Anyone like bank stocks?

[brewer12345]

Dividends Paid (107,413) (98,569) (87,452) (82,851)
Sale/Purchase of Stock 136,795 106,258 60,790 44,199
It appears from the quarterly dividends above that CSE is financing it's dividend through the issuance of stock.

And I do not know of all their loans but any businsess that more than triples it's balance on loans in 2 years can't be using a real high level of control on their loans. Additonally it appears to me CSE loves condos, office buildings and hotels.
Long Term Investments 14,304,542 6,269,167 4,184,425

Retained Earnings (56,067) (17,444) 18,460 26,406
Capital Surplus 2,302,393 2,139,421 2,024,761 1,950,721
And this quarterly look at retained earnings looks mighty suspicious to me, although I do not understand accounting practice for banks. But 400 million in cash provided in one year by stock sold in excess of par may not be the EASIEST financing to maintain with a dropping stock price.

Difference of opinion is what makes a market.

Analyzing finance cos and institutions is not like looking at industrials.

 

[Running_Man]

Difference of opinion is what makes a market.

So you do not feel the sale of 400 million in stock is paying for the 400 million in dividends? Seems like a clear relationship to me and not a payment out of earnings. The other major source of cash in the past year is borrowings, Operating earnings seem to be mainly a non-cash generator

 

[haha]

An awful lot of thebanks that went under back then were due to two things: A) fraud and/or B) lending long and borrowing short. The latter is disastrous when rates rise.

Fraud applied almost exclusively to a group of S&Ls, not masjor commercial banks. It may be that no Texas bank with a national charter survived that period as an independent.

Interfirst was a major Dallas bank, equity disappeared. Some thing happened to almost all the major commercial banks. As Texas Proud said, most were merged, but under the gun and with no value left on the balance sheet except for the insured depositors.

Also, I don't believe it was a case of duration mismatch. An oil well requires a fair amount of money up front, but depending on its nature a successful well starts producing cash to service the debt pretty early. What happened had little or nothing to do with timing- what happened is that loans were made against projected cashflow that suddenly just wasn't going to happen because of severe and abrupt drops in the price of both crude and natural gas.

Ha

 

[Milton]

Personally I wouldn't be in any rush to put money in US banks. Not only do they have a long history of below-par management and a large exposure to CDOs, the US$ is a rapidly weakening currency and will significantly shrink the value of your investment.

Just my opinion.

 

[wildcat]

Personally I wouldn't be in any rush to put money in US banks. Not only do they have a long history of below-par management and a large exposure to CDOs, the US$ is a rapidly weakening currency and will significantly shrink the value of your investment.

Just my opinion.

I assume you are speaking to the multi-national mega cap banks right?

 

[Milton]

Any US banks.

 

[teknobucks]

the problem....
FIAT EMPIRE - Why the Federal Reserve Violates the U.S. Constitution



the answer...
RON PAUL...he's running as a republican but don't let that label fool u

YouTube - Ron Paul : Stop Dreaming

 

[brewer12345]

Any US banks.

Have you, um, looked at the balance sheet of the typical US retail bank? Most of them hold securities, but the vast majority of these portfolios are treasuries, agencies, and GSE backed paper (i.e. stuff with implicit or explicit US gummint guarantees).

 

[BUM]

the problem....
FIAT EMPIRE - Why the Federal Reserve Violates the U.S. Constitution



the answer...
RON PAUL...he's running as a republican but don't let that label fool u

YouTube - Ron Paul : Stop Dreaming

Red Flag!

 

[FIRE'd@51]

the problem....
FIAT EMPIRE - Why the Federal Reserve Violates the U.S. Constitution

Gee, could you at least give us an "executive summary", so we can decide if it's worth watching a one-hour video?

 

[Milton]

Have you, um, looked at the balance sheet of the typical US retail bank? Most of them hold securities, but the vast majority of these portfolios are treasuries, agencies, and GSE backed paper (i.e. stuff with implicit or explicit US gummint guarantees).

Point One: If you compare the Tier One ratios of US retail banks to other options (e.g., Canadian banks), you will see that the American banks are far from the most solvent.

Point Two: The ongoing weakness of the US dollar will effectively cancel out any capital gains that may occur. Are you, um, aware that the US$ has steadily declined relative to pretty much all major currencies over the past few years, with no end in sight? This trend will only accelerate if China pulls the trigger on all the US debt it currently holds (not saying that will happen anytime soon, but see China threatens to trigger US dollar crash - Telegraph). Guarantees issued by the federal government are increasingly suspect.

 

[roadtoharvard]

Anyone have thoughts on USB? Yielding 5.28% battered by sub prime fears and buffett pick.

 

[Hamlet]

I've bought it recently. We will see.

Anyone have thoughts on USB? Yielding 5.28% battered by sub prime fears and buffett pick.

 

[clifp]

I have been looking to sell puts on USB in the hopes of picking it up lower. USB is one of the most profitable banks in the US. I suspect that the next year won't see a profit increase but with high secure dividend and PE in the 10-11 range, I am not to worried about dropping below 25.

 

[brewer12345]

Point Two: The ongoing weakness of the US dollar will effectively cancel out any capital gains that may occur. Are you, um, aware that the US$ has steadily declined relative to pretty much all major currencies over the past few years, with no end in sight? This trend will only accelerate if China pulls the trigger on all the US debt it currently holds (not saying that will happen anytime soon, but see China threatens to trigger US dollar crash - Telegraph). Guarantees issued by the federal government are increasingly suspect.

Dunno about you, but I am a USD-based investor and I spend dollars every day, not euros or yen.

If the feddle gummint's money is no good anymore, I've got bigger problems than a few bank stock positions. And the USD circling the bowl is hedged via other ositions.

 

[Hamlet]

I'm investing in guns, canned goods, and gasoline.

Dunno about you, but I am a USD-based investor and I spend dollars every day, not euros or yen.

If the feddle gummint's money is no good anymore, I've got bigger problems than a few bank stock positions. And the USD circling the bowl is hedged via other ositions.

 

[wildcat]

Anyone have thoughts on USB? Yielding 5.28% battered by sub prime fears and buffett pick.

USB is a pretty conservative bank and as far as I know, they don't have much exposure to the subprime debacle. One of their gems is the payment processing biz. Good margins & cash flow positive unit that doesn't get a lot of attention.

 

[unclemick]

I'm investing in guns, canned goods, and gasoline.

In the 70's it was freeze dryed food - 7 years worth.

heh heh heh - still have my 10% joint venture in a Patented gold mine from 1973 or so. And a few shares of UBS(not USB) - that's Swiss don't cha know.

 

[hayekcapitalist]

I like BAC. Micro factors: At or slightly above its 52 week low; reasonalby low PEG; +-5.4% div yield; good at consolidating large acquisitions with accretion to bottom line and just bought Chicago's LaSalle bank; possibly largest credit card issuer in the world (has a government contract for same)= makes $ from fees; not "over"-exposed to mortgage lending;.

Macro factors: U.S. economy is stronger and more resilient than acknowledged by many ergo if economy does well banks nad BAC will perform accordingly.

Caveat: Fed will probably cave to political pressure to cut rates presenting increased moral hazard to responsible adults.

 

[rawg]

bac

I like BAC. Micro factors: At or slightly above its 52 week low; reasonalby low PEG; +-5.4% div yield; good at consolidating large acquisitions with accretion to bottom line and just bought Chicago's LaSalle bank; possibly largest credit card issuer in the world (has a government contract for same)= makes $ from fees; not "over"-exposed to mortgage lending;.

BAC does look pretty good, my getting in would be about $46.

 

[Milton]

Dunno about you, but I am a USD-based investor and I spend dollars every day, not euros or yen.

Well, you can [-]bury your head in the sand[/-] ignore the ongoing debasement of the currency if you wish. We are all free to make our own investment decisions, which is as it should be.

Personally, I look for the best risk-reward balance I can find, and am not wedded to any particular country or currency. And I like to travel and purchase imported goods (pretty difficult not to, these days).

 

[unclemick]

I bellied up to the bar and bought BAC(then Fleet Boston) and good old JP Morgan in the 90's when they were getting hosed due to Argentina defaulting on loans.

Done good.

If nobody loves em again for a while - may buy some more.

heh heh heh - regular NFL season gets going good in September - also my usual stock picking time.

 

[FIRE'd@51]

I have noticed that the implied volatilities are lower on BAC options than some of the other big money-center banks. Could the market be telling us something about relative risk?

 

[Running_Man]

I bellied up to the bar and bought BAC(then Fleet Boston) and good old JP Morgan in the 90's when they were getting hosed due to Argentina defaulting on loans.

Done good.

I am mystified how with just a minor correction to see people talk of these bank stocks like they are the deal of the century. Bank of America is down 11% from it's all time high. In the early 90's BAC and JP Morgan dropped 75% from their high. In the last 9 years any gain from holding this stock is primarily the dividend as the stock is only averaging a 1.6% gain per year from it's capital appreciation.

Bank stocks are like auto stocks capable of wide swings back and forth. to get a little dip in them as we have so far does not make them comparably cheap as they were in the early 90's. The Fed and the capital markets are awfully worried about the state of outstanding loans to make this stock look like an absolute bargain. At 12 I'd be willing to look at it and think the worst was priced in. At this price you'd be thinking the liquidity squeeze and deflation of the housing assets as a non-factor to future performance of banking, a scenario that I do not see having hit any kind of a bottom.

 

[al_bundy]

Morgan Stanley is now trading below it's 52 week low. the others are getting close. earnings warning season starts after labor day. i would wait at least until next quarter's conference calls to see what their exposure is and what is the damage.

last numbers i heard with new lending standards something like 30% of 2005 and 2006 buyers are locked out of the mortgage market

there is just as much political pressure on the fed to keep rates than cut them. bernanke is going to be up for another appointment by the next president. if he holds rates it's going to be a democrat in the white house who is going to ride the white horse of bringing an economy out of recession. if he cuts rates than who knows what will happen. remember what happened with Bush/Greenspan even though it was really Perot who cost Bush the election. and the Fed is the least political job there. Reagan and Bush both complained about Paul Volcker and Greenspan and their high rates.


PPI wasn't exactly stellar today, so the chances of a rate cut may have just gone down