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BAC-WT - Bank of America Warrants


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They take it in, pay you little to none, loan it out 10X with a net interest margin. Fees are icing on the cake for them.

 

 

I had to go back and see what the hell you were talking about. Nitpicking on a typo? You're a dick.

 

So I guess the 'zero' was a typo and you would have said "loan it out 1X with a NIM". Sounds odd but oke. Or am I confused?

 

In any case, I don't see why Eric is the dick here for correcting something that he couldn't have known was just a plain typo. Play nice!

 

No, BofA is a giant black box. I couldn't say with confidence what they could loan, nor could anyone else.

 

mrstockwell, Dont take this the wrong way, but this statement drives me nuts.  As an outside passive minority investor ALL your investments are black boxes.  BAC, is no more, or no less, a black box, than any other financial, oil company, miner, manufacturer, etc.  In fact I contend it is easier and safer to analyze than oil companies, tech companies, and miners.

 

I agree and I'm in the same boat regarding the discussion on pricing power. It is totally irrelevant at current valuations and for my investment thesis whether the big players have or haven't got any pricing power. +++

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source: www.bankregdata.com

 

 

Net Loans & Leases: $7.29 Trillion (up $140.40 Billion)

Net Loans & Leases jumped $140.40 Billion Q on Q which was the biggest quarterly increase in 15 Quarters (since 2007 Q4) sans the artificial 2010 Q1 lift from Credit Cards mentioned earlier.

 

Quarterly growth by Loan Portfolio type:

                                                                2011 Q4 Amount Q on Q Growth Perc

Commercial & Industrial                                1,358,306,306,000 65,803,604,000 5.09

Credit Cards                                                    687,753,069,000 21,276,448,000 3.19

Farm Loans                                                      61,336,666,000 1,534,287,000         2.57

1-4 Family 1st Liens                                    1,757,656,255,000 32,882,442,000 1.91

Lease Financing                                              100,799,862,000 1,678,089,000         1.69

Individuals: Auto                                            299,860,490,000 3,360,123,000         1.13

Multifamily Residential                                      218,499,357,000 1,683,201,000 0.78

Farmland Loans                                                68,655,223,000 367,012,000         0.54

Commercial Real Estate                                1,062,333,258,000 3,995,775,000         0.38

Individuals: Other                                            320,007,378,000 -1,586,004,000 -0.49

Home Equity Loans                                          603,374,488,000 -4,879,665,000 -0.80

1-4 Family Jr Liens                                            120,310,940,000 -6,921,431,000 -5.44

Construction & Dev                                          240,151,179,000 -14,557,692,000 -5.72

 

Commercial & Industrial lending jumped 5.09% which is the largest increase in 17 quarters and the 2nd highest on record. Credit Cards also saw a nice pop with a 3.19% Q on Q increase - given the amount of solicitations in my mail box the past few months this comes as little surprise.

 

1-4 Family Junior Liens and Construction & Development lending both saw large declines. Construction lending is now at a 10 year low.

 

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In any case, I don't see why Eric is the dick here for correcting something that he couldn't have known was just a plain typo. Play nice!

 

Personally I think he was just saving face.  Why mention any kind of leverage against deposits?  The "typo" argument just doesn't make sense.

 

Why would one ever say "loan it out at 1x", instead of just saying "loan out the deposits".  The 1x would be implied.  No, I think he is confused about how deposits get loaned out.  My guess is he intentionally wrote 10x because he mentally got it mixed up with the money multiplier effect about how deposits get loaned out, then deposited again, then loaned out, etc...

 

Again, wouldn't it be odd to write "loan it out at 1x" when you are just trying to say "loan it out".  That's a very awkward way of saying something. Then he didn't object the first time I questioned him with the $10trillion figure, instead muttering something about a "black box", presumably to avoid the question (saving face).

 

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Commercial & Industrial lending jumped 5.09% which is the largest increase in 17 quarters and the 2nd highest on record. Credit Cards also saw a nice pop with a 3.19% Q on Q increase - given the amount of solicitations in my mail box the past few months this comes as little surprise.

 

1-4 Family Junior Liens and Construction & Development lending both saw large declines. Construction lending is now at a 10 year low.

 

The following chart complements this positive data. The USA does not look remotely like Japan. It seems the deleveraging has stopped so when banks ease conditions, credit responds.

 

http://www.businessinsider.com/what-stagnation-looks-like-in-one-chart-2012-3

 

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I was reading something by Gary Shilling where he stated that people who collectively are not making mortgage payments are getting an imputed income of about $50b from not having to pay anything at all to continue living in their homes.

 

I'm wondering if anyone can take a stab at how much interest income BofA is missing due to their share of that $50b pie?

 

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I was reading something by Gary Shilling where he stated that people who collectively are not making mortgage payments are getting an imputed income of about $50b from not having to pay anything at all to continue living in their homes.

 

I'm wondering if anyone can take a stab at how much interest income BofA is missing due to their share of that $50b pie?

 

BAC as of 12/31/11:

 

Residential mortgage 30+ past due  $28.688 bln  at 4%

Home Equity non-performing              $  2.453 bln  at 4% (mostly floating rate)

Countrywide PCI non performing      $12.700 bln  at 3.8%

Countrywide PCI deliquent                $  3.000 bln  at 3.8%

 

Total comes to about $1.843 bln/year and this is exaggerated since BAC paid 70% for the PCI loans. 

With BAC as such a major player in the US, $50 billion/year seems high to me.

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Total comes to about $1.843 bln/year and this is exaggerated since BAC paid 70% for the PCI loans. 

With BAC as such a major player in the US, $50 billion/year seems high to me.

 

Shilling's number includes principle payments (and insurance) as well I think, but his number is actually $65 billion (I guess by making it only $50b I'm adjusting for the principle portion):

 

-- Rent-Free Renters: Since 2006, 3.1 million people are essentially living rent-free by not paying their monthly mortgage payments. Assuming a monthly mortgage bill equivalent to the national average of $1,721 per person, these nonpayers have increased their purchasing power for other items by $65 billion at annual rates, or the equivalent of 5.6 percent of after-tax income.

 

Here is the article:

http://www.bloomberg.com/news/2012-02-22/why-renters-rule-u-s-housing-market-part-1-a-gary-shilling.html

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Just a warning on Shilling though -- he is skewed with a negative bias so take his article with a dose of skepticism mixed in.

 

For example, he writes:

-- Annual Absorption: Household formation in the fourth quarter of 2011 was 659,000 at annual rates. Over the last decade, it has averaged about 900,000, a number that seems reasonable in years ahead. Note, however, that this number may be on the high side if significant doubling up reduces household formation.

 

I comment:

Gary, it actually might be on the LOW side if there was significant doubling up the past few years given the unemployment rate.  The average formation rate for the ten years immediately pre-ceeding the crisis was much higher.  And using that higher number debunks your thesis.

 

He also writes:

If historical trends hold, the total homeownership rate will return to its earlier base level of 64 percent by the fourth quarter of 2016.

 

I comment:

Gary, you only get away with this argument because the boomer generation skews the data.  If you look at any age category under 55, home ownership rates are lower at the end of 2011 than at any point in history going back 50 years (as far as the data goes).  So,  if historical trends per age category hold, then home ownership rates will CLIMB from here.  Honestly, what a rookie mistake to compare today's demographic makeup of the United States where it's so top-heavy with the 80% ownership rates of the over-65 age category.  And ditto for the over 55 category, which (combined with the over 65 category) encapsulates all the boomers.

 

 

 

 

 

 

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Others have rallied while BAC remains moribund.  I guess everyone is waiting for the stress test results.  It will probably rally once the unknowns become known, regardless of the test outcomes.

 

Good presentation today by Moynihan despite the interruptions.

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Others have rallied while BAC remains moribund.  I guess everyone is waiting for the stress test results.  It will probably rally once the unknowns become known, regardless of the test outcomes.

 

Good presentation today by Moynihan despite the interruptions.

 

got a link?

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Nice videos of Brian Moynihan on CNBC:

 

On housing and stress test

http://video.cnbc.com/gallery/?video=3000077687

 

 

Improvement in consumer spending

http://video.cnbc.com/gallery/?video=3000077688

 

"consumers are spending about 6% more on the credit and debit cards february 2012 versus february 2011, and that's been pretty consistent."

 

thanks for those--respect for moynihan +1.

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I think the best way to illustrate this is to watch Pandit's latest presentation for the Citigroup Financial Services Conference. What is Citigroup's action plan beyond the grandiose vision talk? Then compare his presentation to Brian Moynihan's.

 

My impression is that Moynihan is a businessman on a mission. Pandit, having been dealt a much better hand, not so much on both accounts. And this is being reflected on the non-credit numbers of both companies.

 

I have both. Citi because it does not have the mortgage hangover while still cheap. But I am not sure I will keep it long term.

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I think the best way to illustrate this is to watch Pandit's latest presentation for the Citigroup Financial Services Conference. What is Citigroup's action plan beyond the grandiose vision talk? Then compare his presentation to Brian Moynihan's.

 

My impression is that Moynihan is a businessman on a mission. Pandit, having been dealt a much better hand, not so much on both accounts. And this is being reflected on the non-credit numbers of both companies.

 

I have both. Citi because it does not have the mortgage hangover while still cheap. But I am not sure I will keep it long term.

 

Thanks for the color!

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