Company Reports

WFC @ GS: Likes Long Term, Short Term Systemically Creepy


Wells Fargo CEO sounded chipper on GS Financial Services zoom call. Still, there is too much wood to chop in its restructuring to be so sanguine. Still a Sell on Stock, Perpetual Preferred Stock, and benchmark Bonds. Regulatory risk is Very High and counterparty risk is High. 

TFC: Stuck Between a Merger and a Pandemic


Truist loaded up on perpetual preferred stock YTD to keep the regulators at bay as it deals with merger cost savings delays and an overleveraged balance sheet going into pandemic. Catching up on all fronts. Still commond dividend may be more at risk versus other big regionals. Sell Stock and benchmark Bond, Preferred stock fully priced. Very Low regulatory risk and Low counterparty risk. 

Regions Financial: M&A Mahjong: Who Shall Meld?


Regions Financial continues to stay independent as the latest PNC action bypassed it. We analyse and update our regional bank M&A stratego to see why and when it will be purchased. Seems like a while. Sell capital structure (equity & debt) and counterparty & regulatory indicators are High risk. 

PNC Buys BBVA USA: Motivated Seller, Cash Rich Buyer


PNC pulls the trigger and bags BBVA USA as the stars aligned for both. Still it shows that other big and weaker US regional banks not as motivated to sell hoping for vaccine relief and resumption of normal economics. Sell on PNC capital structure (stock and bonds) and counterparty and regulatory risk is Low. 

CFG @ BofA Securities & 3Q20: Pretend & Get Clobbered


Citizens Financial is not out of the pandemic and credit cycle woods as it continues to pretend it is in the growth mode; when it very much needs added capital to bolster the balance sheet. Still too much credit quality pressures even without a pandemic. Sell on stock, benchmark bonds, and preferred stock. Regulatory and counterparty risk stays at Medium levels which is high for a regional bank given weak economic earnings. 

Recap COF 3Q20: Chock Full of Subprime Sludge: How To Shovel Out?


Capital One is hanging on by a hair as government stimulous support has kept its credit quality together. But it could easily humpty dumpty fall and crash into millions of credit loss pieces. Sell capital stack (Stock & Bonds), Counterparty risk to Medium-to-High. Regulatory risk Medium. 

BAC 3Q20: Merrill Good, Ole BAC Bad


Bank of America did not show the same nominal lift in capital markets trading and investment banking that the other peer trading banks did. Still, Merrrill retail held its own by growing units via customers and products. Rate pressure really harming the biggest retail deposit bank with swaps hedges rather ineffective. So back to cash securities strategies. Sell on Capital Structure (debt & equity). Regulatory/Counterparty Indicatiors stays at Medium risk. 

JPM 3Q20: Credit Cruising or Future Bruising?


JPMorgan tried to wow the investor/risk mgt crowd with seemingly blockbuster results. Excluding one-offs it was a yawn of a quarter. JPM overconfident that worst of pandemic impacts is over. We are a Sell on the Equity and benchmark debt. And systemic risk and counterparty rise to Medium levels. 

FITB @ Barclays: False Positive, Steep Capital Negatives


Fifth Third is on happy pills as it believes that its loan credit quality won't spill into the red. We beg to differ and believe it is very short of common equity capital under a more severe economic/health climate. We are a Sell across its Stock & benchmark Bonds. And recognize Medium Systemic and Counterparty Risk. 

KEY @ Barclays: Delusional on Returns, Deluge of Credit Losses?


KEY was another cool regional bank presenter that was not too panicky on its future credit development and reserves. We beg to differ and see a big capital need if losses go to new highs given the health pandemic. Sell Stock, Buy benchmark Bonds on relative value basis. Higher regulatory and counterparty risk. 

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