racemize Posted March 20, 2014 Share Posted March 20, 2014 It looks to me that BAC can return a max of approximately $13 billion. Hopefully will be $10 billion in buybacks. What numbers are you using to get to the 13 billion? Link to comment Share on other sites More sharing options...
gary17 Posted March 20, 2014 Share Posted March 20, 2014 I'm guessing he's using 12.4% tier 1 = 161b so 1% excess (6% less 5% required) is about 12.9b. It looks to me that BAC can return a max of approximately $13 billion. Hopefully will be $10 billion in buybacks. What numbers are you using to get to the 13 billion? Link to comment Share on other sites More sharing options...
Grenville Posted March 20, 2014 Share Posted March 20, 2014 Posted by: Rabbitisrich « on: Today at 01:28:38 PM » Insert Quote Looks like BAC PTPP is being impacted by adverse litigation and putback expenses in the most adverse scenario. Do you mean the 7.1 b in the other column if the severe adverse scenario? I think he's referring to the PTPP # of 31.4 on page 38/162. That number is through Q42015. It includes: "1 Pre-provision net revenue includes losses from operational-risk events, mortgage repurchase expenses, and other real estate owned (OREO) costs." As a comparison WFC is 50.7 Link to comment Share on other sites More sharing options...
Rabbitisrich Posted March 20, 2014 Share Posted March 20, 2014 Posted by: Rabbitisrich « on: Today at 01:28:38 PM » Insert Quote Looks like BAC PTPP is being impacted by adverse litigation and putback expenses in the most adverse scenario. Do you mean the 7.1 b in the other column if the severe adverse scenario? That other column looks like the change in fair value for available for sale loans. My guess is that the weak projected PPNR, in the most adverse scenario, is mostly due to BAC's litigation and putback developments. Link to comment Share on other sites More sharing options...
redskin Posted March 20, 2014 Share Posted March 20, 2014 I'm guessing he's using 12.4% tier 1 = 161b so 1% excess (6% less 5% required) is about 12.9b. It looks to me that BAC can return a max of approximately $13 billion. Hopefully will be $10 billion in buybacks. What numbers are you using to get to the 13 billion? I was looking at the Fed's estimate of risk weighted assets after severely adverse scenario of approximately 1,300 billion. Since the Fed came up with 6% tier 1 common ratio in severely adverse scenario, they have about 1% of excess capital or $13B (1,300*0.01) I'm sure they'll end up being on the conservative side with the capital ask. Link to comment Share on other sites More sharing options...
racemize Posted March 20, 2014 Share Posted March 20, 2014 I'm guessing he's using 12.4% tier 1 = 161b so 1% excess (6% less 5% required) is about 12.9b. It looks to me that BAC can return a max of approximately $13 billion. Hopefully will be $10 billion in buybacks. What numbers are you using to get to the 13 billion? I was looking at the Fed's estimate of risk weighted assets after severely adverse scenario of approximately 1,300 billion. Since the Fed came up with 6% tier 1 common ratio in severely adverse scenario, they have about 1% of excess capital or $13B (1,300*0.01) I'm sure they'll end up being on the conservative side with the capital ask. I see, thanks. Link to comment Share on other sites More sharing options...
Grenville Posted March 20, 2014 Share Posted March 20, 2014 Something doesn't make sense to me when I compare 2013 to 2014 results. 2014 Net Income under severe adverse scenario: -49.1 Actual Q3 2013 Tier 1 common ratio: 11.1% Projected minimum Tier 1 common ratio: 6.0% Change in Tier 1 common ratio: -5.1% Projected risk weighted assets: 1,319.5 Calculated change in Tier 1 common capital: -5.1%*1,319.5= -67 2013 Net Income under severe adverse scenario: -51.8 Actual Q3 2012 Tier 1 common ratio: 11.4% Projected minimum Tier 1 common ratio: 6.8% Change in Tier 1 common ratio: -4.6% Projected risk weighted assets: ? (use Q3 2012 RWA of 1,195.7) Calculated change in Tier 1 common capital: -4.6%*1,195.7= -55 Not sure what I'm missing, but the drop in the tier 1 common ratio seems a bit too high given the loss numbers given. The loss is in the same ball park across the two years and the RWA has gone up in 2014 over 2013. Link to comment Share on other sites More sharing options...
Grenville Posted March 20, 2014 Share Posted March 20, 2014 Something doesn't make sense to me when I compare 2013 to 2014 results. 2014 Net Income under severe adverse scenario: -49.1 Actual Q3 2013 Tier 1 common ratio: 11.1% Projected minimum Tier 1 common ratio: 6.0% Change in Tier 1 common ratio: -5.1% Projected risk weighted assets: 1,319.5 Calculated change in Tier 1 common capital: -5.1%*1,319.5= -67 2013 Net Income under severe adverse scenario: -51.8 Actual Q3 2012 Tier 1 common ratio: 11.4% Projected minimum Tier 1 common ratio: 6.8% Change in Tier 1 common ratio: -4.6% Projected risk weighted assets: ? (use Q3 2012 RWA of 1,195.7) Calculated change in Tier 1 common capital: -4.6%*1,195.7= -55 Not sure what I'm missing, but the drop in the tier 1 common ratio seems a bit too high given the loss numbers given. The loss is in the same ball park across the two years and the RWA has gone up in 2014 over 2013. I guess if I take the difference of 0.4% in terms of the delta change in the tier 1 common ratio's in the severe adverse scenario times the projected RWA of 1,319.5 it's about 5.3bln. So it's not too off. I'm a bit disappointed the minimum came in so low. The severe adverse scenario must be much worse than 2013's test. EDIT: I just read the executive summary from the Federal Reserve stress test results and it all makes much more sense as to what's going on with the numbers. Link to comment Share on other sites More sharing options...
Grenville Posted March 20, 2014 Share Posted March 20, 2014 Here are BAC's supervisory results. It's posted on it's IR website: http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NTM3MjMyfENoaWxkSUQ9MjI1ODcwfFR5cGU9MQ==&t=1 Here is a comparison of BAC's supervisory results from 2013 & 2014 2014 Q3 2013 Tier 1 common Ratio: 11.1% Supervisory severe adverse Tier 1 common ratio minimum: 8.6% % change: -2.5% 2013 Q3 2012 Tier 1 common Ratio: 11.4% Supervisory severe adverse Tier 1 common ratio minimum: 7.7% % change: -3.7% Link to comment Share on other sites More sharing options...
racemize Posted March 21, 2014 Share Posted March 21, 2014 It seems strange how big the difference in stress test results there are between the Fed results and BAC's results in their presentation. I guess the Fed really put the screws on in their tests. JP Morgan's and the Fed's are much closer... Link to comment Share on other sites More sharing options...
redskin Posted March 21, 2014 Share Posted March 21, 2014 It seems strange how big the difference in stress test results there are between the Fed results and BAC's results in their presentation. I guess the Fed really put the screws on in their tests. JP Morgan's and the Fed's are much closer... Agreed. Very disappointing. It's hard for me to imagine BAC is in worse shape this year than they were a year ago. Link to comment Share on other sites More sharing options...
rkbabang Posted March 21, 2014 Share Posted March 21, 2014 It seems strange how big the difference in stress test results there are between the Fed results and BAC's results in their presentation. I guess the Fed really put the screws on in their tests. JP Morgan's and the Fed's are much closer... Agreed. Very disappointing. It's hard for me to imagine BAC is in worse shape this year than they were a year ago. BAC is further up the field than they were a year ago, but it appears that the goal post has been moved. This isn't a problem, long term anyway, as long as the severe adverse scenario never actually happens. Link to comment Share on other sites More sharing options...
Grenville Posted March 21, 2014 Share Posted March 21, 2014 Federal Reserve issued revised stress test results http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20140321a1.pdf BAC is now 5.9% instead of 6.0% It's funny how a complicated model determines something so important as capital return. Link to comment Share on other sites More sharing options...
nkp007 Posted March 21, 2014 Share Posted March 21, 2014 Federal Reserve issued revised stress test results http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20140321a1.pdf BAC is now 5.9% instead of 6.0% It's funny how a complicated model determines something so important as capital return. Seriously, what the heck is going on? Does Moynihan's ex-girlfriend work at the Fed or something? Link to comment Share on other sites More sharing options...
wescobrk Posted March 21, 2014 Share Posted March 21, 2014 Citigroup went from 7 to 7.2 I like that part:) Link to comment Share on other sites More sharing options...
wescobrk Posted March 21, 2014 Share Posted March 21, 2014 Maybe citi will finally get to 55 this week. Link to comment Share on other sites More sharing options...
ERICOPOLY Posted March 23, 2014 Share Posted March 23, 2014 It seems strange how big the difference in stress test results there are between the Fed results and BAC's results in their presentation. Perhaps BAC expects cost reductions that the Fed isn't accounting for? Multiplied by two years it gets big. Link to comment Share on other sites More sharing options...
redskin Posted March 23, 2014 Share Posted March 23, 2014 It seems strange how big the difference in stress test results there are between the Fed results and BAC's results in their presentation. Perhaps BAC expects cost reductions that the Fed isn't accounting for? Multiplied by two years it gets big. Big difference is in the projected loan losses. Link to comment Share on other sites More sharing options...
dutchman Posted March 24, 2014 Share Posted March 24, 2014 Buy Bank of America http://online.barrons.com/article/SB50001424053111903536004579458402024590832.html Link to comment Share on other sites More sharing options...
fareastwarriors Posted March 25, 2014 Share Posted March 25, 2014 When is the company planning to disclose their capital plans? Link to comment Share on other sites More sharing options...
mankap Posted March 25, 2014 Share Posted March 25, 2014 I understand that Fed will announce the approval of the plan on Wed . Link to comment Share on other sites More sharing options...
ourkid8 Posted March 25, 2014 Share Posted March 25, 2014 March 26 @ 4pm. Tks, S Link to comment Share on other sites More sharing options...
fareastwarriors Posted March 26, 2014 Share Posted March 26, 2014 March 26 @ 4pm. Tks, S Today's the day. Link to comment Share on other sites More sharing options...
ourkid8 Posted March 26, 2014 Share Posted March 26, 2014 I cannot wait! My guestimate is $10B in total capital return - $5B in share repurchase, $2B in dividends and $2-3B in prefered redemptions. Tks, S March 26 @ 4pm. Tks, S Today's the day. Link to comment Share on other sites More sharing options...
wescobrk Posted March 26, 2014 Share Posted March 26, 2014 Good luck. I don't think their (bac) dividends will exceed much beyond 1 billion but the share buybacks should have at least 5 billion. I'm hoping citi gets 6 billion plus 600 million in dividends. Link to comment Share on other sites More sharing options...
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