redskin Posted March 5, 2015 Share Posted March 5, 2015 I hope they requested a $10 billion buyback. Link to comment Share on other sites More sharing options...
Uccmal Posted March 5, 2015 Share Posted March 5, 2015 Any one care to take a stab at what they asked for, and if they get it? My very cursory read is that they could give back everything they earn as net earnings, so long as they can suspend dividends and buybacks at any time. I am guessing 0.40 cents dividend plus buybacks up to 10 Billion. Link to comment Share on other sites More sharing options...
LC Posted March 5, 2015 Share Posted March 5, 2015 T1 under the severe scenario 7.1% vs 5.9% last year. JPM 6.5%, WFC 7.5%, C 8.2% Good improvements IMHO, their expected loan loss rates were below the median in almost all categories. I hope they asked for $10B in buybacks. Link to comment Share on other sites More sharing options...
Grenville Posted March 5, 2015 Share Posted March 5, 2015 "BofA's $8.5 billion mortgage bond settlement wins approval" http://finance.yahoo.com/news/bofas-8-5-billion-mortgage-180808241.html In Thursday's decision, Justice David Saxe wrote for a five-judge panel that Bank of New York Mellon did not abuse its discretion in arranging the settlement. The court also said Barbara Kapnick, a state judge who approved most of the accord in January 2014, erred in excluding claims by investors regarding loan modifications on the ground that the trustee didn't properly investigate their strength. Saxe said Kapnick imposed too tough a standard on Bank of New York Mellon, "one that allows a court to micromanage and second guess the reasoned, and reasonable, decisions of a trustee. "We therefore find that the trustee did not abuse its discretion in deciding to release the claims based on the failure to repurchase the modified mortgages, and we approve the settlement in its entirety," Saxe wrote. Link to comment Share on other sites More sharing options...
wescobrk Posted March 6, 2015 Share Posted March 6, 2015 T1 under the severe scenario 7.1% vs 5.9% last year. JPM 6.5%, WFC 7.5%, C 8.2% Good improvements IMHO, their expected loan loss rates were below the median in almost all categories. I hope they asked for $10B in buybacks. I posted a week or so ago I thought the UBS analyst was obtuse. I gotta love that guy for letting me buy common and options around 15.80. Link to comment Share on other sites More sharing options...
LC Posted March 6, 2015 Share Posted March 6, 2015 T1 under the severe scenario 7.1% vs 5.9% last year. JPM 6.5%, WFC 7.5%, C 8.2% Good improvements IMHO, their expected loan loss rates were below the median in almost all categories. I hope they asked for $10B in buybacks. I posted a week or so ago I thought the UBS analyst was obtuse. I gotta love that guy for letting me buy common and options around 15.80. Same about a month? ago when shares traded in the low 15s. Mr market Ty sir/ Link to comment Share on other sites More sharing options...
wescobrk Posted March 6, 2015 Share Posted March 6, 2015 Gotta love this paragraph: "Bank of America Corp. was the only bank among the six largest to improve in every capital measure from its performance in last year’s test. Wells Fargo & Co. surpassed every minimum by at least 2 percentage points. Morgan Stanley’s ratio in three capital measures fell in a severely adverse scenario to within 1 percentage point of the required minimum." I don't know what the exact buyback will be I just couldn't believe the guy downgraded from $20 to $16. I appreciate his mistake though. http://www.bloomberg.com/news/articles/2015-03-05/fed-stress-tests-show-31-largest-banks-meet-capital-targets Link to comment Share on other sites More sharing options...
fareastwarriors Posted March 6, 2015 Share Posted March 6, 2015 BofA Gains as Analysts See Increased Payout on Fed Results http://www.bloomberg.com/news/articles/2015-03-06/bofa-gains-as-analysts-see-higher-payout-on-stress-test-results Link to comment Share on other sites More sharing options...
benchmark Posted March 6, 2015 Share Posted March 6, 2015 http://www.bloomberg.com/news/articles/2015-03-06/employment-report-bolsters-case-for-fed-rate-increase-in-june Seems like the rate increase baked into the stock price already Link to comment Share on other sites More sharing options...
fareastwarriors Posted March 11, 2015 Share Posted March 11, 2015 Federal Reserve Rejects 2 Banks’ Capital Plans in Annual ‘Stress Tests’ Bank of America must resubmit proposal to address certain weaknesses http://www.wsj.com/articles/federal-reserve-rejects-2-banks-capital-plans-in-annual-stress-tests-1426105804 Bank of America Corp. received conditional approval of its capital plan and can move forward with boosting dividends or stock buybacks, but must resubmit its proposal to address “certain weaknesses” including its ability to measure losses and revenue, the Fed said. If the Fed isn’t satisfied with the firm’s revised plan the regulator can later restrict these capital distributions. Link to comment Share on other sites More sharing options...
gary17 Posted March 11, 2015 Share Posted March 11, 2015 LOL.. these guys just can't get a slam dunk on first try eh / lol any idea where i can find what BAC has requested or we have to wait for their press release? thanks Gary Link to comment Share on other sites More sharing options...
tng Posted March 11, 2015 Share Posted March 11, 2015 This still means that BAC will continue with whatever buyback/dividend they originally submitted right? Just that they need to be approved again in a few months or the dividend/buyback gets halted. Link to comment Share on other sites More sharing options...
dcollon Posted March 11, 2015 Share Posted March 11, 2015 Bank of America authorizes a $4B common stock repurchase program; maintains current $0.05 quarterly div. Wednesday, March 11, 2015 The Federal Reserve board (Fed) has informed the company that it completed its 2015 Comprehensive Capital Analysis and Review and it did not object to the company’s capital plan for the period from the second quarter of 2015 through Q2 of 2016. This plan includes the $4B stock repurchase program and maintaining the common stock dividend at the current rate of $0.05 per share per quarter. The Fed also asked Bank of America to submit an additional capital plan by 30-Sep-15 addressing certain weaknesses identified in the company’s capital planning process. If Bank of America does not make material progress in addressing these key weaknesses, the Fed may restrict the company’s capital distributions. Link to comment Share on other sites More sharing options...
ourkid8 Posted March 11, 2015 Share Posted March 11, 2015 This is total BS... argh!!!!!!!! Bank of America authorizes a $4B common stock repurchase program; maintains current $0.05 quarterly div. Wednesday, March 11, 2015 The Federal Reserve board (Fed) has informed the company that it completed its 2015 Comprehensive Capital Analysis and Review and it did not object to the company’s capital plan for the period from the second quarter of 2015 through Q2 of 2016. This plan includes the $4B stock repurchase program and maintaining the common stock dividend at the current rate of $0.05 per share per quarter. The Fed also asked Bank of America to submit an additional capital plan by 30-Sep-15 addressing certain weaknesses identified in the company’s capital planning process. If Bank of America does not make material progress in addressing these key weaknesses, the Fed may restrict the company’s capital distributions. Link to comment Share on other sites More sharing options...
tng Posted March 11, 2015 Share Posted March 11, 2015 Bank of America authorizes a $4B common stock repurchase program; maintains current $0.05 quarterly div. Wednesday, March 11, 2015 The Federal Reserve board (Fed) has informed the company that it completed its 2015 Comprehensive Capital Analysis and Review and it did not object to the company’s capital plan for the period from the second quarter of 2015 through Q2 of 2016. This plan includes the $4B stock repurchase program and maintaining the common stock dividend at the current rate of $0.05 per share per quarter. The Fed also asked Bank of America to submit an additional capital plan by 30-Sep-15 addressing certain weaknesses identified in the company’s capital planning process. If Bank of America does not make material progress in addressing these key weaknesses, the Fed may restrict the company’s capital distributions. Basically the exact same plan as last year, the one that was eventually negated due to the accounting error. I'm disappointed at the low buyback, but I guess I shouldn't be surprised because last year's earnings was wiped out by the lawsuit settlements. We should have strong earnings this year, but the Fed stress test is backward looking because the recession could start tomorrow. The Fed isn't going to let the bank pay out forward earnings. Link to comment Share on other sites More sharing options...
Viking Posted March 11, 2015 Share Posted March 11, 2015 Yes, Bank of America does look to be trailing its peers with regards to the CCAR process. The focus since 2008 was on litigation and raising capital. Moving forward the focus looks to be shifting to building capital and capital return. With the dividend at $0.05/quarter and $4 billion in buybacks (over 5 quarters) that is about 3.5% total return over a 12 month period. Not as much as was expected but not terrible. Looking out 5 quarters we should see the bank earn a lot of money, build a lot of capital and set itself up for a stronger 2016 capital return plan. Looks like they are about a year behind Citi. Tangible book value for BAC is $14.40. This should increase to about $14.70 when earnings are announced in 4 weeks. Bank is currently trading at 1.1xTBV which is very cheap (with peers trading at about 1.3xTBV). If you are looking for 10-15% total return (per year) over the next few years then BAC looks like a pretty good bet. It is very good news that the commentary is shifting to capital return (and away from litigation). The process is just playing out more slowly then we would all like; patience will be the key. Link to comment Share on other sites More sharing options...
orthopa Posted March 11, 2015 Share Posted March 11, 2015 Have to say I was hoping for a little bit more capital return. I just hope the buyback isn't diluted significantly by stock options. Link to comment Share on other sites More sharing options...
wescobrk Posted March 11, 2015 Share Posted March 11, 2015 Citi's total return is about $8.4 billion, BAC is $4 billion and it was down in after hours and citi up 3-4% in after hours. I own both so I'll make some on citi. I thought the UBS analyst was obtuse as he thought BAC wouldn't pass. I thought BAC would get a reduced buyback but the Fed is so unpredictable on the qualitative aspect. The S&P is at 17x and BAC is around 9.7 next year earnings. I thought BAC would get a short term pop but it seems like waiting for godot as BAC and JPM and Citi are all almost half the market multiple. Serves me right for trying to guess Mr. Market short term instead of long term. Link to comment Share on other sites More sharing options...
Munger_Disciple Posted March 12, 2015 Share Posted March 12, 2015 It seems like Fed is punishing BAC for last year's stress test accounting screw up, which BAC found on its own and corrected. Link to comment Share on other sites More sharing options...
wescobrk Posted March 12, 2015 Share Posted March 12, 2015 It seems like Fed is punishing BAC for last year's stress test accounting screw up, which BAC found on its own and corrected. The Fed is a bunch of academics and bureaucrats. Not exactly a list of accomplished business-people. Link to comment Share on other sites More sharing options...
morningstar Posted March 12, 2015 Share Posted March 12, 2015 It seems like Fed is punishing BAC for last year's stress test accounting screw up, which BAC found on its own and corrected. It's hard to see a punishment here - the company's initial capital return request was approved. In that sense it performed better than 3 of the 6 mega cap banks. Link to comment Share on other sites More sharing options...
vinod1 Posted March 12, 2015 Share Posted March 12, 2015 It seems like Fed is punishing BAC for last year's stress test accounting screw up, which BAC found on its own and corrected. The Fed is a bunch of academics and bureaucrats. Not exactly a list of accomplished business-people. It may be that they are not "accomplished business-people" like Angelo Mozilo, Joe Cassano, Ian McCarthy, Frank Raines, Kathleen Corbet, Dick Fuld, Herb Sandler, Stan O'Neal, Sandy Weill, Jimmy Cayne, Chuck Prince, etc. But they are acting eminently rationally. If they do not have any qualitative criteria, most of the banks would game the system. Wall Street always found various ways to get around regulations - frequently to the detriment of the broader economy. Regulators have learned from the financial crisis and using qualitative criteria, they can credibly threaten institutions that do not play by the spirit of the rules. To me for a bunch of academics, they are doing an outstanding job. I own BAC, it is my largest holding, I understand the frustration. But, BAC still has a lot of work to do to get their systems and processes robust. I have taken a mortgage loan from BAC even though it is slightly higher rate just to get a better sense of how they are working and had several friends who have used them as well as recently as a couple of months back. You would not believe the kind of consistently broken processes they have. You can also look at the their various offerings and see how integrated customer experience they offer (they do not), which tells you a lot about the state of their processes. All this might be anecdotal, but it gives you a picture of what kinds of weakness might be hiding as far as risk management is concerned. I worked on these processes at another SIFI bank in my last job so am keenly interested in this. Vinod Link to comment Share on other sites More sharing options...
Munger_Disciple Posted March 12, 2015 Share Posted March 12, 2015 I find it strange that BAC is the only large bank that did not ask for and thus did not get approval for an increase in dividend or buyback. My guess is that fed "hinted" to BAC that such an increase will not be approved. So in a sense, BAC is being singled out. Link to comment Share on other sites More sharing options...
wescobrk Posted March 12, 2015 Share Posted March 12, 2015 It's true they are the only large bank not to ask for a dividend increase but they did ask for a buyback although I read they could have been approved for $10-12 billion buyback based on they had the strongest quantitative results from Thurs stress test.(across the spectrum not just tier 1). It's complete black box plus the Fed makes it more difficult each year and the government has taken most of the earnings for the past 6 years. No wonder they are trading at single digit multiples. Link to comment Share on other sites More sharing options...
wescobrk Posted March 12, 2015 Share Posted March 12, 2015 One thing remains a constant, Buffett's genius blows me away. I still don't know how he got a 6% dividend and 10 year warrants at half of TBV for a decade from a guy that swore he didn't need any more capital. Michael Corleone couldn't have gotten those terms. Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now