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The Q1-09 div is used for yield calculations while not all Q1 dividends have been declared 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. When bad banks buy worse banks Paul R. La Monica, CNN Money 2-09 Nine banks have failed so far this year. In most cases, the FDIC immediately found a buyer for the failed banks. But none of that means everything is A-OK. In several cases, failed banks have been taken over by banks that are also struggling. For example: Regions Financial, which acquired the assets of FirstBank Financial Services of McDonough, Ga., after it failed Friday, is expected to lose $705.8 million this year, according to consensus estimates of analysts. And this is Regions' second acquisition of a failed bank in the past year. Zions Bancorp, which is acquiring Alliance Bank of Culver City, Calif., another bank that failed Friday, is expected to lose $117.5 million in 2009. This is also the second purchase of a failed bank for Zions in the past year. And CenterState Banks of Florida (CSFL), which bought Ocala National Bank of Ocala, Fla., after it failed last month, posted a loss in the fourth quarter and is expected to lose money for the next two quarters. Is it a problem that weak banks are being allowed to buy failed banks? After all, shouldn't banks that have fewer problems of their own be the ones to scoop up more deposits and assets? Several industry analysts pointed out that the FDIC would not sell a failed bank to another bank that was also in imminent danger. In fact, some would argue that when the FDIC approves a takeover of a failed bank, it is an endorsement of the acquirer's own financial situation. To that end, shares of Zions Bancorp were up 2% Monday morning while shares of Regions surged 12%. Jason Goldberg, an analyst with Barclays Capital, who covers both Regions and Zions, wrote in notes to clients Monday morning that investors do view the deals as a "signal from the FDIC that the buyer is 'healthy.'" He added that the purchases should add to earnings for the two banks. However, it's debatable if the one-day pop in Regions and Zions means that either bank is out of the woods. Shares of Regions and Zions are both down about 40% this year. Clearly, investors are worried about the long-term health of the two institutions. And even though the FDIC has largely won raves for how it has handled the banking and credit crisis, its judgment isn't perfect. Remember, before Wells Fargo agreed to scoop up all of Wachovia last year, the FDIC originally brokered a deal for Citigroup to buy the banking assets of Wachovia. Imagine how much worse shape Citigroup, which has already received $45 billion in bailout funds and more than $300 billion in loan loss guarantees, might be in if it was also trying to integrate Wachovia. Nonetheless, another bank analyst noted that it's important to differentiate between how a bank's stock is doing and how the actual operations of the bank are faring. "In this day and age, some of the best banks I know are struggling with asset quality issues and investment issues that they will get through," said Bill McDonald, managing director with RSM McGladrey, a Minneapolis-based accounting and consulting firm focusing on mid-sized institutions, including community banks. And to be fair, not all acquirers of failed banks are faring poorly. Westamerica Bancorp (WABC), which bought the third bank that failed last Friday, County Bank of Merced, Calif., has remained profitable throughout the credit crisis and actually increased its dividend last month. BB&T, which acquired Haven Trust Bank of Duluth, Ga., after it failed in December, has also been one of the better performing regional banks during the economic downturn. "Regulators are doing a good job, when arranging a marriage, of making sure it's confident the buyer is someone that's holding up well," said McDonald. More Than 1,000 Banks May Fail In Coming Years Alistair Barr, WSJ 2-09 More than 1,000 banks may fail during the next three to five years as the recession intensifies and loan losses climb, an analyst at RBC Capital Markets estimated on Monday. In 2008, analyst Gerard Cassidy forecast 200 to 300 bank failures, but now he says the environment has deteriorated since then. "Residential mortgage delinquencies remain at record levels, home-equity loan defaults are steadily rising and residential construction and land loan non-performing assets are skyrocketing for lenders with excess exposure to the weakest housing markets in the U.S.," Cassidy wrote in a note to clients. "In conjunction with the slowdown in the economy, credit deterioration has accelerated in the commercial and industrial and commercial real estate loan areas," he said. Since the mortgage-fueled credit crunch erupted in 2007, 34 banks have failed in the U.S. While Washington Mutual became the biggest bank failure in history last year, Cassidy expects most of the banks that collapse will be relatively small, with less than $2 billion in assets. Cassidy and his colleagues have developed an early-warning system for spotting future trouble at banks using a calculation known as the Texas Ratio. It measures credit problems as a percentage of the capital a lender has available to deal with them. The formula divides the number of a bank's non-performing loans, including those 90 days delinquent, by its tangible equity capital plus money set aside for future loan losses. Cassidy came up with the ratio after covering Texas banks in the 1980s. He noticed that when problem assets grew to more than 100% of capital, most of the Texas banks in that precarious position ended up failing. Among the 50 largest U.S. commercial banks by assets, Sterling Financial of Spokane, Wash., had the highest Texas Ratio at the end of the fourth quarter. The ratio of 54% was up from 45.4% in the third quarter and 15.6% at the end of 2007, according to RBC data. Colonial BancGroup of Montgomery, Ala., had a ratio of 53.4% at the end of 2008, ranking it second among the top 50 commercial banks. That was up from 44.6% in the third quarter and 11.2% at the end of 2007. Popular was third with a ratio of 37.4%. But that was down from the 40.1% that the Puerto Rico-based bank had during the third quarter. Huntington Bancshares of Columbus, Ohio, was fourth with a ratio of 36.4% at the end of the fourth quarter. That was up from 21.1% in the third quarter, RBC data show. Banks have raised a lot of capital, both from the government and private investors, so Texas Ratios remain lower than may normally be the case at this point in the credit cycle, Cassidy explained. Wells Fargo saw its Texas Ratio drop to 15.5% at the end of the fourth quarter, vs. 19.3% in the third quarter. J.P. Morgan Chase had a Texas Ratio of 6.5% at the end of 2008, down from a ratio of 9.7% in the third quarter, Cassidy noted. Still, other big banks, including Citigroup, U.S. Bancorp and Bank of America saw their Texas Ratios climb during the fourth quarter, RBC data show. In his research report, Cassidy bluntly calls on investors to "avoid the bank stocks" during this precarious climate and gloomy outlook hanging over the industry. "We are nowhere near the end of this down leg in the current credit cycle," Cassidy said. "Bank stocks will likely remain under pressure as the industry confronts its credit problems, de-leverages and raises common equity over the next 12 months." U.S. credit card delinquencies reached all-time highs in January on the back of ongoing deteriorating conditions in the U.S. economy, according to a study released by Fitch on Feb 5th. The rate of payments missed by more than 60 days advanced 0.47 percentage points to an all-time high of 3.75% in January, according to the report. "U.S. consumers continue to struggle in the face of mounting pressures on multiple fronts, from employment to housing to net worth," according to Michael Dean, a managing director at Fitch. Ratings & Dividend Changes - February On 2-06 CFR was started at Buy by Wunderlich. On 2-06 CBSH declared a dividend of $0.24/share [compared to $0.25 last quarter] payable on March 27, 2009 to stockholders of record at the close of business on March 10, 2009. The dividend reflects an adjustment for the 5 percent stock dividend that was paid on December 1, 2008. On 2-18 FNB declared a dividend of $0.12/share payable on March 15, 2009, to shareholders of record as of the close of business on March 2, 2009. On 2-17 HBHC declared a dividend of $0.24/share payable March 16, 2009, to shareholders of record as of March 5, 2009. Ratings & Dividend Changes - January On 1-05 Keefe Bruyette Downgraded BOH, CFR, PCBC and PRSP from Market Perform to Underperform. On 1-05 DA Davidson Downgraded GBCI and UCBH from Buy to Neutral. On 1-09 B. Riley Downgraded TRMK from Neutral to Sell. On 1-12 Barclays Capital Upgraded CBSH and CFR from Equal Weight to Overweight and Barclays Downgraded EWBC and UCBH from Overweight to Equal Weight. On 1-14 Sun Trust Rbsn Humphrey Upgraded PRSP from Neutral to Buy. On 1-22 Wunderlich Initiated FHN at Buy. On 1-27 Keefe Bruyette Upgraded BOH from Underperform to Market Perform. On 1-28 B. Riley & Co Upgraded PRSP from Neutral to Buy. On 1-28 Keefe Bruyette Downgraded CNB from Outperform to Market Perform. On 1-28 Morgan Keegan Downgraded CNB from Outperform to Market Perform. On 1-29 Wunderlich Initiated HBHC at Hold. On 1-30 Bernstein Downgraded RF from Outperform to Market Perform. On 1-14 Analysts at RBC Capital Markets cut their profit estimates on several banks, citing participation in the government's financial rescue and further anticipated credit deterioration. The analysts lowered their earnings forecasts on Bank of America, Wells Fargo, City National (CYN), Northern Trust (NTRS), Zions Bancorp (ZION) and Umpqua Holdings (UMPQ). On 1-02 CATY declared a dividend of $0.105/share payable on January 21, 2009, to stockholders of record on January 14, 2009. On 1-15 RF declared a dividend of $0.10/share, payable April 1, 2009, to stockholders of record as of March 18, 2009. On 1-22 WABC declared an increased dividend of $0.36/ share outstanding to shareholders of record at the close of business on February 2, 2009. The dividend is payable February 13, 2009. On 1-26 BOH declared a dividend of $0.45/share payable on March 13, 2009 to shareholders of record at the close of business on February 27, 2009. On 1-27 TRMK declared a dividend of $0.23/share payable March 15, 2009, to shareholders of record on March 1, 2009. On 1-28 BOKF declared a dividend of $0.225/ share payable on or about February 27, 2009 to shareholders of record as of February 13, 2009. On 1-29 CFR declared a dividend of $0.42/share payable March 13, 2009 to shareholders of record on February 27 of this year. On 1-22 ZION declared a reduced dividend of $0.04/share [from $0.32] payable Feb. 25 to shareholders of record as of Feb. 11. On 1-26 FHN declared a distribution on April 1, 2009, to holders of its common stock, the regular quarterly dividend payable in common stock. The dividend rate will be 2.6673%, which means that 26.673 new dividend shares will be distributed for every 1,000 shares held on the record date of March 13, 2009. The dividend rate was determined to provide shareholders with new shares having a value of 20 cents for each share held on the record date, based on FHN's volume-weighted average stock price on Jan. 15 of $7.4983/share. On 1-22 CYN declared a reduced dividend of $0.25/share [as compared with $0.48 per share previously] payable on February 18, 2009 to stockholders of record on February 4, 2009. On 1-28 EWBC declared a reduced dividend of $0.02/share is payable on or about February 24, 2009 to shareholders of record on February 10, 2009. On 1-22 FNB's Board determined to reduce the dividend to $0.12/share, given the continued economic stress. The actual declaration of the dividend for the first quarter of 2009 typically occurs at the February Board of Directors meeting. On 1-29 PCBC declared a reduced dividend to $0.11/share from $0.22/share. PCBC also moved its dividend declaration date to the middle of the last month of each quarter, to be paid on the last business day of the quarter. The first quarter dividend will be paid March 31, 2009, to shareholders of record as of March 16, 2009. “In recognition of our [PCBC's] reduced profitability, the Board has determined that a reduction in our quarterly dividend payment is appropriate at this time." Home Page Factoids Previous Update |