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Strategies & Market Trends : Value Investing
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To: Madharry who wrote (33686)3/2/2009 7:07:07 PM
From: Keith Feral  Read Replies (2) of 78673
 
Every bank except for BBT and WFC has cut their divvy. BBT actually increased their divvy, but I'm not sure the FED will allow them to do so. They might actually demand that BBT lower the payout so the divvy is less than earnings. BBT has an excellent TCE ration though.

It really doesn't bother me to see the banks do the right thing by cutting the divvies to preserve capital and protect preferred share dividends. PNC just cut their divvy to 10 cents from $2.64. I would be more inclined to trust the banks that have already cut the divvy rather than hold out for a bank like WFC to come out and cut the divvy later.

There is just no way to pay TARP divvies, preferred divvies, and bondholders - plus all of the common shareholders. The net savings from the elimination of divvies has been one thing the analysts have not yet contemplated. BAC is saving $10 billion a year in divvies, C is saving at least that much, JPM is saving $5 billion a year, PNC is saving $1 billion a year, etc...
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