mankap Posted August 22, 2012 Share Posted August 22, 2012 Fifth Third Bancorp Unveils Buyback Plan, May Boost Dividend When did Fifth Third submit the buyback request to Fed.Did they also submit in Jan.Probably not http://www.foxbusiness.com/news/2012/08/21/fifth-third-bancorp-unveils-buyback-plan-may-boost-dividend/#ixzz24EjkFdny Link to comment Share on other sites More sharing options...
FCharlie Posted August 22, 2012 Share Posted August 22, 2012 Fifth Third Bancorp Unveils Buyback Plan, May Boost Dividend When did Fifth Third submit the buyback request to Fed.Did they also submit in Jan.Probably not http://www.foxbusiness.com/news/2012/08/21/fifth-third-bancorp-unveils-buyback-plan-may-boost-dividend/#ixzz24EjkFdny Fifth Third submitted CCAR in Jan but was only allowed to repurchase $75 million of shares. They resubmitted in June and it looks like now that they have approval they will do an accelerated share repurchase. I think this is great news for FITB and BAC as FITB's capital levels under BASEL III are not much different that BAC's. Both will have crossed the 2019 finish line before the race even begins. Link to comment Share on other sites More sharing options...
xazp Posted August 22, 2012 Share Posted August 22, 2012 Grr. It irks me that C decided not to re-submit for a buyback. I still do not understand that decision, and it's made worse by fifth third showing that it is possible. Fifth Third Bancorp Unveils Buyback Plan, May Boost Dividend When did Fifth Third submit the buyback request to Fed.Did they also submit in Jan.Probably not http://www.foxbusiness.com/news/2012/08/21/fifth-third-bancorp-unveils-buyback-plan-may-boost-dividend/#ixzz24EjkFdny Fifth Third submitted CCAR in Jan but was only allowed to repurchase $75 million of shares. They resubmitted in June and it looks like now that they have approval they will do an accelerated share repurchase. I think this is great news for FITB and BAC as FITB's capital levels under BASEL III are not much different that BAC's. Both will have crossed the 2019 finish line before the race even begins. Link to comment Share on other sites More sharing options...
mankap Posted August 22, 2012 Share Posted August 22, 2012 I agree, I think this is a good news for BAC.it increases the odds of approval in Jan. Link to comment Share on other sites More sharing options...
hardincap Posted August 22, 2012 Share Posted August 22, 2012 anyone know roughly when JPM will be reinstating their buyback program? did they give an estimate or hint at the timeframe? Link to comment Share on other sites More sharing options...
xazp Posted August 22, 2012 Share Posted August 22, 2012 Not this year ... so, they are now roughly in the same bucket as C and BAC. Which is not a good bucket to be in. anyone know roughly when JPM will be reinstating their buyback program? did they give an estimate or hint at the timeframe? Link to comment Share on other sites More sharing options...
hardincap Posted August 22, 2012 Share Posted August 22, 2012 Hmm Q1 looking like it will be a big comeback quarter for financials, with the three biggest banks starting to buyback shares. unfortunately i think with basel capital ratios at ~9 by then their stock prices will have run up from where it is now, meaning they wont be buying back shares at today's steep discounts. Link to comment Share on other sites More sharing options...
Guest rimm_never_sleeps Posted August 22, 2012 Share Posted August 22, 2012 the banks can buy back stock for years. it will take forever for these things to find their way out of the wilderness. even when they do recover there will be market corrections recessions etc. it's not just a two phase switch. overvalued/undervalued. Link to comment Share on other sites More sharing options...
JRH Posted August 22, 2012 Share Posted August 22, 2012 Hmm Q1 looking like it will be a big comeback quarter for financials, with the three biggest banks starting to buyback shares. unfortunately i think with basel capital ratios at ~9 by then their stock prices will have run up from where it is now, meaning they wont be buying back shares at today's steep discounts. Haha, here we are, back in the old, "heads i win big, tails i win a little smaller" situation. Link to comment Share on other sites More sharing options...
Grenville Posted August 22, 2012 Share Posted August 22, 2012 Nice update on successor liability from Frankel: "In BofA successor liability issue, whose law applies?" http://newsandinsight.thomsonreuters.com/Legal/News/2012/08_-_August/In_BofA_successor_liability_issue,_whose_law_applies_/ The successor liability issue in NY courts is the one thing that worries me most about BAC. I imagine if the ruling by Bransten comes out in favor of MBIA, BAC will appeal and things will get dragged out. I still would prefer a settlement between MBIA & BAC so the can of worms doesn't get opened and the uncertainty disappears. Link to comment Share on other sites More sharing options...
xazp Posted August 23, 2012 Share Posted August 23, 2012 The successor liability issue in NY courts is the one thing that worries me most about BAC. >> I don't worry about it that much personally. I'm not aware of any big lawsuits coming through the NY courts for BAC (other than MBIA itself). Synorca settled, Walnut Place was dismissed by the state supreme court. There's the settlement case, but that's not litigation 'against' BAC. Have I missed any lawsuits going through the NY courts? The big dollar lawsuits are federal class actions, and the big risk cases are federal securities laws. These are decided in federal court under judge Pfaelzer, and not NY state court. So the big cases you hear about - FHFA, AIG, are both with Pfaelzer for example. The federal judges, unlike the NY state judges, have no predisposition towards using NY state law (the NY state law is the most favorable for these kinds of lawsuits). The NY supreme court dismissed the Walnut Place suit - are there others I don't know about still going through the system? I'm not even sure what they'd file on, that wouldn't get dismissed the way Walnut Place was dismissed. I think you've seen most of the litigation filed regarding countrywide already. AIG filed last year and a bunch of their claims were already dismissed due to statute of limitations/repose. I don't think new lawsuits have a better chance after waiting for a year - I just don't see what would make a group wait to sue, since the clock is clearly ticking on the various litigation time limits. Nice update on successor liability from Frankel: "In BofA successor liability issue, whose law applies?" http://newsandinsight.thomsonreuters.com/Legal/News/2012/08_-_August/In_BofA_successor_liability_issue,_whose_law_applies_/ The successor liability issue in NY courts is the one thing that worries me most about BAC. I imagine if the ruling by Bransten comes out in favor of MBIA, BAC will appeal and things will get dragged out. I still would prefer a settlement between MBIA & BAC so the can of worms doesn't get opened and the uncertainty disappears. Link to comment Share on other sites More sharing options...
Parsad Posted August 23, 2012 Share Posted August 23, 2012 I would agree with all that Xazp. I think you are correct here. The longer claimants wait to file litigation, the less likely the claim is going to be favorable as time is passing. Most people jumped on the bandwagon immediately or in the ensuing years. The biggest cases have already been settled. I think the smaller cases will get dragged out, settled for reasonable amounts or dismissed. The biggest overhang on the stock is loan losses and legacy issues from Countrywide, but the company's cash flows and existing reserves should cover most, if not all of that. So you have a company heavily discounted to book and at a significant discount to tangible book, while reserves have been bolstered, biggest litigation cases settled, and existing cash flows are available to cover foreseeable and unforeseen issues. Cheers! Link to comment Share on other sites More sharing options...
PlanMaestro Posted August 24, 2012 Share Posted August 24, 2012 Have I missed any lawsuits going through the NY courts? Ambac. They have several things going on. Some continuing, some withdrawn. http://www.ambac.com/legal_docs.asp Link to comment Share on other sites More sharing options...
Grenville Posted August 24, 2012 Share Posted August 24, 2012 My worry in regards to the successor liability case is that if the courts side with MBIA as a de Facto merger, it will provide precedence. I worry that this will put the 8.5bln BNY settlement in jeopardy. The settlement occurred mostly because it would be hard to prove successor liability against BAC. Also from some of the articles I've read, the statue of repose varies by state. In the end there is a lot here that hinges on laws and their interpretation. I don't have a legal background to say with confidence that there is no risk of loss so I handicap for it. In my mind, I think that's why Warren set up his investment in BAC as a preferred with the warrant kicker. If it was so clear cut that all the mortgage/Countrywide issues were behind the company, he would be buying the common now. In an interview recently, he said he wished he invested more when he made the preferred deal. The preferred deal protects his capital in the event the risks aren't contained. Link to comment Share on other sites More sharing options...
Parsad Posted August 24, 2012 Share Posted August 24, 2012 My worry in regards to the successor liability case is that if the courts side with MBIA as a de Facto merger, it will provide precedence. I worry that this will put the 8.5bln BNY settlement in jeopardy. The settlement occurred mostly because it would be hard to prove successor liability against BAC. Also from some of the articles I've read, the statue of repose varies by state. In the end there is a lot here that hinges on laws and their interpretation. I don't have a legal background to say with confidence that there is no risk of loss so I handicap for it. In my mind, I think that's why Warren set up his investment in BAC as a preferred with the warrant kicker. If it was so clear cut that all the mortgage/Countrywide issues were behind the company, he would be buying the common now. In an interview recently, he said he wished he invested more when he made the preferred deal. The preferred deal protects his capital in the event the risks aren't contained. No, I think he set the deal up as preferred simply because he gets the equity-like returns from the warrants, while receiving considerable dividend income in a low-interest rate environment and the extra security of being ahead of the common. It's just a great structure and he is able to demand more than most. It's why he did this with GS, GE and BAC. If he couldn't do it in this structure, I think he would have bought common in all three, but just lesser nominal amounts than what he committed through the preferreds. If you can get it, then why not take it. The average investor...in fact, even the well-respected celebrity investor...couldn't get the same deal as Buffett. Cheers! Link to comment Share on other sites More sharing options...
twacowfca Posted August 24, 2012 Share Posted August 24, 2012 My worry in regards to the successor liability case is that if the courts side with MBIA as a de Facto merger, it will provide precedence. I worry that this will put the 8.5bln BNY settlement in jeopardy. The settlement occurred mostly because it would be hard to prove successor liability against BAC. Also from some of the articles I've read, the statue of repose varies by state. In the end there is a lot here that hinges on laws and their interpretation. I don't have a legal background to say with confidence that there is no risk of loss so I handicap for it. In my mind, I think that's why Warren set up his investment in BAC as a preferred with the warrant kicker. If it was so clear cut that all the mortgage/Countrywide issues were behind the company, he would be buying the common now. In an interview recently, he said he wished he invested more when he made the preferred deal. The preferred deal protects his capital in the event the risks aren't contained. No, I think he set the deal up as preferred simply because he gets the equity-like returns from the warrants, while receiving considerable dividend income in a low-interest rate environment and the extra security of being ahead of the common. It's just a great structure and he is able to demand more than most. It's why he did this with GS, GE and BAC. If he couldn't do it in this structure, I think he would have bought common in all three, but just lesser nominal amounts than what he committed through the preferreds. If you can get it, then why not take it. The average investor...in fact, even the well-respected celebrity investor...couldn't get the same deal as Buffett. Cheers! My worry in regards to the successor liability case is that if the courts side with MBIA as a de Facto merger, it will provide precedence. I worry that this will put the 8.5bln BNY settlement in jeopardy. The settlement occurred mostly because it would be hard to prove successor liability against BAC. Also from some of the articles I've read, the statue of repose varies by state. In the end there is a lot here that hinges on laws and their interpretation. I don't have a legal background to say with confidence that there is no risk of loss so I handicap for it. In my mind, I think that's why Warren set up his investment in BAC as a preferred with the warrant kicker. If it was so clear cut that all the mortgage/Countrywide issues were behind the company, he would be buying the common now. In an interview recently, he said he wished he invested more when he made the preferred deal. The preferred deal protects his capital in the event the risks aren't contained. No, I think he set the deal up as preferred simply because he gets the equity-like returns from the warrants, while receiving considerable dividend income in a low-interest rate environment and the extra security of being ahead of the common. It's just a great structure and he is able to demand more than most. It's why he did this with GS, GE and BAC. If he couldn't do it in this structure, I think he would have bought common in all three, but just lesser nominal amounts than what he committed through the preferreds. If you can get it, then why not take it. The average investor...in fact, even the well-respected celebrity investor...couldn't get the same deal as Buffett. Cheers! Warren has done deals like this going back more than 20 years. When he thinks a deal will work out OK, but there isn't a sufficient margin of safety, he will invest with a preferred plus a kicker in the form of convertibility or a warrant. This saved his bacon with a crappy US Air investment several years ago. Link to comment Share on other sites More sharing options...
PlanMaestro Posted August 24, 2012 Share Posted August 24, 2012 Warren has done deals like this going back more than 20 years. When he thinks a deal will work out OK, but there isn't a sufficient margin of safety, he will invest with a preferred plus a kicker in the form of convertibility or a warrant. This saved his bacon with a crappy US Air investment several years ago. Yes, but in this case the conditions were certainly not distressed ... actually sort of market considering the warrants cannot be sold. The prefs at that time were yielding much higher than 6%. It almost looked as he was looking for a way to build a large equity position overnight and he needed to find a way to convince Moynihan ... and he used the capital improvement as a carrot. Besides he needs interest paying securities for his insurance companies ... does somebody know which were the actual entities that actually bought the prefs and the warrants? Why not a convertible bond instead? Link to comment Share on other sites More sharing options...
gfp Posted August 24, 2012 Share Posted August 24, 2012 He put them inside insurance subsidiaries and the preferred shares receive better tax treatment on the income than convertible bonds inside insurance companies. This was also the case with the GS and GE securities. Link to comment Share on other sites More sharing options...
gfp Posted August 24, 2012 Share Posted August 24, 2012 cnbc article on the one-year anniversary of Buffett's BofA deal: http://www.cnbc.com/id/48782147 There are so many factual inaccuracies in this article it is ridiculous! They say in the caption the stock went from 6.30 to 'over 8'. They say that is 16%... It's not. And this: " Should Buffett want to cash out at any time, Bank of America will pay him a 5 percent, or $250 million, premium on the buyback. " Then there is this paragraph: "So let’s calculate this: Buffett has an additional $300 million from the dividend (part of his Berkshire Hathaway’s [bRK.A Loading... () ] disclosure of $1.86 billion in interest income through the first half of the year). Future dividends aside, he will cash out his Bank of America preferred at $5.25 billion. And, as long as BAC shares stay above $7.15 will collect an additional $5 billion, before taxes." Link to comment Share on other sites More sharing options...
Parsad Posted August 24, 2012 Share Posted August 24, 2012 cnbc article on the one-year anniversary of Buffett's BofA deal: http://www.cnbc.com/id/48782147 There are so many factual inaccuracies in this article it is ridiculous! They say in the caption the stock went from 6.30 to 'over 8'. They say that is 16%... It's not. And this: " Should Buffett want to cash out at any time, Bank of America will pay him a 5 percent, or $250 million, premium on the buyback. " Then there is this paragraph: "So let’s calculate this: Buffett has an additional $300 million from the dividend (part of his Berkshire Hathaway’s [bRK.A Loading... () ] disclosure of $1.86 billion in interest income through the first half of the year). Future dividends aside, he will cash out his Bank of America preferred at $5.25 billion. And, as long as BAC shares stay above $7.15 will collect an additional $5 billion, before taxes." Yeah, I read that too. That's why I didn't bother posting it! On another note, what is stopping BAC from spinning off Countrywide? There was an article I read today that discussed it, and I actually think it is possible to do that, unless there is some regulatory or legal reason why they could not do that. Anyone have any information? I know that a Countrywide bankruptcy was always on the table during settlement negotiations, and probably that option is still around for existing litigation, but why not spin it off and put all of those liabilities within a separate trading stock. That would also probably shoot BAC up quite a bit towards tangible book. Cheers! Link to comment Share on other sites More sharing options...
MrB Posted August 24, 2012 Share Posted August 24, 2012 Warren has done deals like this going back more than 20 years. When he thinks a deal will work out OK, but there isn't a sufficient margin of safety, he will invest with a preferred plus a kicker in the form of convertibility or a warrant. This saved his bacon with a crappy US Air investment several years ago. Yes, but in this case the conditions were certainly not distressed ... actually sort of market considering the warrants cannot be sold. The prefs at that time were yielding much higher than 6%. It almost looked as he was looking for a way to build a large equity position overnight and he needed to find a way to convince Moynihan ... and he used the capital improvement as a carrot. Besides he needs interest paying securities for his insurance companies ... does somebody know which were the actual entities that actually bought the prefs and the warrants? Why not a convertible bond instead? It's in the prospectus Link to comment Share on other sites More sharing options...
PlanMaestro Posted August 25, 2012 Share Posted August 25, 2012 It's in the prospectus Is there more? “Permitted Transferee” means any direct or indirect subsidiary of the Investor where the Investor beneficially owns at least 80% of the equity interests (measured by both voting rights and value) of such subsidiary. http://www.sec.gov/Archives/edgar/data/70858/000119312511232422/dex11.htm Link to comment Share on other sites More sharing options...
ERICOPOLY Posted August 25, 2012 Share Posted August 25, 2012 note, what is stopping BAC from spinning off Countrywide? There was an article I read today that discussed it, and I actually think it is possible to do that, unless there is some regulatory or legal reason why they could not do that. Anyone have any information? They could sell it to me for $1, and then I could put it in bankruptcy myself. The $1 would be lost, I would make up for that loss by the soaring price of my BAC shares. Given that this is such a good idea and yet nobody has done it yet... probably it isn't a viable option. Link to comment Share on other sites More sharing options...
twacowfca Posted August 25, 2012 Share Posted August 25, 2012 note, what is stopping BAC from spinning off Countrywide? There was an article I read today that discussed it, and I actually think it is possible to do that, unless there is some regulatory or legal reason why they could not do that. Anyone have any information? They could sell it to me for $1, and then I could put it in bankruptcy myself. The $1 would be lost, I would make up for that loss by the soaring price of my BAC shares. Given that this is such a good idea and yet nobody has done it yet... probably it isn't a viable option. Theoretically, they could spin it off into bankruptcy, but practically why would their regulator approve that when the overriding goal of the government is to keep increasing amounts of capital in the banking system and not allow banks to shuck insolvent subsidiaries, unless to a different and sounder bank holding company? That policy is intended to force banks to lend money out as well as provide a well of capital to buy US government debt to finance the huge deficit. Link to comment Share on other sites More sharing options...
Cardboard Posted August 25, 2012 Share Posted August 25, 2012 BAC needs to add another $5 to $10 billion to its reserves to settle pretty much all its remaining legacy liabilities. I think that they should get that done quickly and move on so they can start presenting to regulators a much cleaner bill of health at the end of Q4. There is no point to keep on draging these various lawsuits anymore which they keep on losing anyway. Even their own law firm has written that they should increase their reserves to pay for the monolines. Huge fees and effort are wasted there plus all the risk and uncertainties associated to it. That is one thing I hate about most corporations, why does it take so much time to get anything done? Another issue that concerns me about BAC is compensation with stock, especially at these levels. 99 million shares issued in 2010, 51 million in 2011 and 191 million so far this year. This latest is 1.8% of outstanding for 2012. We are talking about buybacks, while these guys are diluting the heck out of our shares right now. So if they were to buy back 5% of shares in a given year, it is really only 3.2% net at the current rate. That adds up over time. Cardboard Link to comment Share on other sites More sharing options...
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