Nomura Securities on U.S. Banks: Summary of Recent 10-Ks (PNC, COF, STI & C)
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Up: 8 | Down: 5 | New: 26
Rating Summary:
22 Buy, 13 Hold, 2 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Nomura Securities on U.S. Banks: Summary of Recent 10-Ks
Analyst, Glenn Schorr, said, "Legal risk remains: Last year banks started disclosing potential legal costs above what has already been reserved. This year’s tally is $16bn across the banks, up ~25% year on year. For perspective, this is 7% of consensus earnings over the next two years – so it is not going to kill anyone, but it is an annoying expense drag."
"Putbacks – progress made but not done: Some banks disclose potential putback expense above existing reserves. These disclosures suggest most banks are about 2/3 of the way through the putback problem. The pipeline of industry putback requests stands at $25bn as of 4Q11, up 16% linked quarter."
"Credit healing: Commercial criticized loans were down 7% qoq and 25% yoy, with declines at every bank. At the big banks, home equity disclosures indicate a typical 10-year revolving period, suggesting any credit loss acceleration from hitting amortization periods is still years away. ~40% of home equity is currently making interest-only payments."
PNC Financial (NYSE: PNC) 1Q12 charge: $0.20 integration charge in 1Q12; Capital One (NYSE: COF) 1Q12 gain: $0.20 gain expected in 1Q12 from selling Visa (NYSE: V) stock; and SunTrust (NYSE: STI & Citi (NYSE: C) re-casted 4Q11: to include the state AG settlement. STI final EPS $0.13 vs. originally reported $0.28. Citi final $0.31 vs. $0.38 before.
Analyst, Glenn Schorr, said, "Legal risk remains: Last year banks started disclosing potential legal costs above what has already been reserved. This year’s tally is $16bn across the banks, up ~25% year on year. For perspective, this is 7% of consensus earnings over the next two years – so it is not going to kill anyone, but it is an annoying expense drag."
"Putbacks – progress made but not done: Some banks disclose potential putback expense above existing reserves. These disclosures suggest most banks are about 2/3 of the way through the putback problem. The pipeline of industry putback requests stands at $25bn as of 4Q11, up 16% linked quarter."
"Credit healing: Commercial criticized loans were down 7% qoq and 25% yoy, with declines at every bank. At the big banks, home equity disclosures indicate a typical 10-year revolving period, suggesting any credit loss acceleration from hitting amortization periods is still years away. ~40% of home equity is currently making interest-only payments."
PNC Financial (NYSE: PNC) 1Q12 charge: $0.20 integration charge in 1Q12; Capital One (NYSE: COF) 1Q12 gain: $0.20 gain expected in 1Q12 from selling Visa (NYSE: V) stock; and SunTrust (NYSE: STI & Citi (NYSE: C) re-casted 4Q11: to include the state AG settlement. STI final EPS $0.13 vs. originally reported $0.28. Citi final $0.31 vs. $0.38 before.
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