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The Q2-09 div is used for yield calculations. CATY, CYN, UCBH & WTNY have lowered their Q2-09 divs - CATY, RF and ZION have reduced their Q3-09 divs and PCBC and UBCH have eliminated their divs. Negative EPS estimates will crash this javascript. The lowest EPS estimate that I use is $0.10. So the Div/EPS ratios are inaccurate for banks with negative EPS estimates [CNB, EWBC, FHN, PCBC, RF, UCBH, ZION]. Book values are still the Q2-09 ending values. 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. UMB Financial will drop Moody's ratings AP 8-26 Bank holding company UMB Financial said Wednesday it will no longer use Moody's Investors Service to rate its credit, nor that of its UMB Bank NA subsidiary. UMBF said it will continue to use Fitch Ratings and Standard & Poor's for credit ratings services. UMB said it does not have any public debt outstanding so it believes that two ratings agencies are sufficient. Moody's could not immediately be reached for comment. However, on Tuesday the firm withdrew its ratings for UMB Financial and UMB Bank, citing business reasons. It did not elaborate. UMB Financial's senior debt was rated "A3," six notches below the top triple-A rating and four notches above junk status. UMB Bank is rated an investment-grade "A2" for deposits and "C+" for bank financial strength. The last rating action on UMB was on March 12, when Moody's affirmed the company's ratings with a stable outlook. Banks' credit costs likely to begin moderating in 2010 AP 8-19 Banks should begin to show signs of earnings recovery in the coming months as questions about credit quality begin to dissipate, BMO Capital Markets analyst Lana Chan wrote in a research note on 8-19. When combined with a stabilizing housing market, less tightening of underwriting standards, and a decline in the growth rate of problem assets and early delinquencies, credit costs should moderate in 2010. Banks have been hammered by mounting loan losses as more people fall behind on repaying debt amid the recession and rising unemployment. The sector, however, has largely been re-capitalized and has rebuilt reserves to record levels, which is a key difference from a year ago, Chan wrote. Most banks have sharply increased loan-loss provisions to protect against rising defaults during the first half of 2009. Even so, early delinquencies, or loans that are 30 to 89 days past due, declined for regional banks, she wrote. "Delinquencies have typically shown improvement in the second quarter reflecting tax benefits and a better home selling season, while delinquencies in the second half of the year have increased," Chan wrote. However, she warned, "Given the tenuous state of the economy, there is a risk that this improvement in delinquencies will reverse in the back half of the year, as we have seen in the past." Chan maintained an "Outperform" rating on the sector. Her top turnaround picks are Fifth Third Bancorp and East West Bancorp Inc. Chan's higher-quality recommendations are BOK Financial Corp., Prosperity Bancshares Inc., Signature Bank, TCF Financial Corp., and U.S. Bancorp. UCBH Reports Q2 Estimates Business Wire 8-06 San Francisco's UCBH Holdings reported selected preliminary financial information. FTE Net interest income is estimated at $70.6 million. Noninterest income is estimated at $7.4 million. Net loan charge-offs are estimated to be in a range of $275 million to $300 million. Nonperforming assets are estimated to be in a range of $835 million to $875 million at June 30, 2009. With total assets estimated at $12.8 billion, NPAs to assets [using midpoint $855 for NPAs] were 6.68%. Total loan delinquencies are estimated to decline by approximately $143 million, or 59.4%, from 3.13% of total loans in the first quarter of 2009 to 1.36% of total loans in the second quarter of 2009. UMPQ Announces Offering Business Wire 8-11 Umpqua announced it has commenced an underwritten public offering of $175 million of its common stock. The net proceeds from the offering will qualify as both tangible common equity and regulatory Tier 1 capital and will be used for general corporate purposes, which may include capital to support growth and acquisition opportunities and to position the Company for the eventual redemption of preferred stock issued to the U.S. Treasury under the TARP Capital Purchase Program. Ratings & Dividend Changes - August On 8-25 B. Riley Downgraded FNB from Buy to Neutral. On 8-21 Wunderlich Initiated coverage on BXS at Hold. On 8-07 Sterne Agee Downgraded WTNY from Buy to Neutral. On 8-17 Keefe Bruyette Upgraded UMPQ from Underperform to Market Perform. On 8-06 Keefe Bruyette Downgraded FNB from Outperform to Market Perform. On 8-05 Keefe Bruyette Upgraded CATY from Underperform to Market Perform. On 8-05 Keefe Bruyette Downgraded CYN from Outperform to Market Perform. On 8-03 Sterne Agee Downgrade FNB from Buy to Neutral. On 8-18 HBHC declared a dividend of $0.24/share payable September 15, 2009, to shareholders of record as of September 8, 2009. On 8-19 FNB declared a dividend of $0.12/share payable on September 15, 2009, to shareholders of record as of the close of business on September 1, 2009. On 8-26 WTNY declared a dividend of $.01/share payable on October 1, 2009 to shareholders of record as of September 15, 2009. Deutsche Bank Downgrades Regions On 8-20 Deutsche Bank analyst Matt O'Connor downgraded RF to "Hold" from "Buy" because a recent surge in its share price brought it in line with expectations, and the regional bank could still face steep losses from commercial real estate exposure. In a research note, O'Connor said Regions shares have surged 44% since he upgraded shares in May, significantly outperforming the broader banking sector. That rise brought Regions share price in line with O'Connor's trough tangible book estimate of $5.50 and just above his price target of $5. Aside from the recent share price gains, O'Connor said Regions Financial still could face large losses from its exposure to commercial real estate loans. It is widely expected defaults on those types of loans will increase sharply in the coming quarters, putting pressure on banks' earnings. "We continue to believe commercial real estate-related losses will be much higher than the market expects for banks overall," including at Regions Financial, O'Connor wrote in the note. Goldman Sachs Downgrades Regions On 8-03 Goldman Sachs analyst Brian Foran cut his rating on RF to "Neutral" from "Buy." He wrote in a research note that since he upgraded the stock in June, its share price has risen, but credit quality has worsened. While Foran said the second quarter might be the peak for non-performing assets at Regions Financial, "improvement may come in the shape of an L rather than a V," meaning credit quality is unlikely to significantly improve until 2010. During the second half of 2009, Regions Financial will continue to face easing land, homebuilder and Florida home equity loan problems, Foran said. At the same time, it will face the start of problems in the commercial real estate sector, he added. Foran said the increase of non-performing assets increased much more than expected during the second quarter and rose from already elevated levels the previous two quarters. Foran maintained a $4.50 price target. Home Page Factoids Previous Update |