Bank Ratings: U.S. Bancorp Tops, Morgan Stanley Last

Bank Ratings Through December 31, 2012

The 10 Largest USA Banks have reported fourth quarter 2012 financial results, i.e., financial performance for the quarter ending 12-31-12 and financial position at 12-31-12. There were several changes in the quarterly ratings: 4 upgrades and 2 downgrades. The median score is "D" and the average score for the quarter ending December 2012 is "C+", an increase from the average score of "C" for the prior quarter ending September 2012.

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



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

Above Average U.S. Bancorp is the sole leader at "A", followed by Wells Fargo, Capital One, and PNC Financial Services at "A-". These 4 banks have moved positively beyond the 2008 financial crisis. BNY Mellon and Citigroup are next at "B+" and "B-", respectively.

Average Bank of America is at the average of "C+".

Below Average JPMorgan Chase and Goldman Sachs are next at "D", which is the median rating. Trailing the field is Morgan Stanley at a dismal "G".

Based on fundamental analysis of both financial position and performance on a short-term and long-term basis, the largest 10 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 the latest quarterly 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 can vary each quarter.

Financial position 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 internal and/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 predominant intent of the ratings.

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

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

Bank of America Announces $10+ Billion Mortgage Settlement with Fannie Mae

Bank of America Announces Settlement with Fannie Mae to Resolve Agency Mortgage Repurchase Claims on Loans Originated and Sold Directly to Fannie Mae Through December 31, 2008

* Agreements Cover Mortgage Loans With $1.4 Trillion of Original Unpaid Principal Balance

* Agreements Also Substantially Resolve Outstanding Claims for Compensatory Fees

CHARLOTTE, N.C. -- (BUSINESS WIRE) -- Jan. 7, 2013 -- Bank of America today announced agreements with the Federal National Mortgage Association (Fannie Mae) to resolve outstanding and potential repurchase and certain other claims relating to the origination, sale and delivery of substantially all residential mortgage loans originated and sold directly to Fannie Mae from January 1, 2000 through December 31, 2008 by entities related to Countrywide Financial Corporation (legacy Countrywide) and Bank of America, National Association (BANA).

In addition, Bank of America announced that it signed definitive agreements to sell the servicing rights on 2.0 million residential mortgage loans totaling approximately $306 billion, as measured by the aggregate unpaid principal balance (as of November 30, 2012).

“As we enter 2013, we sharpen our focus on serving our three customer groups and helping to move the economy forward,” said Bank of America Chief Executive Officer Brian Moynihan. “Together, these agreements are a significant step in resolving our remaining legacy mortgage issues, further streamlining and simplifying the company and reducing expenses over time.”

"Our focus on strengthening the balance sheet continued this quarter," said Chief Financial Officer Bruce Thompson. "We ended the quarter with record Tier 1 common capital ratio of 11.41 percent and an estimated Basel 3 Tier 1 common capital ratio of 8.97 percent, up from 7.95 percent as of the second quarter of 20121. With these gains, we have turned our attention to driving core earnings."

Fannie Mae Agreements

The agreements with Fannie Mae cover loans with an aggregate original principal balance of approximately $1.4 trillion and an aggregate outstanding principal balance of approximately $300 billion. Unresolved claims by Fannie Mae for alleged breaches of selling representations and warranties with respect to these loans totaled $11.2 billion of unpaid principal balance at September 30, 2012. These agreements extinguish substantially all of those unresolved claims, as well as any future representations and warranties claims associated with loans sold directly to Fannie Mae from January 1, 2000 to December 31, 2008, subject to certain exceptions which Bank of America does not expect to be material.

As part of the agreement to settle representations and warranties claims, Bank of America will make a cash payment to Fannie Mae of $3.6 billion and also repurchase for $6.75 billion certain residential mortgage loans sold to Fannie Mae, which Bank of America has valued at less than the purchase price. These actions are expected to be covered by existing reserves and an additional $2.5 billion (pretax) in representations and warranties provision recorded in the fourth quarter of 2012.

Bank of America also agreed to make a cash payment to Fannie Mae to settle substantially all of Fannie Mae’s outstanding and future claims for compensatory fees arising out of past foreclosure delays. This payment is expected to be covered by existing reserves and an additional provision of $260 million (pretax) recorded in the fourth quarter of 2012.

Together, these actions described above are expected to reduce Bank of America’s pretax income by approximately $2.7 billion in the fourth quarter of 2012.

The Fannie Mae agreement also clarifies the parties' obligations with respect to mortgage insurance, including by establishing timeframes for certain payments and other actions, as well as parameters for potential bulk settlements and by providing for cooperation in future dealings with mortgage insurers.

Through these actions, Bank of America is addressing substantially all of its remaining exposure to repurchase obligations for residential mortgage loans sold directly to Fannie Mae. After giving effect to the settlement agreements with Fannie Mae announced today, the company expects to reduce the range of possible loss above existing accruals for both GSE and non-GSE representations and warranties exposures to up to $4.0 billion at December 31, 2012, compared to up to $6.0 billion at September 30, 2012.

Bank of America Announces Settlement with Fannie Mae to Resolve Agency Mortgage Repurchase Claims on Loans Originated and Sold Directly to Fannie Mae Through December 31, 2008

$BAC $XLF

Federal Reserve Announces $8.5 Billion Mortgage Settlement

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Independent Foreclosure Review to Provide $3.3 Billion in Payments, $5.2 Billion in Mortgage Assistance

(Board of Governors of the Federal Reserve System and Office of the Comptroller of the Currency; January 7, 2013)

WASHINGTON -- Ten mortgage servicing companies subject to enforcement actions for deficient practices in mortgage loan servicing and foreclosure processing have reached an agreement in principle with the Office of the Comptroller of the Currency (OCC) and the Federal Reserve Board to pay more than $8.5 billion in cash payments and other assistance to help borrowers.

The sum includes $3.3 billion in direct payments to eligible borrowers and $5.2 billion in other assistance, such as loan modifications and forgiveness of deficiency judgments. The payments involve mortgage servicers operating under enforcement actions issued in April 2011 by the OCC, the Federal Reserve, and the Office of Thrift Supervision. The agreement ensures that more than 3.8 million borrowers whose homes were in foreclosure in 2009 and 2010 with the participating servicers will receive cash compensation in a timely manner.

Eligible borrowers are expected to receive compensation ranging from hundreds of dollars up to $125,000, depending on the type of possible servicer error.

This agreement includes Aurora, Bank of America, Citibank, JPMorgan Chase, MetLife Bank, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo. For these participating servicers, fulfillment of the agreement would meet the requirements of the enforcement actions that mandated that the servicers retain independent consultants to conduct an Independent Foreclosure Review.

Independent Foreclosure Review to Provide $3.3 Billion in Payments, $5.2 Billion in Mortgage Assistance

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

Big Banks Ratings Through September 30, 2012

The Largest USA Banks have reported third quarter 2012 financial results, the financial performance for the QE 9-30-12 and financial position at 9-30-12. There were several changes in the quarterly ratings: 4 downgrades and no upgrades. The median score is "D" and the average score for QE September 2012 is "C".

Above Average U.S. Bancorp is the sole leader at "A", followed by Wells Fargo and Capital One at "A-". These 3 banks have moved positively beyond the 2008 financial crisis. PNC Financial Services is next at "B+", followed by Bank of New York Mellon at "B" and Bank of America at "B-".

Below Average JPMorgan Chase is next at "D", which is the median rating. Citigroup follows with an "E+", below the median rating of "D". Farther below is Morgan Stanley at "E-". Trailing the field is Goldman Sachs, continuing at a dismal F-.

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

Largest USA Banks Rankings The 10 Largest 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 10 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 the latest quarterly 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 can vary each quarter.

Financial position 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 predominant intent of the ratings.

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

Bank of America Earnings Review: Ongoing Volatility

Bank of America reported QE September 2012 financial results on October 17

Bank of America, the World's Most Unstable Bank, is inexplicable at this point in their corporate life cycle. I continue to have the vague, hopeful feeling that BAC has moved on from the very worst of their troubles. However, doom is most likely alive and well in the background and may be in the form of junk mortgage repurchases and retribution for various morally reprehensible deeds performed. For now, a sigh of relief is in order as we wait and see what financial catastrophe the next quarter might bring.

CEO Brian Moynihan continues cleaning up the carnage from the biggest debacle in American banking history. Moynihan announced last quarter Project New BAC: a multi-year, multi-billion dollar cost cutting plan which will include a workforce reduction of tens of thousands. The past "banking" model was broken (actually it 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.

Therefore financial performance is and will be volatile. 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.

At QE 9-30-12, I have rated Bank of America a "B-" on a scale of A+ to G-. This is a downgrade from "B" at the prior QE 6-30-12. The median rating is "D" and the average rating at QE 6-30-12 was "C". Financial position is weighted more than financial performance. The QE 6-30-12 bank ratings review is here.







"We are doing more business with our customers and clients: Deposits are up; mortgage originations are up; we surpassed 11 million in mobile customers; small business lending is up 27 percent year over year; loans to our commercial clients rose for the seventh consecutive quarter; and our corporate clients made us the second-ranked global investment banking firm," said Brian Moynihan, chief executive officer. "Our strategy is taking hold even as we work through a challenging economy and continue to clean up legacy issues."

"Our focus on strengthening the balance sheet continued this quarter," said Chief Financial Officer Bruce Thompson. "We ended the quarter with record Tier 1 common capital ratio of 11.41 percent and an estimated Basel 3 Tier 1 common capital ratio of 8.97 percent, up from 7.95 percent as of the second quarter of 20121. With these gains, we have turned our attention to driving core earnings."

$BAC $XLF

Bank of America Reaches $2.43B Settlement Related to Merrill Lynch Acquisition

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Bank of America Reaches Settlement in Merrill Lynch Acquisition-Related Class Action Litigation

Total Third-Quarter 2012 Litigation Expense Estimated to Be Approximately $1.6 Billion Litigation Expense, Valuation Adjustments for Improvement in the Company’s Credit Spreads and U.K. Tax Charge Are Expected to Negatively Impact EPS by Approximately $0.28 in Third Quarter 2012

(Bank of America; September 28, 2012)

CHARLOTTE, N.C., Sep 28, 2012 (BUSINESS WIRE) --Bank of America today announced it, and certain of its current and former officers and directors, have agreed, subject to court approval, to settle a class action lawsuit brought in 2009 on behalf of investors who purchased or held Bank of America securities at the time the company announced plans to acquire Merrill Lynch.

Under terms of the proposed settlement, Bank of America would pay a total of $2.43 billion and institute certain corporate governance policies. Plaintiffs had alleged, among other claims, that Bank of America and certain of its officers made false or misleading statements about the financial health of Bank of America and Merrill Lynch. Bank of America denies the allegations and is entering into this settlement to eliminate the uncertainties, burden and expense of further protracted litigation.

“Resolving this litigation removes uncertainty and risk and is in the best interests of our shareholders,” said Chief Executive Officer Brian Moynihan. “As we work to put these long-standing issues behind us, our primary focus is on the future and serving our customers and clients.”

The proposed settlement will be reviewed by Judge Kevin Castel in the United States District Court for the Southern District of New York, where the class action is pending. Further information concerning the details of the settlement are available from the court’s docket, In Re Bank of America Securities Derivative & Employment Retirement Income Sec. Act (ERISA) Litigation, 09 MDL 2058 (PKC) or from plaintiffs’ lead counsel, Bernstein Litowitz Berger & Grossmann LLP; Kaplan Fox & Kilsheimer LLP; and Barroway Topaz Kessler Meltzer & Check, LLP.

The amount to be paid under the proposed settlement will be covered by a combination of Bank of America’s existing litigation reserves and incremental litigation expense to be recorded in the third quarter of 2012. The company estimates total litigation expense will be approximately $1.6 billion for the three months ended September 30, 2012, which includes the incremental costs of the related settlement above previous accruals and other litigation-related items.

The settlement agreement also contemplates that Bank of America will institute and/or continue certain corporate governance enhancements until January 1, 2015, including those relating to majority voting in director elections, annual disclosure of noncompliance with stock ownership guidelines, policies for a board committee regarding future acquisitions, the independence of the board’s compensation committee and its compensation consultants, and conducting an annual “say-on-pay” vote by shareholders.

Litigation expense, improvements in the company’s credit spreads and the U.K. tax charge are expected to negatively impact reported third-quarter EPS by approximately $0.28

In addition to the litigation expense, the company expects that its third-quarter 2012 financial results will be adversely impacted by approximately $1.9 billion (pretax) in negative fair value option (FVO) adjustments and debit valuation adjustments (DVA) related to the improvement in the company’s credit spreads, and the previously reported charge of approximately $800 million to income tax expense for changes in the U.K. corporate tax rate and the related effect on the deferred tax asset valuation.

Bank of America is scheduled to report third-quarter 2012 financial results on October 17.

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Wall Street Banksters: Ongoing Bailouts & No Criminal Prosecutions!

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Neil Barofsky on the Ongoing Bailout of Wall Street and the Lack of Criminal Prosecutions

Welcome to Capital Account. The legacy of the financial crisis and the response from the government is still making headlines. It has turned into a legacy with taxpayers footing the bill and Wall Street paying less for its crimes. Today the SEC charged Wells Fargo's brokerage firm, as well as a former Vice President, for selling investments tied to Mortgage-Backed Securities without fully understanding their complexity or disclosing the risk to investors. Wells Fargo agreed to settle the charges. However, a fine of $6.5 million, no admission of guilt, and a 6-month suspension of the Vice President sounds like a handslap playing on a broken record. We talk to Neil Barofsky, the man who helped prosecute the CEO and President of Refco, and the watchdog for TARP -- the government-sposered bailout of Wall Street.

Neil Barofsky discuses the costs associated with the taxpayer funded bailouts of wall street doled out through tarp and the false promises made under the pretense of bailing out main street. He provides an in-depth account of his experience behind the scenes, as he tried to negotiate what he initially believed, was a program designed to save main street, but that he later discovered was really created with the full intention of bailing out wall street. That man is Neil Barofsky, the former Special Inspector General for TARP and author of "Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street."

Also, Bloomberg reports that Russell Wasendorf Sr., the CEO of the bankrupt Peregrine Financial Group, was indicted on 31 counts for making false statements to regulators. We ask Neil Barofsky if, even without blatant confessions of guilt, there are legitimate criminal cases that could be built around executives at major firms. He cites the LIBOR scandal as the most current, and most obvious example of an opportunity for criminal charges and prosecutions to be filed by authorities.

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Big Banks Long-Term Growth Stalls: U.S. Bancorp and Wells Fargo Shine

Long-Term Year on Year Earnings Performance

Only 2 of the 10 Largest USA Banks reported gains in net income from the prior year Q2 2012. The other 8 reported year over year decreases. Shining were U.S. Bancorp (+18%) and Wells Fargo (+17%). Reporting the smallest YoY decreases were JPMorgan (-9%), Goldman Sachs (-12%), and Citigroup (-12%). Those dropping more significantly were BNY Mellon (-35%), PNC Financial (-40%), and Morgan Stanley (-50%). Even worse at next-to-last and last-place were Capital One (-90%) and Bank of America (-128%).



Short-Term Quarter on Quarter Earnings Performance

Sequential quarterly net income results, the change from the prior quarter Q1 2012, were better. 6 of the 10 Largest USA Banks reported increases with Morgan Stanley and Bank of America at the top with +729% and +277%, respectively. Next were Wells Fargo (+9%), U.S. Bancorp (+6%), JPMorgan (+1%), and Citigroup (+1%). Reporting decreases QoQ were BNY Mellon (-21%), PNC Financial (-33%), Goldman Sachs (-54%), and Capital One (-94%).



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

Big Banks Assets Shrink, Capital Strengthens

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

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

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

Quarterly Net Income

All 10 of the Largest USA Banks reported net income for the QE 6-30-12, reaching an aggregate quarterly net income of $19.1 billion. This is a small increase of +$142 million and +0.75% from the prior QE 3-31-12, but a strong increase of +$9.1 billion and +48% from the prior year QE 6-30-11.

Bank of America (+$1.81 billion) and Morgan Stanley (+$685 million) reported the largest sequential QoQ increases. Capital One (-$1.31 billion) and Goldman Sachs (-$1.15 billion) reported the largest sequential QoQ decreases.

The Billion Dollar Club: JPMorgan Chase led the way at #1 with $4.96 billion in quarterly net income. Wells Fargo was #2 at $4.62 billion. Citigroup ($2.95 billion), Bank of America ($2.46 billion), and U.S. Bancorp ($1.42 billion) were next. Below $1 billion in quarterly net income were Goldman Sachs ($962 million), Morgan Stanley ($591 million), PNC Financial Services ($546 million), and BNY Mellon ($496 million). Capital One was last and #10 with quarterly net income of a near break-even $93 million.



Return on Assets

The 10 Largest USA Banks reported an average return on assets of +0.83% for the QE 6-30-12, which was a small decrease -0.03% from the prior QE 3-31-12 of +0.86%.

The 1%+ Club: U.S. Bancorp and Wells Fargo were the clear leaders with an ROA of +1.60% and +1.30%, respectively. Capital One was #3 at 1.13%. Just below the 1% ROA benchmark was PNC Financial Services at +0.96%. Next were JPMorgan Chase (+0.78%) and BNY Mellon (+0.72%). Further down were Citigroup (+0.55%) and Bank of America (+0.52%). Trailing at #9 and #10 were Goldman Sachs (+0.39%) and Morgan Stanley (+0.31%).



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

Big Banks Assets Shrink, Capital Strengthens

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

Big Banks Assets Shrink, Capital Strengthens

Total Assets

The 10 Largest USA Banks reported aggregate total assets of $10.69 trillion for the QE 6-30-12. This is a small decrease of -$57 billion and -0.53% from the prior QE 3-31-12, but a strong increase of +$105 billion and +1.00% from the prior year QE 6-30-11.

The 3 largest banks in the USA, JPMorgan, Bank of America, and Citigroup, all reported decreases in total assets as did 5 of the 6 biggest. The remaining 4 reported increases. JPMorgan reported the largest decrease (-$30 billion) followed by Citigroup and Morgan Stanley (both -$28 billion). BNY Mellon reported the largest increase (+$30 billion) followed by U.S. Bancorp (+$12 billion).

Largest USA Banks by Total Assets The Trillion Dollar Club: JPMorgan Chase continues #1 with total assets of $2.29 trillion, Bank of America is #2 with $2.16 trillion, Citigroup is #3 with $1.92 trillion, and Wells Fargo continues #4 with $1.34 trillion. Next are Goldman Sachs at $949 billion and Morgan Stanley at $754 billion. U.S. Bancorp $353 billion, Bank of New York Mellon $330 billion, PNC Financial Services $300 billion, and Capital One at $297 billion round out the top 10.



Capital Ratio

The 10 Largest USA Banks reported an average capital to assets ratio of 10.39% for the QE 6-30-12, an increase from the prior QE 3-31-12 (10.27%). The increase was broad with 8 of the 10 reporting higher ratios. BNY Mellon reported the only notable decrease (from 11.60% to 10.71%) and the Capital One decrease (from 12.55% to 12.54%) was negligible.

Largest USA Banks by Capital Ratio The 10%+ Club: PNC Financial Services, Capital One, Wells Fargo, U.S. Bancorp, Bank of America, and BNY Mellon 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 & Wells Fargo Tops, Goldman Sachs Last

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

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

The Largest USA Banks have reported second quarter 2012 financial results. There were several changes in the quarterly ratings: 3 upgrades and 2 downgrades. The median score is "D" and the average score for the QE June 2012 is "C".

Above Average U.S. Bancorp is the sole leader at "A", followed by Wells Fargo and Capital One at "A-". These 3 banks have moved positively beyond the 2008 financial crisis. PNC Financial Services is next at "B+", followed by Bank of New York Mellon and Bank of America at "B".

Below Average JPMorgan Chase follows at "D". Citigroup is next with a "D-", below the median rating of "D". Farther below is Morgan Stanley at "E+". Trailing the field is Goldman Sachs, continuing at a dismal G+.

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

Largest USA Banks Rankings The 10 Largest 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 10 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 June 30, 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

Bankers Gone Bad: MF Global, Bank of America

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Wall Street Bankster, Politician, and Con Artist: Former MF Global CEO John Corzine

Nomi Prins on Banker's Gone Bad - MF'ers, BoA, and Spanish Bond Bashing

Welcome to Capital Account. MF Global's creditors could have more than three billion dollars in claims against the failed firm. That's according to the creditors' bankruptcy trustee -- former FBI director Louis Freeh. Guess who is NOT in the front of the line for the money according to Freeh's report? Customers. This is after a report came out yesterday from the trustee for the creditors, James Giddens. Lot's to unpack, and we have just the guest to help us do it, author and former Goldman Sachs managing director Nomi Prins.

G7 finance chiefs reportedly held a Eurozone crisis conference call today as Spain's treasury minister has up a flare: Help Us! The country is shut out of the bond market. The treasury minister and reportedly some of Spain's bankers want the EU to help recapitalize struggling banks. This is easy for them to say. A bank rescue for them comes on the backs of taxpayers. It comes on the backs of citizens. We'll ask if anything could turn this dynamic around.

And, on a lighter night, no pun intended, it seems that cash strapped cities have discovered a new and creative way to fill the budget shortfall: putting advertisements on fire trucks. We are not kidding. Demetri and Lauren will explain on our episode of Loose Change.

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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

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

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

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.

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

Largest USA Banks: Ratings and Rankings

U.S. Bancorp is the sole leader at A, followed by PNC Financial Services and Wells Fargo at A-. These 3 banks have moved positively beyond the 2008 financial crisis. Bank of New York Mellon is 4th at a respectable B+. Bank of America is next at #5, 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 could move the ranking up or down in the next QE March 2012.
JPMorgan Chase is sixth at D, despite CEO Jamie Dimon's trumpeting of the JPM "fortress balance sheet" of $2.27 trillion. However, financial position and performance are adequate. Next are Citigroup and Morgan Stanley at D-, just below the median score of D. Trailing the field at #9 is the once mighty Goldman Sachs at a dismal G+. Capital is inadequate. The Average Rating for the 9 largest USA banks is C-, just above the median score of D in the overall rating system.

Rating, Bank
A    U.S. Bancorp
A-   PNC Financial Services
A-   Wells Fargo
B+  Bank of New York Mellon
C+  Bank of America
D    JPMorgan Chase
D-   Citigroup
D-   Morgan Stanley
G+  Goldman Sachs
C-   Average

Largest USA Banks Rankings The Largest 9 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. The ratings are based on the December 31, 2011 financial statements. 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. Financial position strength, notably the capital ratio, is weighted more than recent financial performance. The rating therefore is primarily a gauge of financial position, balance sheet, strength, which indicates the ability of the bank to withstand financial shock or a downturn in financial performance. The rating is secondarily a gauge of financial performance, both short-term and long-term.

Largest USA Banks Report Overall Poor Earnings QoQ and YoY

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Largest USA Banks Net Income QoQ The 9 Largest USA Banks reported an average +3.90% increase in quarterly net income QoQ for the QE 12-31-11, compared to the prior quarter QE 9-30-11. However, this is misleading. 6 of the 9 banks reported a decrease and the chart below indicates overall QoQ performance was poor. A significant portion of the average was attributable to Goldman Sachs at +357.76% QoQ, swinging from a quarterly net loss of -$393 million for QE 9-30-11 to a quarterly net income of +$1.01 billion for QE 12-31-11.
How the Largest Banks Performed QoQ:
Goldman Sachs +357.76%
U.S. Bancorp +6.05%
Wells Fargo +1.28%
JPMorgan Chase -12.53%
BNY Mellon -28.01%
PNC Financial Svcs -40.89%
Bank of America -68.05%
Citigroup -69.11%
Morgan Stanley -111.37%




Largest USA Banks Net Income YoY The 9 Largest USA Banks reported an average +2.96% increase in quarterly net income YoY for the QE 12-31-11, compared to the year-ago quarter QE 12-31-10. However, this is misleading. 6 of the 9 banks reported a decrease and the chart below indicates overall YoY performance was poor. A significant portion of the average was attributable to Bank of America at +260.05% YoY, swinging from a quarterly net loss of -$1.24 billion for QE 12-31-10 to a quarterly net income of +$1.99 billion for QE 12-31-11.
How the Largest Banks Performed YoY:
Bank of America +260.05%
U.S. Bancorp +38.60%
Wells Fargo +20.30%
Citigroup -11.00%
JP Morgan Chase -22.83%
BNY Mellon -31.12%
PNC Financial Svcs -39.88%
Goldman Sachs -57.56%
Morgan Stanley -129.90%




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