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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: Ramsey Su who wrote (51148)1/24/2006 3:07:41 PM
From: russwinter   of 110194
 
Before we let GDW get away with "our shit doesn't stink", let's see what the 10-Q says about delinquencies, as the operational didn't appear to cover that.

To me GDW's (and most other banks) main asset and claim to fame are dumb and dumber depositors, the kind of people who let billions sit around in potentially highly exposed institutions at one and half percent below T-bill rates. I guess the question to ask is will some of the dumb (forget about dumber) make a move? Their cost of deposits went from 2.97% to 3.24% from Sept to Dec. From the 3rd quarter 10-Q they had total deposits of $58.4 billion:

-14.7 billion in savings deposits paying a whopping 1.93%
-26.9 billion in 4 week to one year CDs paying 3.54%, and
-$7.8 billion in 1-2 year paying 3.42%.

You can basically add 27 bp to that to get year cost of funds. As long as dumb and dumber roll their CDs over at 3.80% when bills are paying 4.50%, GDW ought to be able to milk it a while longer. However, judging from this, cost of funds may be starting to spike? 4.61% for an eight month CD.
worldsavings.com

80% of GDW's ARMs are COSI, or tied to their cost of deposits, so those mortgages so far may be getting a break.
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