Wednesday, January 27, 2010

Financials Today 1.27.10

· Banks – warning from the IMF - The world's biggest banks face an impending funding crisis, with a "wall of maturities" fast approaching, and must raise billions more in capital in the coming years, the International Monetary Fund (IMF) has warned (London Telegraph). billionsto- fend-off-crisis-says-IMF.html

· Mortgage modifications – worries that if HELOCs are modified could lead to more write-downs for banks – BoA Tues afternoon said “that it is the first mortgage servicer to sign an agreement formally committing to participation in the pending second-lien component of the federal government's Home Affordable Modification Program (HAMP)”. there had been a big controversy around mortgage mods. The initial mod plan centered on first liens – however, a lot of the first mortgages were securitized and sold off to investors (whereas banks retained HELOC exposure). BoA now saying that will start modifying HELOCs too - so people worried this could lead to more problems/write-downs for the larger banks.

· Bankers urge for global coordination when it comes to regulation; says patchwork of new
rules risks their ability to lend money.

· Wall St toughens rules on comp clawbacks – gives firms the power to rescind comp to
employees whose actions cause neg. harm down the road (WSJ).

· BRK’b - S&P says Berkshire Hathaway Class B to replace BNI in S&P 500; change to be
made on a date to be announced (Reuters)

· BLK reports earnings – EPS adjusted came in 2.39 vs. St 2.10; BlackRock's results reflect the acquisition of BGI, continued positive business momentum, net asset growth and improvements in the external market environment. Revs came in $1.544B vs. St $1.247B. Flows were strong across a wide range of products and across domestic and international distribution channels CC 9amET 800..374.0176Pwd:49409856

· CNS reports earnings; EPS came in .27 vs. St .24 = better than expected; revs came in $39.9MM. CC Wed 11amET 800.769.9015 pw:21455819

· PRE - announced that during the January 1, 2010 treaty renewal season it expects to write
and bind approximately $2.6 billion of Non-Life premium. This includes $440 million in premium from PARIS RE, whose acquisition was completed in December 2009. On a constant foreign exchange basis, the January 1, 2010 total expected premium for the combined Company of $2.594 billion represents a 20% increase over the expiring premium of PartnerRe's original January 1, 2009 portfolio of $2.159 billion.

· TSFG EPS came in (.90) vs. St (.47). "Credit costs have begun to show signs of moderating, although they will continue to be challenging. We remain focused on assertively addressing credit issues and executing sales and liquidations of problem loans and foreclosed properties," we are suspending dividends on all remaining outstanding equity and capital instruments. While our year-end capital ratios exceeded well-capitalized regulatory requirements, the suspension of dividends will preserve approximately $4.5 million in capital on a quarterly basis going forward." A 7.6% linked-quarter decline in nonperforming loan balances to $399.0 million from $431.8 million at September 30, 2009, the second consecutive quarterly decline

· EWBC – they report earnings; big beat on headline, but a lot of items in the Q; net income came in $259.6MM on the headline, although this included a pre-tax gain of $471MM from the United Commercial deal. We believe that for East West, the credit cycle peaked in the third quarter of 2009 and that as we enter the new year, the worst is behind us. Since January 1, 2008, we actively reduced our exposure to land and construction loans by over $2.2 billion. Our capital position is strong and continues to grow -- during 2009 we raised a total of $607.8 million in new capital and generated $76.6 million additional capital from net income." The Company is providing a forecast for the first quarter of 2010. Management currently estimates that fully diluted earnings per share for the first quarter of 2010 will range from $0.04 to $0.08

· TRMK reported diluted EPS of $0.23. Excluding the $0.14 noncash charge related to the accelerated accretion of the discount tied to TARP repayment (previously announced by the
company and excluded from our core estimates), core EPS of $0.37 beat our estimate of $0.30 and consensus of $0.29

· JEF – one of the co’s director sells $1.4B worth of stock – Barron’s

· China loan growth – China’s ICBC, the country’s largest bank, said on Wed it had stopped
rolling over some loans in an effort to slow credit growth. The co issued a statement: "ICBC
will not rush to lend, nor will it stop lending," the bank said. "In the first 20 days of January
this year, due to concentrated capital demand from ongoing projects, the bank's credit
offering was a bit fast but was still below that of the same period last year," "In the last 10
days of January, due to the expiry and return of a concentrated volume of existing loans and
repayment of credit card debt, loan growth has eased, Reuters

· MHP, MCO – win favorable ruling - won dismissal of a lawsuit seeking to hold them responsible for defrauding investors who bought about $100 billion of mortgage- backed securities – Bloomberg

· Man Group Plc fell in European trading on Wed after its AHL Diversified Futures Ltd. fund dropped the most in seven weeks. Bloomberg

· BBVA, Spain’s second largest bank, fell in European trading after earnings missed forecasts – Bloomberg

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