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Synovus Financial Shares Tumble on Downgrade AP 8-13 Synovus Financial Corp. [SNV] shares tumbled Wednesday after a Stifel Nicolaus analyst cut his rating on the bank to "Hold" from "Buy," saying the stock currently trades at a premium. Shares fell 9.4% to $9.55 in morning trading. Shares are up 47% from a 52-week low of $7.19 on July 15. "Our reluctance to maintain a "Buy" rating is a function of the stock's recent performance and relative earnings multiple," wrote analyst Anthony Davis in a note to clients. "Specifically, we believe Synovus has performed relatively well year to date." The stock is down about 5% this year, when adjusted for the company's spinoff of its majority interest in payments processor TSYS to shareholders at the end of last year, Davis said. Davis is primarily concerned by softness in fee income and margin pressure rather than asset quality. "We are actually encouraged by the stability in the 30-to-89 day delinquencies in the second-quarter of 2008, and the potential sale of $100 million in non-performing loans by year-end," Davis said. Columbus, Ga.-based Synovus operates more than 300 branches in Alabama, Florida, Georgia, South Carolina and Tennessee. U.S. Says Banks on `Problem List' Rose 30% in Quarter Alison Vekshin, Bloomberg 8-26 The U.S. Federal Deposit Insurance Corp. said its ``problem list'' of banks increased 30 percent in the second quarter to the highest total in five years as more commercial real-estate loans were overdue. The list had 117 banks as of June 30, up from 90 in the first quarter and the highest since mid-2003, the agency said today in its quarterly report without naming any institutions. FDIC-insured lenders reported net income of $4.96 billion, down 87 percent from $36.8 billion in the same quarter a year ago. `More banks will come on the list as credit problems worsen,' FDIC Chairman Sheila Bair said at a news conference. Regulators are adding to the list as bank assets, liquidity and other fiscal measures weaken. Nine banks have failed this year. Second-quarter earnings fell from $19.3 billion in the previous quarter, driven by higher provisions for loan losses, the FDIC said. It was the second-lowest net income reported since the fourth quarter of 1991 behind the $600 million reported in the fourth quarter of 2007, the agency said. `The results were pretty dismal, and we don't see a return to the high earnings levels of previous years any time soon,' Bair said. Funds set aside by banks to cover loan losses more than quadrupled to $50.2 billion from $11.4 billion in the year- earlier quarter. Loans 90 days or more overdue, deemed troubled by the FDIC, jumped 20% to $162 billion from $136 billion in the first quarter, the FDIC said. Real-estate loans accounted for almost 90% of the rise in the past three quarters, the agency said. From CNN: Banks included on the problem list are considered the most likely institutions to fail, although few institutions actually reach that point - just 13% of banks on the FDIC's problem list have failed on average. The FDIC doesn't reveal the names of the banks on the list, but it does give the total assets of these institutions. Net charge-offs, or loans banks don't think are collectable, continued to rise, totaling $26.4 billion in the second quarter - its highest level since 1991. Banks also saw their first decline in assets since 2002. Total assets fell $68.6 billion during the quarter, the largest drop since early 1991. FCID Data on Florida Brian Bandell, South Florida Business Journal 8-27 Commercial banks in Florida flipped into the loss column in the second quarter according to FDIC data. Florida-based commercial banks lost $79 million in Q2-08 after pulling in $75 million in Q1-08. About 48% of these banks were unprofitable, while just 17% saw earnings gains. In Q2-07, these commercial banks combined for $200 million in profits. But, that was before the real estate meltdown and the collapse of many mortgages. As of June 30, Florida-based commercial banks had $2.85 billion in non-current loans, which accounted for 3.34% of their total loans. This ratio is up from 2.44% in Q1-08 and 0.96% in Q2-07. The combined loan loss reserve of Florida’s commercial banks covered less than half of the non-current loans on June 30. A year ago, the reserve covered the entire amount of bad loans and then some. The FDIC said the industrywide non-current coverage ratio fell to a 15-year low of 88.5%. Florida commercial banks held $392 million in properties seized in foreclosure as of June 30, compared with $280 million in Q1-08 and $77 million in Q2-07. ---------------- Joseph Brusuelas, Merk InvestmentsThe Case Shiller indices have a base value of 100 in January 2000. So a current index value of 150 translates to a 50% appreciation rate since January 2000 for a typical home located within the metro market.) Metro Area June 2008 Change from May Year-over-year change Atlanta 125.08 0.6% -8.1% Boston 162.32 1.2% -5.2% Charlotte 133.64 0.4% -1.0% Chicago 150.25 0.2% -9.5% Cleveland 109.67 0.7% -7.3% Dallas 122.38 0.7% -3.2% Denver 131.64 1.5% -4.7% Detroit 92.68 -0.1% -16.3% Las Vegas 158.51 -1.6% -28.6% Los Angeles 195.74 -1.4% -25.3% Miami 189.87 -1.7% -28.3% Minneapolis 141.50 1.0% -13.9% New York 194.22 0.2% -7.3% Phoenix 153.19 -2.6% -27.9% Portland 175.03 -0.3% -5.8% San Diego 175.37 -1.5% -24.2% San Francisco 159.83 -1.8% -23.7% Seattle 178.28 -0.2% -7.1% Tampa 175.11 -1.1% -20.1% Washington 197.39 -0.9% -15.7% Source: Standard & Poor’s and FiservData From Goldman Sachs: House prices continue to fall, but the pace of decline appears to be slowing… This is not to say the housing market is healthy. We expect house prices to continue falling throughout this year and into next year, but it is now starting to look as if the fastest pace of declines may be over. However, once house prices do stop falling, they are unlikely to recover quickly. Joseph Brusuelas, Merk Investments: Inventories remain far too high for even a –6.3% year over year adjustment in prices to clear the market. Moreover, the uncertainties regarding the prospects for Fannie and Freddie may provide another disruption to a mortgage market that cannot yet function properly without the twin government sponsored giants. The housing market will turn around one day. But that day is not today and the market will not observe it until prices fall another 10% and the large outstanding question of the twin GSEs is settled. Until then, this is all but prologue. Ratings & Dividend Changes - August In a note to clients on 8-25, Citi analyst Greg Ketron upgraded BB&T to "Buy" from "Hold," noting the bank's improving margins and solid revenue growth. Ketron also raised his target price on the stock to $34 from $29. "Despite having a large homebuilder construction book, credit has held up as the markets BB&T operates in have not faced the overbuilding and home price declines other markets have experienced," Ketron wrote. What's more, the Winston-Salem, N.C.-based bank has been able to generate solid core revenue growth of 8 percent in the first half of 2008 in a difficult environment through loan and fee growth, Ketron said. BB&T has largely avoided exposure to investments that are proving problematic for many other banks, specifically, collateralized debt obligations, or CDOs, and structured investment vehicles. Additionally, Ketron said the bank's strong capital levels reduce the risk of a dividend cut or a dilutive capital raise. Ketron, trimmed his full-year profit estimate to $2.69 per share from $2.73 per share, on expectations for a slight increase in credit costs. Analysts polled by Thomson Reuters, on average, anticipate earnings of $2.77 per share in 2008. Ratings & Dividend Changes - July On 7-02 SSUSQ was upgraded by Keefe, Bruyette & Woods. On 7-03 FirstMerit [FMER] was downgraded to hold. FirstMerit operates in northern and central Ohio and western Pennsylvania. FMER's net income increased by 0.1% when compared to the same quarter one year prior, edging up from $31.42 million to $31.44 million. Compared to other companies in the industry and the overall market, FirstMerit's return on equity exceeds that of both the industry average and the S&P 500. FirstMerit, with its decline in revenue, underperformed when compared the industry average of 22%. Since the same quarter one year prior, revenue dropped by 3.6%. FirstMerit had been rated a buy since April 2008. On 7-14 ASBC declared a dividend of $0.32/share payable Aug. 15 to shareholders of record Aug. 7. On 7-17 WL declared a dividend of $.345 payable Aug. 15 to shareholders of record as of Aug. 1. On 7-17 NTRS declared a dividend of $.28 payable on Oct. 1 to shareholders of record as of Sept. 10. On 7-22 CMA declared a dividend of $0.66/share payable October 1, 2008, to shareholders of record September 15, 2008. On 7-24 ONB declared a dividend of $0.23/share payable September 16, 2008, to shareholders of record September 2, 2008. On 7-29 NAL declared a dividend of $.07/share to be paid on August 19, 2008 to shareholders of record on August 8, 2008. Home Page Factoids Previous Update |