XLF, Banking and Financial Sector Stocks

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Top 179. Apr 15, 2004 11:50 AM

» Normxxx - Model Behaviorist

Model Behaviorist

By Jon Markman | Wednesday, April 14, 2004

Jon leverages a proprietary stock-rating system based on StockScouter at MSN Money to go long and short stocks in a mostly mechanical model, though he also will "swing trade" opportunistically.

If the refi boom is over, so is the regional bank rally.

The weakness of regional financial banks’ shares reflects the perception among investors that the end of the refinancing boom is upon us. Regional banks that make loans to residential and commercial developers and home buyers mint money as rates go down, but see margins shrink as rates go back up.

My sole play in that area is Commercial Capital Bancorp (CCBI, news, msgs), based in Irvine, Calif. Its shares have declined for the past seven days in a row on increasing volume and closed Monday for the first time in a year below their 50-day moving average. The stock’s weekly chart is actually even weaker, as it closed Tuesday below its nine-week moving average for the first time in 14 months.

Squiggles on a chart don’t mean much sometimes and are often misinterpreted, but in this case they provide a visual representation of the decline in investor interest in companies leveraged to real estate. A lot of money has been made in this group in the past three years, but all good things must come to an end. The profits appear to be rotating to other sectors, including small-cap health care, energy and defense.

I have had good luck in the small-cap health care area so far this round, and one new name that has surfaced in my models is Amedisys (AMED). It is a provider of home health-care nursing services throughout the South. I also like the improving telecommunications sector, and Mexico, and so am attracted to America Movil (AMX) -- a provider of wireless phone services throughout Latin America, covering nearly half of Mexico, as well as much of Brazil, Guatemala, Colombia, Ecuador, Argentina, Uruguay and Nicaragua.

Among stocks not rated in the 8 to 10 area by StockScouter, the Tuesday decline could provide a good entry point for TRM Corp. (TRMM), which I have described previously in my column, as well as Scientific Games (SGMS).

For now, though, I’m going to just sell the banks, and come back with a couple new ideas later in the week.

The content of this message is not to be construed as constituting market or investment advice. It is intended for educational purposes only.

-- posted by Normxxx

http://www.reuters.com/newsArticle.jhtml...

Top 180. Apr 22, 2004 3:32 PM

» SteveT - Ex-Banker Quattrone Knew About Fed Probes -Witness

Ex-Banker Quattrone Knew About Fed Probes -Witness
Thu Apr 22, 2004 06:09 PM ET

By Paul Thomasch

NEW YORK (Reuters) - A key prosecution witness testified on Thursday that he telephoned Frank Quattrone about federal investigations hours before the former star investment banker forwarded an e-mail advising co-workers to "clean up" their files.

Jurors hearing evidence in the obstruction of justice and witness tampering trial of Quattrone -- who one year earned $120 million in compensation -- also learned that the financier was told about grand jury subpoenas in advance of sending the controversial e-mail at the center of the case.

David Brodsky, Credit Suisse First Boston's former general counsel, recounted for jurors a call he placed to Quattrone on Dec. 5, 2000, to tell him that the "inquiries going on were likely to lead to him being called as a witness" and advising him to retain a personal lawyer.

About eight hours after that telephone call, Quattrone forwarded and endorsed an e-mail to other bankers at CSFB telling them it would be wise to "clean up" their files.

Brodsky also told jurors he had previously spoken with Quattrone about the matter. He testified that two days earlier -- Dec. 3, 2000 -- he sent a series of e-mails to the banker regarding the "extreme concern" he had about broadening investigations of the bank, including subpoenas that had been issued for documents and records.

When Quattrone forwarded the now infamous e-mail, CSFB was under investigation by federal prosecutors and the staff of the U.S. Securities and Exchange Commission, who were interested in how the bank allocated shares of hot stock offerings.

Prosecutors charge that Quattrone interfered with those investigations when he forwarded the e-mail, and did so to save his own reputation, pay and career.

Later, Brodsky told jurors during cross examination that he did not believe Quattrone had done anything wrong when they spoke on the telephone Dec. 5, even though he advised the banker to retain a lawyer during that conversation.

Attorney John Keker's cross examination of the star witness, however, was slowed by a series of objections from prosecutors.

U.S. District Judge Richard Owen upheld most of the objections, and at one point asked federal prosecutors, "Are you objecting to that? Because I would sustain that objection."

The judge's remark drew laughter and groans from the courtroom crowd, which included a number of Quattrone's friends, business associates and family members.

After a brief conference with lawyers, the judge demanded the "slight laughter and comments" from the audience "stop forthwith."

"Obviously this is impermissible in this courtroom," he said.

Federal prosecutors are expected to wrap up their case on Friday, after reading back to jurors some of Quattrone's testimony from his first trial.

-- posted by SteveT

Top 181. Jun 30, 2004 9:44 AM

» Q_out - Rising Interest Rate Headwinds

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With the Federal Reserve expected today to announce the first of several increases in interest rates, I thought I'd look back and see how Citigroup has done in past rising interest rate environments.

For my study, I looked at five times in the past 30 years that the Federal Reserve has started a series of increases in the discount rate. I am ignoring the isolated increase of 50 basis points from 8.5% to 9.0% on April 9, 1984 that was reversed by the Fed 7 months later.

In the first period, beginning August 30, 1977, the Fed raised the discount rate 14 times in 2 1/2 years, beginning at 5.25% and ending at 13.0% on February 15, 1980.

After three 1 percent cuts in the middle of 1980, the Fed again began to raise rates with four one percent increases beginning September 26, 1980 to take the discount rate from 10.0% to 14.0% on May 5, 1981.

In the third period, the Federal Reserve raised rates in three widely spaced half point moves. On September 4, 1987 the discount rate rose from 5.5% to 6.0%. Nearly a year later on August 9, 1988 they raised it to 6.5%. Finally on February 24, 1989 the rate was raised one last time to 7.0%.

In the fourth period, the rate rose from 3.0% to 5.25% in four increases between May 17, 1994 and February 1, 1995.

In 1999, the Fed began a series of smaller, more regular increases. On August 24, 1999, they raised rates from 4.5% to 4.75%. This was followed by four more increases resulting in a rise to 6.0% by May 16, 2000.

The following chart shows the performance of the Citigroup stock during the 18 months following the initial rate increase. The performance is measured from the opening price on the day of the first Fed increase.
<img src="/files/mysites/qout/citi.gif" width=568 height=328>

You can see that while the stock price was down in all five cases eight weeks after the rate increase, the longer term effects were more varied. At the end of 18 months, the stock price was down three times, up once and unchanged once.

<img src="/files/mysites/qout/bhoestarts.gif" width=53 height=34 align="left">
Q_out
DISCLAIMER: My words and observations are general in nature, and are not meant as specific investment advice. Individuals should consult with their own advisors for specific investment advice.

-- posted by Q_out

Top 182. Jun 30, 2004 12:21 PM

» SteveT - Re: Rising Interest Rate Headwinds

In response to message posted by Q_out:

Q, Citigroup is my single largest stock holding and has been since 1990. I very much appreciate someone that takes on a project like this for the benefit of the entire community. I do have a question and comment.

Is the data you are using really that of the old CitiCORP or Travelers? As I understand it after the 1998 merger Travelers was the surviving entity. I have not spent a great deal of time researching this but from what I have seen data pre 1998 is actually that of Travelers.

If the data is actually the old Citicorp it is a far different company today than it was.

Thanks

-- posted by SteveT

Top 183. Jun 30, 2004 6:38 PM

» Q_out - Re: Re: Rising Interest Rate Headwinds

In response to message posted by SteveT:

I'm afraid I don't know whether the older data is from Citicorp or Travelers. I just used the data from Yahoo! for ticker symbol C.

Since I'm not sure, I thought I'd repeat the chart for another financial stock, American Express.
<img src="/files/mysites/qout/axp.gif" width=526 height=328>

For American Express, the results are more of a coin toss -- up twice, down twice and unchanged once after 18 months.

-- posted by Q_out

http://biz.yahoo.com/ap/041213/citibank_...

Top 184. Dec 13, 2004 3:52 PM

» SteveT - Citibank to Issue American Express Cards

Citibank to Issue American Express Cards
Monday December 13, 5:56 pm ET
By Eileen Alt Powell, AP Business Writer
American Express Signs Agreement With Citibank to Issue Its Credit Cards

NEW YORK (AP) -- American Express Co., the travel and financial services company, announced Monday that it has signed an agreement with the banking giant Citibank to issue its credit cards.

It was the second such deal that American Express has reached with a U.S. financial institution. In January, American Express said MBNA Corp. would issue its cards; distribution began this fall.

American Express, based in New York, said that cards issued by Citibank "will be accepted on the American Express global merchant network." It said it expected the new cards to be available in late 2005.

Citibank is the retail and corporate banking division of Citigroup Inc., the nation's largest financial institution. Citigroup is headquartered in New York.

Financial terms of the agreement were not disclosed.

The choice of Citibank as a partner was not entirely unexpected.

On Nov. 15, American Express sued Visa and MasterCard as well as eight banks for damages stemming from anticompetitive practices that prevented American Express from issuing cards through U.S. banks.

Citigroup was not among the major banks named in the case.

American Express' lawsuit -- and a similar one brought by Discover Financial Services, a unit of New York-based Morgan Stanley -- followed an Oct. 4 ruling by the U.S. Supreme Court in an antitrust case brought by the Justice Department that accused Visa and MasterCard of restraining competition. The high court's decision let stand a lower court ruling requiring Visa and MasterCard to allow member banks to issue competing cards.

The Supreme Court ruling cleared the way for American Express and Discover to begin partnering with U.S. financial institutions.

In a statement accompanying Monday's announcement, American Express chairman and chief executive Kenneth I. Chenault called Citibank "a tremendous addition to the American Express network."

He added: "We are committed to working with outstanding partners like Citibank and the premiere customer experience they provide."

Citibank said in a statement: "We're looking forward to the new relationship with American Express, and we're committed to providing the same high quality Citi products and services to Citibank card members using the American Express network that we provide today to all our card members."

Citibank in the past mainly issued MasterCard credit and debit products.

The deal was announced after the close of regular trading. In Monday trading, American Express shares fell 14 cents to close at $55.04 on the New York Stock Exchange. Citigroup shares rose 86 cents to finish at $46.77, also on the Big Board.

www.americanexpress.com

www.citigroup.com

-- posted by SteveT

http://biz.yahoo.com/ap/050301/citigroup...

Top 185. Mar 2, 2005 1:16 PM

» SteveT - Citigroup Implementing Ethics Program

Citigroup Implementing Ethics Program
Tuesday March 1, 5:31 pm ET
By Eileen Alt Powell, AP Business Writer
Citigroup Begins Implementing Five-Point Ethics Program Aimed at Expanding Training

NEW YORK (AP) -- Stung by a series of scandals in the United States and abroad, Citigroup Inc. on Tuesday began implementing a new ethics policy aimed at expanding training and accountability for managers and rank-and-file workers.

Charles O. Prince, Citi's chief executive officer, kicked off the initiative in meetings with workers in the company's New York headquarters and, later, in Sioux Falls, S.D., where the bank's credit card operations are based.

"Our goal is to make explicit what is implicit," Prince told The Associated Press. "Every employee, starting with me, has the ability to refocus on our reputation and our integrity and our long-term franchise."

He said he wants Citi to be "the most-respected financial services company" in the world.

The initiative comes as the bank is grappling with regulatory problems at home and abroad.

Citi was forced to close its private bank in Japan last year for ethical lapses. In Europe, the bank is under investigation for bond trading that roiled European markets.

Before that, Citi got caught up in a number of domestic scandals.

In April 2003, it was part of a $1.4 billion settlement with federal regulators over biased advice from analysts. Last year, Citi paid $2.58 billion to settle a class action suit involving investors who bought WorldCom Inc. securities before its 2002 collapse. The bank also has been named in cases stemming from the Enron Corp. bankruptcy.

Prince said a five-point program was developed with input from internal "town hall" meetings as well as discussions with employees of companies including health care products maker Johnson & Johnson of New Brunswick, N.J., and computer maker Dell Inc. of Round Rock, Texas.

The program, which the company has titled "Our Shared Responsibilities," will be phased in over the next 12 to 18 months.

Under the plan, Citi will expand training for all employees, including senior managers. Improved communications will include "voice of the employee" input into policies and an ethics "hot line."

Citi also said it would step up executive coaching and development programs as well as talent review processes; create a companywide performance appraisal program; and strengthen compliance and audit controls.

As part of the program, the 3,000 employees who are senior managers will be required to retain 25 percent of the Citi stock they are awarded or purchase under incentive programs. Top tier executives must retain a 75 percent stake.

Citigroup, the nation's largest financial institution, also announced last month that it was streamlining its corporate structure so operations can be managed more efficiently.

Citi, which operates in more than 100 countries, has 300,000 employees worldwide.

Citigroup shares rose 16 cents, or 0.3 percent, to $47.88 in Tuesday trading on the New York Stock Exchange.

-- posted by SteveT

Top 186. Mar 2, 2005 3:03 PM

» Kirk - Re: Citigroup Implementing Ethics Program

.
In response to Citigroup Implementing Ethics Program posted by SteveT:

Do you think there is still an old mare left in the barn? smile

-- posted by Kirk

Top 187. Mar 18, 2005 5:15 PM

» SteveT - Fed Bars Citigroup From New Acquisitions

Associated Press
Fed Bars Citigroup From New Acquisitions
Friday March 18, 3:29 pm ET
Federal Reserve Bars Citigroup From New Acquisitions Until Problems Corrected

WASHINGTON (AP) -- The Federal Reserve has barred Citigroup Inc., the largest U.S. financial institution, from making major new acquisitions until it corrects regulatory problems that have gotten it into trouble with authorities in several countries.

The unusual move by the central bank came less than a month after Citigroup, stung by a series of scandals in the United States and abroad, put into effect a new ethics policy and a drive to strengthen internal controls and expand training throughout the globe-spanning company.

The directive issued by the Fed's board of governors Wednesday was tucked into an order approving Citigroup's acquisition of First American Bank of Bryan, Texas, so that it initially escaped public notice. First American has assets of $3.5 billion and more than 100 branches. Terms of that deal have not been disclosed.

Referring to Citigroup's plan to bolster ethics and internal controls, the Fed said in the order it "expects that management at all levels will devote the necessary attention to implementing its plan fully and effectively and won't undertake significant expansion during the implementation period."

The Fed governors believe it is important "that management's attention not be diverted from these efforts by the demand that mergers and acquisitions place on management resources," it said.

Shannon Bell, a Citigroup spokeswoman, said in a statement that implementing the plan "is our top priority and it is the right way for Citigroup to engage in sustained long-term growth."

New York-based Citigroup was forced to close its private banking operation in Japan last year for ethical lapses. In Europe, the company is under investigation for bond trading that roiled European markets.

Before that, Citigroup became caught up in a number of domestic scandals. In April 2003, it was part of a $1.4 billion industrywide settlement with federal and state regulators over analysts issuing biased ratings on stocks to lure investment-banking business. Last year, Citigroup paid $2.58 billion to settle a class-action lawsuit brought by investors who bought WorldCom Inc. securities before the telecom titan's 2002 collapse. Citigroup also has been named in cases stemming from the Enron Corp. bankruptcy.

Citigroup also has been sued for its role in financing Parmalat Finanziaria SpA of Italy, which collapsed last year under $18 billion debt. Citigroup has denied any wrongdoing and has filed a countersuit, claiming the bank lost $670 million.

-- posted by SteveT