Saturday, June 12, 2010

Barclays Large-Cap Mid-Cap Banks 2010 1Q 06.10 $BAC $ZION $C Regulation E

  • We expect changes to Reg E, the CARD Act, proposed interchange legislation, a tax/fee on size, derivative changes (excluding the possibility of the spin-off of swaps desks), and the Volcker rule to cost our coverage over $20 billion of net income, or more than 15% of estimated 2013 results.
  • Starting with 2Q10 both Basel I and Basel II will be reported to the regulators by thebiggest banks. Still, with data from the 10-Qs, we updated our Basel III analysis. Based on our findings, we estimate a 225–275bps decline in Tier 1 capital ratios, with the median Tier 1 ratio falling from 11.5% to 9.3% at 1Q10
  • Generally speaking, the 10-Qs foreshadowed improving trends in early stage delinquencies and net charge-offs, particularly on the consumer side, but stubborn NPAs reflecting the challenges in real estate related lending; renegotiated loans could increase while OREOs stay elevated; improving net interest margins amid higher accretion on covered loans, wider spreads on new loans, and lower deposit costs; and optimism on 2H10 loan demand as the decline in balances slowed and unfunded loans generally grew (also Fed H.8 data up in each of the past 3 weeks).
  •  ZION, BAC, JPM, and C are names where current 2Q10 consensus is most below our version of 1Q10 operating results (which are adjusted for expected gains/charges), implying that these companies could have a relatively easier time making/beating expectations for the current quarter. STT, NTRS, CYN, EWBC, FITB, and FHN stand out on the other end. 
  • C, EWBC, FIBK, JPM, MI, STT, TCB and WFC appear to be the only liabilitysensitive banks, while BK, CMA, FHN, KEY, NTRS, RF, SNV, TCBI and ZION appear to be the most asset-sensitive banks.

20100601 Barclays Large-Cap Mid-Cap Banks 2010 1Q

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