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Non-Tech : Banks--- Betting on the recovery -- Ignore unavailable to you. Want to Upgrade?

To: Asymmetric who wrote (1216)	10/26/2010 11:34:48 PM
From: Asymmetric	Read Replies (2) \| Respond to of 1428

Rainy-Day Funds Account For Half Of Big Banks' Earnings . By Marshall Eckblad / WSJ Oct 26, 2010 Call it steroids for bank profits. The biggest U.S. banks virtually doubled their collective earnings in the third quarter just by injecting $8.1 billion into net income from funds they'd set aside to cover loan losses. There are 18 commercial banks in the U.S. with at least $50 billion in assets, and together they earned an adjusted $16.8 billion in the third quarter. Of those profits, nearly half, or 48%, were from drawing down what bankers call loan-loss reserves, according to an analysis by Dow Jones Newswires. A year ago, the same 18 banks earned $6.2 billion in quarterly profits; at that time, they added more than $7.8 billion to the same reserves, a move that reduced their profits. The analysis omits a $10.4 billion noncash charge to earnings that Bank of America Corp. (BAC) disclosed during the third quarter. Lenders are likely to disclose more releases from reserves for quarters to come. The reason: American banks set aside so much capital for loan losses during the financial crisis that they still hold bigger reserves than at any other time in modern history, according to Moody's Investors Service Inc. "Going back to 1948, banks' reserves, as measured by total loans outstanding, are at the highest levels we've ever seen," said Gerard Cassidy, analyst at RBC Capital Markets. At the heart of the issue is a set of arcane corporate governance accounting rules that call for banks to release loan-loss reserves as soon as they don't expect to need them, even against the protest of some bank officials. The sharp reductions in loan-loss reserves illustrate how starkly banks' economic forecasts have improved in recent months, even as borrowers continue to face persistently high unemployment and a slumping U.S. economy. For borrowers looking for capital, the shrinking loan-loss reserves at banks also show how lenders have pulled back from loans to riskier borrowers in the wake of the financial crisis. J.P. Morgan Chase & Co. (JPM) earned $4.4 billion in the third quarter, in part because it released $1.7 billion from the bank's loan-loss reserves. During a recent conference call with investors, Chief Executive Jamie Dimon told investors, "We don't release reserves because we want [to hit] earnings targets or something like that. We release them because we have to." He called the rules "silly" and said they promote the industry's history of boom-and-bust cycles; banks are unable to build an extra cushion of reserves in good times, and then have to build such reserves when loan problems surface. But as banks' lending activity and revenue have fallen in the last two years from overheated levels before the financial crisis, the sharp reductions in reserves have been a great help to big banks' earnings. In fact, releases from reserves eclipsed earnings at two big banks. Fifth Third Bancorp (FITB) earned $238 million in the third quarter after the Cincinnati regional bank released $500 million from its loan loss reserves. KeyCorp (KEY), in Cleveland, earned $219 million after releasing $263 million from reserves. At other banks, draw-downs from reserves accounted for the vast majority of third-quarter profits. Of Citigroup Inc.'s (C) $2.2 billion in earnings, 92% came from reserve releases. Similar releases accounted for 82% of earnings at Capital One Financial Corp. (COF) in McLean, Va., and 65% at Huntington Bancshares Inc. (HBAN) in Columbus, Ohio. Two other regional lenders reported smaller losses after releasing reserves. Marshall & Illsley Corp. (MI) in Milwaukee lost $144 million in the quarter, but released $128 million. Zions Bancorp (ZION) in Salt Lake City, lost $47 million and released $51 million. Banks' moves to shrink their reserves are also a reflection of a decade-old fight between investor advocates and regulators. The Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency want banks to set aside money based on expected losses over time--and they prefer banks use longer time horizons. Said Cassidy: "Regulators have never seen a reserve they didn't like. In their view, more is better." The Securities and Exchange Commission, on the other hand, has in the past slammed banks for setting aside too much capital for loan losses and using the fat reserves to pad earnings. In the late 1990s, the SEC questioned the loan-loss accounting used by Atlanta-based SunTrust Banks (STI), and the bank agreed to cut provisions. In the third quarter, SunTrust earned $153 million after releasing $75 million from its reserves.

To: Asymmetric who wrote (1216)	10/28/2010 6:11:09 PM
From: tejek	Respond to of 1428

Market reaction to SBNY, WTNY, EWBC much better than stocks like RF, BAC, SNV, WL, etc. Check them out. SBNY yes but not WTNY and EWBC....the last two have moved sideways like BAC, RF and SNV. Keep in mind with RF and SNV I bought them at single digits as a speculative buy. Same with BAC which I sold at a nice profit. I admit I am speculating with all those stocks as well as HBAN. The reward will justify the risk if I am right. If I am wrong, I get kicked in the butt. So far I am ahead on all of them except SNV although I plan to sell RF on a bounce because I think its dead meat for the next three months.

To: Asymmetric who wrote (1216)	12/27/2010 10:01:24 AM
From: Asymmetric	Respond to of 1428

Banks Pushed Together in a Wave of Deals . By DAVID BENOIT / WSJ Dec 23, 2010 The long-awaited bank-takeover boom suddenly seems to be under way. Hancock Holding Co. announced plans to acquire Whitney Holding Corp. in a deal valued at $1.5 billion, uniting two regional banks that survived the Great Depression and Hurricane Katrina but now are struggling for profit growth. December has been the busiest month for bank mergers and acquisitions in more than two years, with a total $6.25 billion in announced deals, according to SNL Financial. Takeover speculation is roiling the shares of potential targets, and investment bankers are circling bank boardrooms with matchmaking scenarios. Analysts and investors have long predicted a surge in deal making as the U.S. economy shows more signs of life, new banking regulations eat into revenue and many borrowers either resist the urge to go deeper into debt or can't get new loans because of tighter credit standards. A Whitney National Bank branch in Thibodaux, Louisiana. Hancock Holding is buying Whitney in a deal valued at $1.5 billion. The pressure is especially intense on regional banks like Hancock and Whitney, which are far bigger than the so-called community banks generally known for obsessive customer service but smaller than low-cost financial supermarkets such as J.P. Morgan Chase & Co. and Bank of America Corp. "It's taking bigger loan transactions and bigger lending relationships to move the needle in absence of any green shoots from a revenue perspective," said David Bishop, an analyst at Stifel, Nicolaus & Co. "Here, they reduce some costs and emerge a little bit cleaner and a little bit leaner to compete over the long term." The deal announced Wednesday aims to boost profits at the combined company, with $20 billion in assets and 305 branches in five states along the Gulf of Mexico, largely by cutting costs. That is an ominous sign for employees at other banks around the U.S. unless revenue rebounds more strongly next year than expected. Michael Achary, Hancock's chief financial officer, told analysts that "a lot of the power" behind the acquisition is based on the Gulfport, Miss., bank's projection that it will eliminate $134 million in expenses during the next two years, or 18% of total at the two banks combined. The two banks have a total of nearly 5,000 employees. Two larger deals announced earlier this month were spurred by hunger to make new loans. Last week, Bank of Montreal unveiled a takeover agreement with Marshall & Ilsley Corp., a regional bank based in Milwaukee, for about $4.1 billion in stock. Toronto-Dominion Bank said Tuesday that it plans to buy Chrysler Financial Corp. in a deal valued at $6.3 billion. Both Canadian banks are scooping up U.S. assets as a way to enlarge their lending pipeline. In a separate deal announced Tuesday, Berkshire Hills Bancorp, Pittsfield, Mass., agreed to acquire smaller hometown rival Legacy Bancorp for nearly $110 million. The combined bank will have $4 billion in assets and more than 60 offices. Legacy shares jumped 47% in trading Wednesday, while Whitney surged 29%. Other regional-bank stocks rose amid fresh gossip that more deals are right around the corner. Regions Financial Corp., based in Birmingham, Ala., climbed 7.1%, and Atlanta-based SunTrust Banks Inc. was up 3.6%. Hancock shares fell 6.6%, and Berkshire slipped 1.3%. Launched in 1883, Whitney is the oldest continuously operating bank in New Orleans. The bank is known for the bronze clock installed at its downtown headquarters in 1926. Last year, the chimes were programmed to play "When the Saints Go Marching In," a tribute to the New Orleans Saints NFL team. Whitney and Hancock were pummeled in 2005 by Hurricane Katrina and hurt again by this summer's oil spill in the Gulf of Mexico. The real-estate bubble caused more problems, especially for Whitney. The New Orleans bank said in October that it would sell $180 million in nonperforming loans for $100 million. Most of the loans were made in Florida. Hancock said the purchase gives the 112-year-old bank a "crown jewel" in Whitney's deposits and a strong brand name. The combined company will rank among the top three banks in deposits in New Orleans, Baton Rouge, La., and Pensacola, Fla. "We've known each other, we've competed against each other for many, many years," Hancock Chief Executive Carl Chaney said. As part of the deal, Hancock plans to repay $300 million that Whitney got from the Troubled Asset Relief Program.