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Using the Forecaster Model In 2006, geography was destiny - and the metrics were misleading. It was a winning strategy to 'avoid' California and Oregon and 'buy' Texas and Oklahoma. The stocks that the analyst liked did not out-'total return' the stocks the analysts did not like. The low yielders failed to out-return the high yielders. Nor was buying the high P/E stocks or high Price/Book stocks a winning strategy. In a sector where the dividend payout ratio varies from 21% to 80%, it is not a surprise that the dividend discount model fails to be predictive. This sector sells at a fairly consistent P/E ratios despite wide variations in CAGRs. That is not logical. And the CAGRs also fail to be predictive of the stocks with high price to book ratios. That is not logical. I am not giving up hope that this sector can be forecasted. But my readers should be pessimestic about the predictions in the forecaster spreadsheet until it shows more signs of some success. This is the link to the 2006 stats for this sector, showing the projections based on 2006 begining of the year stats - along with the 2006 returns in the 'forecasting' spreadsheet which is the last of five spreadsheet posted - or roughly in the middle of the long page. This is the link to the 2007 stats page. Some Bank Say No to Bailout CNN Money 11-03 Cullen/Frost Bankers, a San Antonio-based bank with $14.1 billion in assets, announced Friday that it has decided to not ask for funding through TARP, the Treasury Department's Troubled Assets Relief Program. Since the TARP program was launched last month, dozens of banks have received approval for a government investment, and many more are expected to apply before the deadline on Nov. 14. But it looks as if Cullen/Frost really doesn't need the money. Earnings per share are expected to fall only about 3% for the full year, compared to expectations of a 67% drop in profits for the financial-services sector overall, according to data from Thomson Baseline. And Cullen/Frost's stock is actually up 13% this year, an astonishing feat in this market. "Cullen/Frost is well capitalized now and for the foreseeable future, with sufficient capital to grow our business and take advantage of acquisition opportunities," said Dick Evans, Cullen/Frost's chairman and CEO in a statement. If a bank is truly well-capitalized, why would it willingly agree to dilute its current shareholder base as well as to restrictions on executive compensation and dividends it can pay? Cullen/Frost is not alone. First Citizens BancShares (FCNCA), a Raleigh, N.C.-based bank with $16.7 billion in assets, also said it is not interested in a Treasury investment. ""We are not taking TARP funding. Our capital ratios are excellent and we don't need a capital infusion," said a company spokesperson. After the closing bell Monday, Kansas City-based UMB Financial (UMBF), also announced that it would not apply for funding from the government. The bank has been another one of the few to buck the downward trend this year: earnings per share are expected to increase 37% and the company's stock has risen 20%. We'll probably see more such announcements. One lawyer who works closely with financial firms said that some banks that think they may not need TARP funding do need to think about the advantages that their peers may get from receiving a capital boost. "If a lot of banks get TARP money, the banks that don't have TARP may have lower capital ratios compared to their peers and regulators and lenders do look closely at peer comparisons," said Chip MacDonald, a partner with the capital markets group at law firm Jones Day. Ratings & Dividend Changes - November On 11-05 PACW declared a dividend of $0.32/share payable on November 26, 2008 to stockholders of record at the close of business on November 14, 2008. On 11-18 HBHC declared a dividend of $0.24/share payable December 15, 2008, to shareholders of record as of December 5, 2008. On 11-19 FNB declared a dividend of $0.24/share payable on December 15, 2008, to shareholders of record as of the close of business on December 1, 2008. On 11-19 WTNY declared a dividend of $.20/share payable on January 2, 2009 to shareholders of record as of December 15, 2008. This dividend represents a reduction of $.11/share [35%] from the quarterly dividend rate paid in Q3-08. On 11-03 B. Riley & Co Downgraded CATY from Buy to Neutral and B. Riley & Co Downgraded UCBH from Buy to Neutral. . On 11-05 Bernstein raised their ratings on Fifth Third, Regions Financial and Comerica from Market Perform to Outperform as they looked undervalued compared with expected 2010 earnings. On 11-14 Morgan Keegan raised Colonial BancGroup (CNB) to "outperform" from "market perform," as it believes the recent sell-off in the financial services company's shares is overdone and has created an attractive entry point for investors. Colonial's shares stand to gain whether the company gets U.S. Treasury funding or not, because if it does not receive approval, it will potentially be sold at a price closer to its stress case $4.50 tangible book value, analyst Robert Patten wrote in a note to clients. CNB's shares have fallen 65% since Colonial posted a wider-than-expected third-quarter loss and suspended its quarterly dividend on Oct. 22. The decline was aided by the uncertainty surrounding whether or not it will receive capital under the U.S. Treasury's capital purchase program, the analyst said. Despite the present downturn in the Florida economy, demographic trends should be positive for the state longer term, making Colonial, which is ranked sixth in terms of deposit market share in Florida, attractive to a host of potential buyers, Patten said. "More importantly, with a current market capitalization of $510 million, Colonial is bite-sized for several regional/national as well as foreign banks to make a play," he added. Ratings & Dividend Changes - October On 11-05 Bernstein Research downgraded U.S mid-cap banks Synovus and Marshall & Ilsley Corp to "market perform" from "outperform" and raised its rating on Fifth Third, Regions and Comerica to "outperform" from "market perform", all on valuation. The brokerage cut its ratings of Synovus and Marshall & Ilsley "on both valuations approaching our price targets and prolonged weakness in residential construction portfolios, where losses are likely to exceed our prior forecast," it said in a note to clients. Bernstein said it raised Fifth Third, Regions Financial and Comerica as they looked undervalued compared with expected 2010 earnings. "Looking out 12 months, we believe the market will focus on a sequentially better 2010 and more normal tangible returns of 16 to 18 percent," it said. Bernstein said it saw a peak in charge-offs in the third quarter of 2009 at the earliest. On 10-08 Stifel Nicolaus Initiated BOH, UMPQ and WABC at Hold. On 10-10 Stifel Nicolaus Initiated WABC at Hold. On 10-13 Stifel Nicolaus Upgraded FHN from Hold to Buy and Sterne Agee Upgraded FHN from Hold to Buy. On 10-15 Sterne Agee Downgraded WTNY from Hold to Sell and DA Davidson Upgraded UCBH from Neutral to Buy. On 10-17 Friedman Billings Downgraded ZION from Outperform to Market Perform. On 10-31 Janney Mntgmy Scott Downgraded FHN from Buy to Neutral. On 10-01 BXS declared a dividend of $0.22/share payable January 2, 2009 to shareholders of record at the close of business on December 15, 2008. On 10-16 RF declared a dividend of $0.10/share payable January 2, 2009, to stockholders of record as of December 17, 2008. On 10-22 FHN declared a quarterly dividend, payable in shares on 1-01-09 at the rate of 1.837 new dividend shares will be distributed for every 100 shares of stock - or the equivilent of $0.20/share given FHN's volume weighted average stock price on Oct. 16 of $10.8876 per share. On 10-23 CYN declared a dividend of $0.48/share payable on November 19, 2008 to stockholders of record on November 5, 2008. On 10-23 CFR declared a dividend of $0.42/share payable December 15, 2008 to shareholders of record on December 1 of this year. On 10-23 WABC declared a dividend of $0.35/share to shareholders of record at the close of business on November 3, 2008 payable November 14, 2008. On 10-27 BOH declared an increased dividend of $0.45/share payable on December 12, 2008 to shareholders of record at the close of business on November 28, 2008. On 10-27 EWBC declared a dividend of $.10/share payable on or about November 24, 2008 to shareholders of record as of November 10, 2008. On 10-27 PRSP declared an increased dividend of $0.1375/share payable on January 2, 2009 to all shareholders of record as of December 12, 2008. On 10-28 TRMK declared a dividend of $0.23/share payable December 15, 2008, to shareholders of record on December 1, 2008. On 10-28 BOKF declared a dividend of $0.225/share payable on December 2, 2008 to shareholders of record as of November 14, 2008. On 10-31 CBSH declared a dividend of $0.25/share payable December 1, 2008 to stockholders of record at the close of business on November 14, 2008 and a 5% stock dividend. Home Page Factoids Previous Update |