XLF, Banking and Financial Sector Stocks

Top 139. Sep 20, 2000 7:14 AM

» Kirk - Lehman profit rises 58%, Announces Stock Split

Lehman profit rises 58%, Announces Stock Split
http://biz.yahoo.com/rf/000920/nrt000728...

Wednesday September 20, 8:45 am Eastern Time
Lehman profit rises 58 pct on trading, to split stock

NEW YORK, Sept 20 (Reuters) - Lehman Bros Holdings Inc., one of Wall Street's few remaining independent investment banks, on Wednesday reported a 58 percent rise in quarterly profits, driven by trading gains, and said its board approved a two-for-one stock split.

Lehman (NYSE:LEH - news) reported net income of $457 million, or $3.37 per share, for the fiscal third quarter, ended Aug. 31. That compared with profits of $290 million, or $2.20 per share, a year ago. The results easily beat average analyst estimates of $2.74 per share, according to First Call/Thomson Financial.

Net revenues were up 51 percent to $2.052 billion, driven by more than $1 billion in revenues from trading stocks and bonds and record revenues from advising on mergers and acquisitions (M&A). The 150-year-old firm, previously best-known for trading bonds, has shifted its focus overseas to lucrative businesses like stock trading and merger advisory.

Lehman said its stock split is payable Oct. 20 to shareholders of record as of Oct. 5. Its shares have surged more than 65 percent since June on speculation the company will be sold amid a wave of consolidation in the financial services sector.

Lehman shares closed in Tuesday trading on the New York Stock Exchange at $143-11/16, off from their year high of $160-1/4, set on Sept. 11.

-- posted by Kirk

Top 140. Oct 29, 2000 11:06 AM

» Kirk - Recap:

Recap:

Back in December 1999 as mentioned HERE some of us were buying Financial Stocks such as XLF as the 30 year bond hit 6.7%.

Here Rande says it isn't too late to buy BTO and XLF "PROVIDED it fits into your overall allocation and investment plan". I ONLY bought the XLF as I was using taxable dollars. (I DID buy some Fidelity Select Regional Bank in my IRA in addition to more XLF).

The chart below shows that BTO, XLF and FSRBX are up a good amount since we bought.

Then again on Feb 10th, 2000 I posted Here that I was rolling some HWP profit taking dollars ($124) into XLF.

In my newsletter and in my personal account, I ALSO bought BTTRX stripped Zero's to diversify out of technology and get some great rates while 30 year bonds were above 6.3%. Remember Rande was saying he was buying BTTRX when the 30 yr was above 6.25 and he sold for a very nice profit when rates dropped to 5.75%. I've held as I like the coupon plus I think rates could go lower but even if they don't the coupon is fine for me.

Too bad we didn’t' have a crystal ball that told us to sell ALL technology at the beginning of March, but I am happy with the results of profit taking then rolling the dollars into bonds and Financials last Spring!

-- posted by Kirk

Top 141. Nov 6, 2000 3:15 PM

» Rande - News:

News:

6:13 pm ET [CMB,JPM] CHASE MANHATTAN GETS DOJ OK TO BUY J.P. MORGAN

-- posted by Rande

Citigroup's 1st-Quarter Net Fell 8.2% As Bank of America's Declined 17%

Top 142. Apr 16, 2001 9:47 AM

» JenL_2 - Big Banks 1st Q Performance

This from 4/16 WSJ:

A WSJ.COM News Roundup

Citigroup Inc. and Bank of America Corp. were among a handful of big banks that Monday reported a fall-off in first-quarter profit amid weak investment performance.

Citigroup posted a 8.2% drop in net income, and Bank of America, which was hurt also by an increase in provisions for credit losses, suffered a 17% decline. First Union Corp., while announcing a major acquisition, also reported a 30% drop in net income. Meanwhile, Bank of New York Co. saw its net income jump 14% to match analysts' estimates.

Citigroup, the New York financial-services giant, said net income fell to $3.54 billion, or 69 cents a diluted share, from $3.86 billion, or 75 cents a share, a year earlier.

The latest quarter included an accounting adjustment of $42 million and an $80 million aftertax charge for severance and related costs. But even excluding items, the company results turned lower, to $3.66 billion, or 71 cents a share, from $3.94 billion, or 76 cents a share, a year earlier. Analysts surveyed by Thomson Financial/First Call expected Citigroup to report earnings excluding items of 70 cents a share in the latest period.

Citigroup's total revenue rose 6% to $21 billion. Excluding investment activities, revenue rose 11%. Return on equity in the first quarter was 22.5%.

Income from investment activities in the first quarter fell by $497 million, or 10 cents a share, to $136 million. Excluding investment activities, core income rose 7% from a year earlier.

Citigroup's Corporate and Investment Bank unit reported first-quarter core income of $1.01 billion, 21% lower than a year ago but 74% higher than the fourth quarter.

Citigroup said first-quarter income for its Global Corporate business fell 7% from the year-ago result but rose 38% from the fourth quarter.

The Global Consumer Finance unit earned $394 million in the first quarter, rising 28% on the strength of 19% revenue growth. Travelers Property Casualty Commercial Lines had first-quarter core income growth of 13%.

Bank of America's Results Top Estimates

Bank of America's net income slipped to $1.87 billion, or $1.15 a diluted share, from $2.24 billion, or $1.33 a share, a year earlier. The results topped analysts' estimates by three cents a share.

Bank of America, based in Charlotte, N.C., attributed the decline to a $415 million increase in the provision for credit losses and a $416 million decline in equity investment gains. Without these factors, earnings rose about 7% from a year ago.

Revenue fell 2% from a year earlier, reflecting a "significant drop in equity investment gains driven by the weakening stock market," the company said. The company's provision for loan losses rose 99% to $835 million from $420 million a year ago.

"We are pleased with our continued progress in meeting strategic goals and continue to see good customer flows across many business lines," Hugh L. McColl Jr., the bank's chairman and chief executive, said in a prepared statement. "It is clear, however, that the increasingly weak economic environment is making it difficult for our efforts to show up on the bottom line."

Nonperforming assets were $5.9 billion, or 1.5% of loans, leases and foreclosed properties at March 31, compared with $3.5 billion, or 0.9% a year earlier.

Bank of America's equity investments reflected the weaker equity markets and earned $35 million in the first quarter, compared to $301 million a year ago. Equity investment gains came in at $141 million, with return on equity registering at 6% for the quarter.

Revenue from credit-card fees rose 18% for the quarter due to increased purchase volume and a "sharp rise" in debit-card usage.

The latest quarter includes a $140 million gain from the sale of an interest in the Star ATM network, a one-time $83 million accounting charge and a charge of $41 million associated with the closing of Price Auto Outlet.

The bank's earnings from consumer and commercial banking rose 14% for the quarter to $1.09 billion from $954 million a year ago. Earnings from global corporate and investment banking fell 17% for the quarter to $604 million from $724 million a year ago.

Bank of New York's Earnings Jump 13.6%

Bank of New York said first-quarter earnings rose to $384 million, or 52 cents a share, from $338 million, or 46 cents a share, a year earlier. The results matched estimates generated by Thomson Financial/First Call.

"Our first-quarter results reflect the strength of our strategy in an uncertain business climate," said Thomas A. Renyi, Chairman and chief executive. "Despite declining equity values in the past quarter, our business model continues to perform well given the diversity of markets, products and client bases we serve throughout the world."

The company raised its loan-loss provision by 50% to $30 million from $20 million. Return on equity was 25.9% in the latest quarter compared with 27.1% last year.

Bank of New York's net interest income was $455 million in its latest quarter, compared with $447 million last year. Noninterest income was $858 million, compared with $737 million last year.

Bank of New York's fee revenue rose 23% in the first quarter to $458 million from $372 million last year. Private-client services and asset management fees rose 14% to $79 million and foreign exchange and other trading revenue rose 9% to $83 million.

Bank of New York said it still expects 12% to 14% full-year earnings-per-share growth, absent a further slowdown in the global markets. Last year, the company earned $1.43 billion, or $1.92 a share. In mid-December, the company had said it was comfortable with the 2001 consensus estimate of analysts surveyed by Thomson Financial/First Call, which was then, and remains, $2.17 a share.

First Union's Net Slips 30%

First Union Corp., which confirmed Monday that it would acquire Wachovia Corp. for $13.4 billion in stock, reported a 30% decline in first-quarter net income

The Charlotte, N.C., bank said net income dropped to $584 million, or 59 cents a share, from $840 million, or 85 cents a share, a year earlier. Results were hurt by decreased principal investing revenue, the winding down of divested businesses and a "difficult financial market environment," First Union said.

The latest period included a pretax restructuring charge of $116 million and a gain of $73 million on branch sales. Excluding items, the company reported operating income of $610 million, or 62 cents a share, on target with estimates generated by Thomson Financial/First Call.

First-quarter interest income fell 13% to $1.73 billion, while fee and other income fell 16% to $1.55 billion.

First Union said nonperforming assets rose 29% to $1.7 billion. Excluding $344 million of assets held for sale, nonperforming assets rose 5%.

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Let's take a look....

<img src="http://pvcharts.quicken.com/bin/icenter...." width=470 height=250>
Big Banks, BTO, XLF, S&P500, Nasdaq 1 YR Chart

<img src="http://pvcharts.quicken.com/bin/icenter...." width=470 height=250>
YTD Chart

Looks like our purchases of BTO and XLF in 12/99 were good moves.....Jen

-- posted by JenL_2

Top 143. Apr 16, 2001 10:08 AM

» Kirk - Re: Big Banks 1st Q Performance

In response to message posted by JenL_2:

Thanks for posting that great summary article Jen!

Looks like our purchases of BTO and XLF in 12/99 were good moves.....Jen

Indeed! here is a chart that shows just how good XLF has done since mid Dec 1999. I actually bought more in Feb 2000 after taking some HWP profits... Watermelon smile for those funds! Too bad I didn't sell ALL my HWP for XLF...

I also bought a little bit of FSRBX and it seems to track BTO ... Staying even is just fine compared to the S&P being down 15% in that same time so BTO and FSRBX are doing great (add in dividends they paid and they are probably up!)

XLF has been a bright spot the last 16 months or so!

-- posted by Kirk

SunTrust Makes Its Move for Wachovia With Unsolicited Bid of $14.54 Billion

Top 144. May 14, 2001 8:28 AM

» JenL_2 - More Merger Mania

We've recently discussed company buyouts in the Biotech, Energy, Lumber/Paper, and Food sectors - now the merger mania continues in the Financials....from 5/14 WSJ:

By NIKHIL DEOGUN and CARRICK MOLLENKAMP

SunTrust Banks Inc. (STI), moving aggressively to wrest a long-coveted competitor from the arms of another suitor, is making an unsolicited $14.54 billion bid for Wachovia Corp. (WB), SunTrust said Monday.

The board of SunTrust, based in Atlanta, has approved the stock-swap offer that was delivered Monday in a letter from SunTrust to Wachovia's directors.

The move comes less than a month after First Union Corp. (FTU) agreed to buy Wachovia in a transaction currently valued at $12.46 billion in stock. The hostile bid to break up a friendly marriage is sure to roil the courtly world of Southern banking and is an uncharacteristic move for SunTrust, considered the most genteel of the major Southeastern banks.

The First Union agreement stunned Wall Street because Wachovia, a storied franchise in Southeast banking, agreed to sell for only a tiny premium, and the buyer was a bank that has stumbled badly in recent years thanks in part to botched acquisitions. Furthermore, investors for more than a decade have expected Wachovia to merge not with First Union but with SunTrust, given the two banks' similarly conservative cultures and history of periodic merger discussions. Indeed, SunTrust came very close to inking a deal with Wachovia in December but the discussions fell apart at the 11th hour, people familiar with those discussions have said.

Now, SunTrust is offering 1.081 of its shares for each Wachovia share, which would value Wachovia at $70.06 a share based on Friday's closing price. The bid also is 16.7% higher than the current value of the offer from First Union, which has offered two of its shares for each share of Wachovia. In 4 p.m. Friday New York Stock Exchange composite trading, Wachovia, which had been trading strongly in anticipation of a competing bid, slipped 75 cents to $60.90, while First Union fell 26 cents to $30.02, 6% lower than before it announced the Wachovia deal. SunTrust shares closed at $64.81, down 23 cents, also on the Big Board.

As an additional sweetener, SunTrust would increase its annual dividend to $2.22 a share from the $1.60 expected for 2001 so that Wachovia shareholders, after receiving 1.081 of SunTrust shares, would effectively get the same $2.40 annual dividend they already receive from Wachovia. First Union recently slashed its dividend in half to 96 cents a share and is offering a special dividend of 48 cents a share to compensate Wachovia shareholders, but that payout is a one-time event only, whereas SunTrust would permanently increase its dividend. SunTrust is expected to file a proxy statement so it can solicit Wachovia shareholders to vote against the First Union deal.

While SunTrust's offer currently represents a significant premium, much will depend on how SunTrust investors react to the maneuver. Since SunTrust trades at a high price-to-earnings multiple, the deal is expected to add to SunTrust's earnings per share in the first year after merger-related charges. SunTrust should be able to extract $500 million in annual cost savings, people familiar with the matter say.

SunTrust's most potent weapon may be its stock, which has a solid track record, having risen 81% in the past five years compared with a 2% decline in First Union stock in the same period. Now, if First Union gets into a bidding war, it could damage its already wounded credibility.

The idea of a merger between SunTrust and Wachovia dates to the 1980s. Analysts have for years dubbed the potential merger as "the Coke and Smoke deal" because of SunTrust's close ties to Coca-Cola Co. and Wachovia's ties to R.J. Reynolds Tobacco Holdings Inc.

Under the conservative leadership of Robert Strickland and later James Williams, predecessors to current chief executive L. Phillip Humann, SunTrust stayed out of the acquisition fray partly because it feared a dilutive deal would anger shareholders. That enabled banks such as First Union and Bank of America Corp. to leapfrog past SunTrust. In 1998, the bank finally cast its lot by acquiring Crestar Financial Corp., a Richmond, Va., bank that gave SunTrust entree into Virginia, Maryland, and Washington, D.C.

Wachovia was always seen as the logical partner for SunTrust, since the Atlanta bank had no presence in the Carolinas, where Wachovia is strong, and the region represents a gaping hole in SunTrust's Southeast territory. In December, the two sides nearly clinched a deal but Wachovia seemed to get cold feet.

On the mid-April weekend before First Union and Wachovia announced their deal, SunTrust's top executives heard rumblings of the pending nuptials and called their counterparts at Wachovia, who kept SunTrust's CEO and finance chief in the dark. In a recent securities filing, Wachovia disclosed it received a call from an unnamed bank but that it had already considered a deal with this bank in late 2000 and determined it wouldn't benefit Wachovia shareholders.

The brushoff undoubtedly angered SunTrust, which apparently feels it was misled by Wachovia officials that April weekend. At the same time, SunTrust may have realized that with Wachovia in the hands of First Union, SunTrust's growth prospects would be limited. Buying Wachovia would give SunTrust the No. 1 market share in Georgia, Virginia and South Carolina.

Since SunTrust has no operations in the Carolinas, it likely wouldn't slash costs as aggressively and is expected to cut only 4,000 jobs, compared with the 7,000 First Union is planning to cut. By not cutting as much, SunTrust may endear itself to rank-and-file Wachovia employees and local politicians.

Winning Wachovia won't be easy, since First Union and Wachovia have granted each other options to buy 19.9% stakes in one another. In an unusual move, the banks are permitted to buy the stakes using cash, securities or any property, such as distressed loans or real estate. SunTrust is almost sure to challenge the takeover deterrent in court.

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<img src="http://pvcharts.quicken.com/bin/icenter...." width=470 height=250>
STI, WB, FTU, XLF, BTO, S&P500, DJIA, Nasdaq 1 YR Chart

Our XLF & BTO buys in 12/99 are still looking good. Wonder if this merger mania across sectors will lead us out of The Bear?......Jen

-- posted by JenL_2

Top 145. May 14, 2001 11:27 AM

» JenL_2 - Re: More Merger Mania

In response to message posted by JenL_2:

.....Jen

-- posted by JenL_2

Suit Against NetBank Points To Limits of Online Banking

Top 146. Jun 18, 2001 7:22 AM

» JenL_2 - Online or Brick&Mortar Banking?

This from 6/18 WSJ:

By STACY FORSTER

ShelleyRae Norbeck and Martin Lindhe were ready to close on their dream house in Seattle when they discovered a mysterious snag.

On May 12, they needed to show $6,000 in their account to cover closing costs. But NetBank Inc. had put an "administrative hold" on their account. In desperation, they renegotiated their mortgage to put less money down and pay a higher interest rate, which will cost them an extra $400 a month, say Ms. Norbeck.

The couple has filed a lawsuit against NetBank, and Ms. Norbeck says next time, she will stick with a company "that I know has a longstanding history with a brick-and-mortar bank."

That excludes NetBank. One of the leading Web-only banks, it has 230,000 accounts, $2 billion in assets, but not a single branch. The Alpharetta, Ga., company acknowledges that it froze a "small number" of the 50,000 accounts it acquired from online rival CompuBank.

The incident has sparked an uproar by former customers of Houston-based CompuBank and underscored the vulnerabilities of banking without branches.

"There's an advantage to being able to go and get in someone's face with the local bank," says Tony Pondel, a certified public accountant in Wilmette, Ill. He says his account at the old CompuBank was frozen for two weeks without explanation. During that time, Mr. Pondel couldn't get through to the bank by telephone to ensure it was processing checks he'd written to cover his business expenses.

"It was a total nightmare," Mr. Pondel says. In the end, none of his checks bounced, but he says he is finished with Internet-only banking.

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It is unclear how many CompuBank accounts were frozen as part of the NetBank acquisition. On Yahoo!, an Internet message board is brimming with purported former customers of CompuBank and claims that thousands were locked out of their accounts.

Officials of NetBank say only a few hundred customers had trouble during the rollover. "I know people were inconvenienced and I'm sorry for that," says D.R. Grimes, NetBank's chief executive officer. The freezes were part of NetBank's examination of the acquired CompuBank to screen for questionable addresses or other potential signs of fraud.

"It's something we do to protect our depositors from someone stealing their identity and making off with their money," says Mr. Grimes. He added that NetBank is pleased that the transition went smoothly for most customers.

But a former CompuBank executive close to the conversion says thousands of accounts were likely frozen in the change-over. NetBank used a computer program during the rollover that flagged 4,000 to 5,000 accounts with potential problem, the executive says.

Ms. Norbeck's lawsuit, filed in U.S. district court in western Washington, alleges that NetBank failed to uphold its responsibility to customers under the Expedited Funds Availability Act. The federal law passed in the mid-1980s was intended to ensure that customers have access to their funds within a reasonable amount of time. In the case of Mr. Lindhe and Ms. Norbeck, the funds had already been deposited and Keith Dubanevich, an attorney with the Seattle firm of Garvey, Schubert & Barer, which is representing Mr. Lindhe and Ms. Norbeck, said it was unreasonable for the bank to restrict them for so long.

NetBank's Mr. Grimes says the company has received the suit and will file a response shortly.

Mr. Dubanevich says more than a dozen other disgruntled CompuBank customers have contacted him about joining the lawsuit. The law firm is prohibited from seeking out others until it is certified as a class action.

The lawsuit and customer complaints are uncharacteristic setbacks for NetBank. The company has been profitable for 12 consecutive quarters, and is considered a leading independent online bank.

Its profit for quarter ended March 31 was $797,000, or three cents a share, down from $4.6 million, or 16 cents a share, a year earlier. But the company's shares have held up relatively well. At 4 p.m. on the Nasdaq Stock Market Friday, NetBank shares were down 50 cents to $9.50, but well off their 52-week low of $6.

The company has emerged as one of the leading consolidators in the Internet banking space, also picking up Market Street Mortgage, a mortgage originator with 40 offices in 11 states, in April.

Mr. Grimes said the company is likely to continue making acquisitions as the online banking industry consolidates. And though that opens the possibility for a repeat of the problems faced by some CompuBank customers, Mr. Grimes downplays the risk.

Still, NetBank and other Web-only banks may be limited by their lack of physical branches, analysts say. Jupiter Media Metrix, a New York e-commerce research firm, says 12.5 million households were banking online at the end of 2000, compared with the 21 million who are shopping online.

And data suggest that old-line banks with an online presence are recovering ground lost to Internet upstarts, said Jim VanDyke, an electronic finance analyst with Jupiter Research. Web traffic at banks that also have branches, including Bank of America, Chase and Citibank, is up 44% in the last six months, according to Jupiter Media Metrix. During the same time period, traffic was up only 32% at pure-Internet banks such as NetBank and E*Trade Bank, a unit of E*Trade Group Inc. with about 400,000 accounts.

Customers place high value on branch access, says Mr. VanDyke. According to a recent survey of nearly 4,000 online finance customers, 52% said the availability of nearby physical branches would be an influential factor in picking a company to provide online banking.

Many analysts say the benefits of Internet banking outweigh the negatives. Because Internet-only banks don't have to pay the high overhead costs of maintaining branches, they can offer products and services to customers at lower cost and better rates, says Tim Butler, an analyst with Pacific Crest Securities in Portland, Ore.

Still, it has been difficult to convince large blocks of consumers to give up that offline presence in favor of an Internet bank. "People's financial habits change very slowly, and that's been one of the key obstacles," Mr. Butler says

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<img src="http://chart.neural.com/servlet/GIFChart..." width=450 height=250>
NTBK, XLF, BTO, S&P500 1 YR Chart

.....Jen

-- posted by JenL_2

Top 147. Jun 18, 2001 8:06 AM

» Kirk - Re: Online or Brick&Mortar Banking?

In response to message posted by JenL_2:

Interesting article Jen.

I think it is pretty clear to most that "clicks and Bricks" is the future.

The internet is a great tool that will help many brick n mortar companies lower their costs and interact better with their customers. Pure play internet companies will have a very tough time of it as your article showed. I am the type that has online brokers where I can march myself into their office and erect a tent should I need proper attention. That psychological "good feeling" that I get just from having that option is hard if not impossible to duplicate on the internet.

-- posted by Kirk