial Services reported Q1 2012 financial results on Wednesday, April 18, 2012.


PNC Financial Services Summary Q1 2012 PNC Financial Services quarterly performance rebounded from the weak prior Q4 2011. However, results were mixed with YoY decreases in net income, earnings per share, operating margin, and net margin. Financial position continues very strong. Financial performance overall is adequate and should improve in the next quarters. CEO James Rohr said, "With the completion of our acquisition of RBC Bank (USA), we plan to leverage our brand and innovative product set to grow market share in the southeast."

PNC Financial Services Income Statement Q1 2012 Net revenues were $3.73 billion, net income $811 million, and earnings per share $1.44. From the prior quarter Q4 2011, these were +5%, +65%, and +69%, respectively. From the prior year Q1 2011, these were +3%, -3%, and -8%, respectively. Both the operating margin and net margin increased QoQ but decreased YoY. The operating expense ratio of 60.80% decreased QoQ but was up YoY.

PNC Financial Services Balance Sheet Q1 2012 Total assets increased to a record high of $295.88 billion, attributable mostly to the acquisition of RBC Bank (USA). The capital ratio dipped QoQ to 12.92%, but continues very strong. Return on assets decreased QoQ to a still strong +1.12%. Net Loans increased to 58% of the asset mix, which is adequate.