BAC-WT - Bank of America Warrants

hardincap · July 19, 2014

One needs to look at where WFc was when Buffett and Berkowitz started buying. The company was overextended on bad loans, specifically California real estate. The were in full retrenchment mode for a few years. I think the cultural change was a result of the trouble they got in.

I see no reason at all that BAC wont perform as well as WFC going forward. It will take a few years to produce similar numbers as WFC. Right now, they are erring on the side of over conservatism, partly because they are not getting the interest spreads to justify the risk. I see that as a good sign for the future.

One of my favourite value investment books is David Dreman's "Contrarian Investment Strategies...".
In it he discusses how companies and their stock prices outperform the general market long after they have left the value investors "emergency ward". That is where I see BAC right now.

Unless, something dramatic changes I intend on making BAC a major long term core holding when I convert some of my Leaps in 2016.

Nonperforming loans were still earning 6% yield. Trading at less than 2x pretax preprofit. The idea that Wells was in a huge mess seems to be exaggerated?

buylowersellhigh · July 19, 2014

do you feel similarly about AIG? As a core long term holding?

One needs to look at where WFc was when Buffett and Berkowitz started buying. The company was overextended on bad loans, specifically California real estate. The were in full retrenchment mode for a few years. I think the cultural change was a result of the trouble they got in.

I see no reason at all that BAC wont perform as well as WFC going forward. It will take a few years to produce similar numbers as WFC. Right now, they are erring on the side of over conservatism, partly because they are not getting the interest spreads to justify the risk. I see that as a good sign for the future.

One of my favourite value investment books is David Dreman's "Contrarian Investment Strategies...".
In it he discusses how companies and their stock prices outperform the general market long after they have left the value investors "emergency ward". That is where I see BAC right now.

Unless, something dramatic changes I intend on making BAC a major long term core holding when I convert some of my Leaps in 2016.

xazp · July 19, 2014

I've been thinking a little about deposits in an era of rising ST interest rates.

Currently interest rates are ~0%, which is creating growth in deposits. This is because all ST interest rate vehicles pay about 0%, like money market funds, ST bond funds. So if you're getting paid about 0%, you might as well take the most flexible/feature option which is a bank deposit.

When interest rates rise, though, I'd expect deposit interest rates to grow more slowly than money market or ST bond rates. So overall the banking industry may see deposit shrinkage after FFR goes up.

That gets interesting when the smaller banks, which have loan/deposits of ~1 may come under pressure. They may end up in a situation where they have too many loans versus a shrinking deposit base. Of course this doesn't matter for the big banks which have loans << deposits.

Structurally, I believe larger banks have stickier deposit bases. For one, any large company has to stick with a large bank - the companies need the breadth of service and the balance sheet provided by large banks. Two, I believe the larger banks have a tech advantage (online/mobile banking; mobile check deposit; etc). Three, they have a cross-selling advantage meaning once you've got your mortgage, checking, savings account and brokerage account with a given bank, it's really hard to quit and go somewhere else.

So - you may actually see implicit loan growth in the large banks relative to smaller ones in the sense that large banks have lending capacity but in a shrinking or flat deposit market, the smaller banks do not all have that lending capacity. It'd almost flip the current narrative on its head, where the ones with capacity can grow but the ones already at capacity may run into problems if deposits leave the system.

The other big factor is the cost of funding. Banking is commodity like and the lowest cost supplier has the advantage.

Both BAC and WFC have huge low cost deposit bases relative to the competition. Merrill is also a first class business, with great margins. BAC has great prospects going forward.

So there are potential financial reasons:
- higher priced debt(?) that can roll off
- run-off assets
- both of these should fix themselves slowly over time.

There are potential employee issues:
- BAC might not be able to hire the best talent
- They may be too short-term in thinking (vs. WFC)
- the layoffs may be hurting morale

There are potentially structural issues:
- WFC is really good at cross-selling which is the closest a bank can come to locking-in customers
- BAC is not as good, and, possibly not as able to get to the levels that WFC already has

I don't really know the answer here. I feel like Buffett understands cultures and competitive advantages in banking; I haven't anyone articulate it really clearly to me in a way that I could understand whether BAC can or can not emulate WFC (not total emulation, but if you close half the gap on ROE/ROA that is worth a lot to the stock).

Onyx, my question: why aren't greater earnings possible from BAC absent an interest rate rise? It's a serious question.

JPM and BAC are fairly similar companies in terms of size, assets, breadth of operations, etc. But BAC's target for $2/share after interest rates rise is below what JPM earns today with low interest rates. Why?

What are the structural reasons that BAC has to earn lower ROA, ROE, etc than JPM (or crazier yet, WFC?)

BAC will close some of the gap with cost cutting, and, it will experience a good uplift with interest rates. That's a good enough reason to hold for now.

But looking down the road, JPM can probably earn $28Bn/year, while we're talking $22Bn or so for BAC. Any hope of closing the remaining $6Bn gap? Or some of it?

These are great questions that get right to the essence of culture and productivity. I wish I had some answers or knew someone who did. Deposit rates are basically the same among banks so somewhere in the mix of productivity, culture and assets is the answer but where to start looking? These are massive and complex organizations. I have to assume that BAC management knows the answers but as far as I can see they have not said anything about an aspiration to get above their 1% ROA target. That suggests that they don't think it is realistic or possible (in the short term at least) to achieve ROAs like those at WFC and JPM. BB said early on a 1% ROA is a good target for BAC, I wonder what he, and WEB, thinks now.

BTW xazp, thanks for your posts on this thread over the last several years. Superb contributions.

Spekulatius · July 20, 2014

That gets interesting when the smaller banks, which have loan/deposits of ~1 may come under pressure. They may end up in a situation where they have too many loans versus a shrinking deposit base. Of course this doesn't matter for the big banks which have loans << deposits.

Not many small banks have loan/Deposit ratios of one. Most have the same problem than larger banks, too many deposits, not enough loan demand, although I noticed that this year loan demand for some small banks has been surprisingly strong (my largest bank holding FMBL has shown strong loan growth recently for example). BAC on the other side, hasn't been growing interest income and loans by leap and bounds recently.

Sunrider · July 20, 2014

Hi everyone

So I was a little surprised at the relative lack of post-results discussion (hello Ericopoly ...:). Is it just me or do the rest of the Board also feel that this is actually looking better and better:

1. About 2 settlements remaining - albeit with uncertainty of 17 vs 12bn on the government front. This quarter's 4bn in legal costs will likely go in large part to reserves for that settlement.

2. Assuming that there aren't any more big settlements/cases, excl. most of the legal costs, the quarterly run-rate was about 40c/share.

3. If we add in further newBAC reductions, it seems that it's reasonable to say we're sitting on $1.6 - $2 a share already.

... of course the market will likely only give BAC credit for it once it can stop taking huge reserves each quarter ... so hopefully by the end of year?

What'd y'all think?

Thanks - C.

xazp · July 20, 2014

Conference call seemed to say $2/share in earnings in 2016 assuming a 100bps parallel shift.

Hi everyone

So I was a little surprised at the relative lack of post-results discussion (hello Ericopoly ...:). Is it just me or do the rest of the Board also feel that this is actually looking better and better:

1. About 2 settlements remaining - albeit with uncertainty of 17 vs 12bn on the government front. This quarter's 4bn in legal costs will likely go in large part to reserves for that settlement.

2. Assuming that there aren't any more big settlements/cases, excl. most of the legal costs, the quarterly run-rate was about 40c/share.

3. If we add in further newBAC reductions, it seems that it's reasonable to say we're sitting on $1.6 - $2 a share already.

... of course the market will likely only give BAC credit for it once it can stop taking huge reserves each quarter ... so hopefully by the end of year?

What'd y'all think?

Thanks - C.

Sunrider · July 20, 2014

Well, this quarter was 0.19 + 0.22 = 0.41c/share, excl. litigation. So that's $1.6 already. Throw in further reductions in LAS/newBAC (some of which will be offset by small remaining litigation costs as well as Q1 comp expenses; then annualise ...

I'd say at least $1.6.share already, perhaps moving towards $2 with ongoing reduction in cost of debt, optimisation of capital structure, increasing business volumes ... even before a rise in rates.

Thoughts?

Conference call seemed to say $2/share in earnings in 2016 assuming a 100bps parallel shift.

Hi everyone

So I was a little surprised at the relative lack of post-results discussion (hello Ericopoly ...:). Is it just me or do the rest of the Board also feel that this is actually looking better and better:

1. About 2 settlements remaining - albeit with uncertainty of 17 vs 12bn on the government front. This quarter's 4bn in legal costs will likely go in large part to reserves for that settlement.

2. Assuming that there aren't any more big settlements/cases, excl. most of the legal costs, the quarterly run-rate was about 40c/share.

3. If we add in further newBAC reductions, it seems that it's reasonable to say we're sitting on $1.6 - $2 a share already.

... of course the market will likely only give BAC credit for it once it can stop taking huge reserves each quarter ... so hopefully by the end of year?

What'd y'all think?

Thanks - C.

xazp · July 20, 2014

I don't have a huge problem with that number, but you're normalizing things in the positive direction but not the negative.

Their provision for credit losses are way below normal. They did $400MM in provisions, which is below where they should be long-term.

And litigation expenses, you backed it out to $0, but litigation is never going to be $0. Maybe $500 million?

Well, this quarter was 0.19 + 0.22 = 0.41c/share, excl. litigation. So that's $1.6 already. Throw in further reductions in LAS/newBAC (some of which will be offset by small remaining litigation costs as well as Q1 comp expenses; then annualise ...

I'd say at least $1.6.share already, perhaps moving towards $2 with ongoing reduction in cost of debt, optimisation of capital structure, increasing business volumes ... even before a rise in rates.

Thoughts?

Conference call seemed to say $2/share in earnings in 2016 assuming a 100bps parallel shift.

Hi everyone

So I was a little surprised at the relative lack of post-results discussion (hello Ericopoly ...:). Is it just me or do the rest of the Board also feel that this is actually looking better and better:

1. About 2 settlements remaining - albeit with uncertainty of 17 vs 12bn on the government front. This quarter's 4bn in legal costs will likely go in large part to reserves for that settlement.

2. Assuming that there aren't any more big settlements/cases, excl. most of the legal costs, the quarterly run-rate was about 40c/share.

3. If we add in further newBAC reductions, it seems that it's reasonable to say we're sitting on $1.6 - $2 a share already.

... of course the market will likely only give BAC credit for it once it can stop taking huge reserves each quarter ... so hopefully by the end of year?

What'd y'all think?

Thanks - C.

onyx1 · July 21, 2014

I don't have a huge problem with that number, but you're normalizing things in the positive direction but not the negative.

Their provision for credit losses are way below normal. They did $400MM in provisions, which is below where they should be long-term.

And litigation expenses, you backed it out to $0, but litigation is never going to be $0. Maybe $500 million?

Well, this quarter was 0.19 + 0.22 = 0.41c/share, excl. litigation. So that's $1.6 already. Throw in further reductions in LAS/newBAC (some of which will be offset by small remaining litigation costs as well as Q1 comp expenses; then annualise ...

I'd say at least $1.6.share already, perhaps moving towards $2 with ongoing reduction in cost of debt, optimisation of capital structure, increasing business volumes ... even before a rise in rates.

Thoughts?

Conference call seemed to say $2/share in earnings in 2016 assuming a 100bps parallel shift.

Hi everyone

So I was a little surprised at the relative lack of post-results discussion (hello Ericopoly ... :) . Is it just me or do the rest of the Board also feel that this is actually looking better and better:

1. About 2 settlements remaining - albeit with uncertainty of 17 vs 12bn on the government front. This quarter's 4bn in legal costs will likely go in large part to reserves for that settlement.

2. Assuming that there aren't any more big settlements/cases, excl. most of the legal costs, the quarterly run-rate was about 40c/share.

3. If we add in further newBAC reductions, it seems that it's reasonable to say we're sitting on $1.6 - $2 a share already.

... of course the market will likely only give BAC credit for it once it can stop taking huge reserves each quarter ... so hopefully by the end of year?

What'd y'all think?

Thanks - C.

Here is what management has offered as guidance on both normalized provisions and litigation:

2Q 2013 CC Bruce Thompson: "I think, John, as we look at legal expense, it's always a little bit difficult to predict. But the just under $500 million that we saw this quarter is clearly at an elevated level from what we'd expect long term. At the same time, within the $500 million, there was nothing lumpy from the quarter. So it's -- I always hesitate to say too much on that because it is lumpy. But the $500 million [per quarter] number as it relates to a base level, at least what we can tell in the near term, is probably not a bad level to keep."

3Q 2013 CC Bruce Thompson, "Given what we see from the improving delinquencies, as well as the current HPI trends, absent any unexpected changes in the economy, we expect net charge-offs to decline again in the fourth quarter and stabilize sometime in 2014 at approximately $1.5 billion per quarter.

Sunrider · July 21, 2014

Thanks for the input guys so 1bn is roughly 10c or so in earnings. So on that basis we'd have to take out between 40c and 80c, depending on where legal expenses and, importantly, provisions end up. Hmm. Guess we'll have to hope that they get to the remaining newBAC costs quickly!

I don't have a huge problem with that number, but you're normalizing things in the positive direction but not the negative.

Their provision for credit losses are way below normal. They did $400MM in provisions, which is below where they should be long-term.

And litigation expenses, you backed it out to $0, but litigation is never going to be $0. Maybe $500 million?

Well, this quarter was 0.19 + 0.22 = 0.41c/share, excl. litigation. So that's $1.6 already. Throw in further reductions in LAS/newBAC (some of which will be offset by small remaining litigation costs as well as Q1 comp expenses; then annualise ...

I'd say at least $1.6.share already, perhaps moving towards $2 with ongoing reduction in cost of debt, optimisation of capital structure, increasing business volumes ... even before a rise in rates.

Thoughts?

Conference call seemed to say $2/share in earnings in 2016 assuming a 100bps parallel shift.

Hi everyone

So I was a little surprised at the relative lack of post-results discussion (hello Ericopoly ... :) . Is it just me or do the rest of the Board also feel that this is actually looking better and better:

1. About 2 settlements remaining - albeit with uncertainty of 17 vs 12bn on the government front. This quarter's 4bn in legal costs will likely go in large part to reserves for that settlement.

2. Assuming that there aren't any more big settlements/cases, excl. most of the legal costs, the quarterly run-rate was about 40c/share.

3. If we add in further newBAC reductions, it seems that it's reasonable to say we're sitting on $1.6 - $2 a share already.

... of course the market will likely only give BAC credit for it once it can stop taking huge reserves each quarter ... so hopefully by the end of year?

What'd y'all think?

Thanks - C.

Here is what management has offered as guidance on both normalized provisions and litigation:

2Q 2013 CC Bruce Thompson: "I think, John, as we look at legal expense, it's always a little bit difficult to predict. But the just under $500 million that we saw this quarter is clearly at an elevated level from what we'd expect long term. At the same time, within the $500 million, there was nothing lumpy from the quarter. So it's -- I always hesitate to say too much on that because it is lumpy. But the $500 million [per quarter] number as it relates to a base level, at least what we can tell in the near term, is probably not a bad level to keep."

3Q 2013 CC Bruce Thompson, "Given what we see from the improving delinquencies, as well as the current HPI trends, absent any unexpected changes in the economy, we expect net charge-offs to decline again in the fourth quarter and stabilize sometime in 2014 at approximately $1.5 billion per quarter.

Junto · July 21, 2014

That gets interesting when the smaller banks, which have loan/deposits of ~1 may come under pressure. They may end up in a situation where they have too many loans versus a shrinking deposit base. Of course this doesn't matter for the big banks which have loans << deposits.

Not many small banks have loan/Deposit ratios of one. Most have the same problem than larger banks, too many deposits, not enough loan demand, although I noticed that this year loan demand for some small banks has been surprisingly strong (my largest bank holding FMBL has shown strong loan growth recently for example). BAC on the other side, hasn't been growing interest income and loans by leap and bounds recently.

Very few banks are even close to 1. Most are 60~70% lent out. The competitive advantage is low cost deposits, noninterest liabilities that will drive margins as rates rise.

BAC is a much different business mix than WFC but opportunities are there to build large returns as rates move up.

xazp · July 21, 2014

I'm working off the following article (the whole thing is below, but I've bolded the sentence I am keying off). I don't have the stern agee report they are quoting though, but assume they have access to the data they are quoting.

Banks should prepare now for changes in their deposit costs and composition to avoid a potential margin squeeze when interest rates move higher, according to industry experts.

Several members of the investment community are encouraging banks to consider how their deposit businesses could change and possibly return to levels that more closely mirror the balances before the credit crisis. The words of caution come after deposits have flooded into the bank system over the last four years, outpacing loan growth by nearly five-to-one. Not all of those deposits will be as sticky as some banks might hope and some could leave the system, or at least come at a higher cost than current levels, when the interest rate environment eventually turns.

"At some point, there is going to be a little bit of runoff or I'm going to have to pay more than I'm maybe modeling and if I'm running my bank, I want to have that discussion with my [asset-liability committee] today," Scott Hildenbrand, managing director and chief balance sheet strategist at Sandler O'Neill & Partners, told SNL.

Hildenbrand said that banks should not be naïve and assume that the flow of deposits in recent years will hold its course. He suggested that banks look at their deposit mix in 2006 and 2007 and consider just how different it is today. Hildenbrand specifically advised banks to monitor the growth in money market accounts since the credit crisis and assume that 25% or even 50% of the growth in those deposits leaves the bank in the worst case scenario of a rising rate environment.

"Running some form of a scenario like what I just described will make you start to have real discussions at ALCO around loan pricing and deposit pricing so you could either feel more comfortable or if you're not comfortable, we need to start to think about some strategies we can implement so we can go be aggressive and go get loans," Hildenbrand said.

One strategy some smart banks have employed, he said, is extending the liability side of their balance sheets. Even though most banks are liquid today, they could be worried about cash leaving the bank in the future. A bank can remove such uncertainty by locking in the future issuance of home loan bank advances a year from now, cementing the forward expectation of where interest rates will be in 12 months. The approach has the added benefit of helping protect book value when rates rise since it could allow a bank to grow by making fixed-rate loans, as opposed to relying on securities for income as many banks have in the slow growth environment.

SNL Image

"A lot of banks would say, 'You know what, a year or two from now, if we're up in a rate environment, I could lose some of those money market accounts, but I don't want to lose the loans today,'" Hildenbrand said.

Ultimately, what will come to pass is anyone's guess, but few dispute that changes in deposits will come when rates move higher. Some market watchers have entertained the possibility that banks' deposit mix could move back to the composition witnessed before the credit crisis.

A change in deposit composition back closer to precrisis levels could pose risks to the overall anticipated profitability levels in the banking industry, Sterne Agee & Leach's bank research team noted in a July 8 report. That certainly seems evident when looking at banks' currently large balances of low cost funding and relatively small balances of certificates of deposit. Savings accounts, including money market demand accounts, had grown to close to 57.8% of banks deposit balance at the end of the first quarter, compared to roughly 38.5% back in 2007. Meanwhile, CDs balances had fallen to 15.1% of deposits from roughly 27.0% in 2007. Banks are relying on wholesale funding far less as well, with those balances declining to 12.3% from 25.3% in 2007.

Hildenbrand noted that many banks are not considering the optionality risk in their CD book. Others have argued that depositors could withdraw money from CDs early without fear of penalties should rates move higher.

If higher interest rates move the banking industry's funding profiles back closer to precrisis levels, the Sterne Agee team noted that banks could see their net interest margins "compromised" as they work to build stable, core deposit funding.

"In our view, this is a risk for 2016 and beyond when interest rates finally do turn higher. While universal and super-regional banks are flush with liquidity and appear well positioned for this change, regional banks with high percentages of non-core deposit funding and operating with +100% loan/deposit ratios, in our view, appear at risk for weaker long-term results," the Sterne Agee team wrote in the report.

The analysts further noted that there is some evidence that banks are already working to shore up their funding and have raised prices on longer-dated CDs. The analysts said that price increases are the most pronounced in the Northeast, where loan-to-deposit ratios are higher. They said that prices on three-year and five-year CD rates are averaging 8 basis points and 18 basis points higher, respectively, from one year ago.

Regulators have increased their focus on core funding and this is particularly true at larger institutions, which are subject to the liquidity coverage ratio, or LCR. Banks that are subject to the LCR believe that the provision just might put even more pressure on deposit costs when rates rise.

"It just strikes me that as the Fed tightens, which means draining liquidity from the system, those rules may start to bite far earlier than on the surface it would appear they might, given how much liquidity there appears to be in the system today, and that banks may be scrambling for deposits and funding, and therefore pricing up for it sooner than one might think," Zions Bancorp. CFO Doyle Arnold said at an investor conference in June, according to the transcript.

Since the LCR is a new regulation, the industry has no historical reference to use as a basis for how banks might react to the new provision when the rate environment turns. Rates have been so low for so long as well, historical changes in the deposit business might not prove that instructive for banks that try to prepare for what lies ahead. However, it might be prudent to take some precaution now to avoid being on the wrong side of the rate environment when it eventually turns.

That gets interesting when the smaller banks, which have loan/deposits of ~1 may come under pressure. They may end up in a situation where they have too many loans versus a shrinking deposit base. Of course this doesn't matter for the big banks which have loans << deposits.

Not many small banks have loan/Deposit ratios of one. Most have the same problem than larger banks, too many deposits, not enough loan demand, although I noticed that this year loan demand for some small banks has been surprisingly strong (my largest bank holding FMBL has shown strong loan growth recently for example). BAC on the other side, hasn't been growing interest income and loans by leap and bounds recently.

Very few banks are even close to 1. Most are 60~70% lent out. The competitive advantage is low cost deposits, noninterest liabilities that will drive margins as rates rise.

BAC is a much different business mix than WFC but opportunities are there to build large returns as rates move up.

Rabbitisrich · July 22, 2014

According to the FDIC, loans to deposits rises with asset size until $10b+, where the ratio drops again.

Junto · July 22, 2014

One strategy some smart banks have employed, he said, is extending the liability side of their balance sheets. Even though most banks are liquid today, they could be worried about cash leaving the bank in the future. A bank can remove such uncertainty by locking in the future issuance of home loan bank advances a year from now, cementing the forward expectation of where interest rates will be in 12 months. The approach has the added benefit of helping protect book value when rates rise since it could allow a bank to grow by making fixed-rate loans, as opposed to relying on securities for income as many banks have in the slow growth environment.

That gets interesting when the smaller banks, which have loan/deposits of ~1 may come under pressure. They may end up in a situation where they have too many loans versus a shrinking deposit base. Of course this doesn't matter for the big banks which have loans << deposits.

Not many small banks have loan/Deposit ratios of one. Most have the same problem than larger banks, too many deposits, not enough loan demand, although I noticed that this year loan demand for some small banks has been surprisingly strong (my largest bank holding FMBL has shown strong loan growth recently for example). BAC on the other side, hasn't been growing interest income and loans by leap and bounds recently.

Very few banks are even close to 1. Most are 60~70% lent out. The competitive advantage is low cost deposits, noninterest liabilities that will drive margins as rates rise.

BAC is a much different business mix than WFC but opportunities are there to build large returns as rates move up.

I don't think extending the liability side in today's market makes much sense unless you are using FHLB advances greater than 3 years to offset rates. The problem with most certificates is most can be redeemed with a limited penalty if rates move up aggressively, i.e. the optionality risk referenced in the article. It is my opinion is now is the opportune time to be driving depository growth in transaction and other more core demand accounts versus extending out liabilities given the existing yield curve. The spread is too large to garner new depository growth in the greater than 2 year window and customers really don't want it yet. Futhermore, BAI research has done analysis indicating perhaps the market will see growth in MMKTs into rising rates:

The 10 likely scenarios described below derive from our analysis based on the behavior of deposit rates during the last rising-rate cycle, from July 2003 to July 2007:

1. Once rates start rising this year and beyond, the banking industry will face relatively higher interest expense per-deposit dollar due to the inelasticity of consumer deposits. This means that in order to maintain or increase balances, banks will have to increase rates at a greater pace than the increase in balances.
2. During the rising rate period, the largest percentage gain in deposit balances is likely to be in money market accounts (MMDA) while the largest percentage decrease in balances is likely to be in checking accounts.
3. Rates of term accounts are projected to increase in a general linear pattern with minor hiccups, which is easier to project and budget.
4. Rates of liquid accounts are projected to increase in a general down-curved pattern, which makes it harder to project and budget.
5. The increase in rates of deposit products is going to be moderate, gradual and volatile, which will require constant monitoring of the competitive set.
6. Deposit rates are not likely to exhibit big jumps month over month.
7. Whether rates increase in a general linear or curved pattern, rates of all deposit products are likely to fluctuate throughout the rising-rate period.
8. Expect national average rate increases to range from one-half to one basis point per month per product. There will be noticeable variations among the regions.
9. Predictors of rising deposit rates vary by product and include the Fed fund effective rate, the 3-month and the 6-month LIBOR rates.
10. Since the starting point of the rate increases, i.e. current rates, is so low, it will take much longer for deposit rates to reach their pre-recession level.

See attachment from the research as well. As rates rise, the deposit mix will change but customers won't go rushing into CD's and move their money around aggressively. The market doesn't move that way. The brokered CD's and wholesale funding however does.

SABTTFBAI1.27.14.PDF

mankap · July 25, 2014

Fed clears Zions' resubmitted stress test

I hope that BAC is next in line.

I had read that Fed will respond by Aug to BAC's capital plan that was resubmitted.

Mephistopheles · July 25, 2014

They gave a mid-August date in the cc by which the Fed has to reply.

xazp · July 25, 2014

I think Aug 11th - Fed has 75 days from resubmission to reply, and I think they submitted it May 27th.

They gave a mid-August date in the cc by which the Fed has to reply.

Grenville · July 25, 2014

I think Aug 11th - Fed has 75 days from resubmission to reply, and I think they submitted it May 27th.

They gave a mid-August date in the cc by which the Fed has to reply.

Thanks for the date. I remember hearing 75days on the conference call.

xazp · July 29, 2014

BAC-WT - Bank of America Warrants

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