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| Tuesday, February 9, 2010 |
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ANALYSIS
March 2, 2009
Sagging Index no longer reflects what’s going on in the market, some say, Replacements? Google it, to start.
March 2, 2009
Downward price spiral will actually boost the cost of capital for most companies. CFOS, take note.
March 2, 2009
The latest bailout at AIG could be a preview of how the president will deal with Wall Street.
March 2, 2009
No corporate defaults. Big debt offerings. Percolating CP issuance. Things may be looking up in the capital markets.
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July 17, 2008 4:22 PM ET
Following the government takeover of IndyMac Bancorp last week, banking analysts and financial industry observers have tried to determine which other banks and thrifts might be in danger of failing. Last weekend, Ladenburg Thalmann securities analyst Richard Bove looked at more than 100 of the biggest U.S. banks by assets and ranked them by two metrics: the ratio of non-performing assets and seriously delinquent loans to gross loans, and the ratio of those questionable loans to the sum of reserves and common equity. The title of his note: “Who is Next?” Five companies fell short of Mr. Bove’s benchmarks in both criteria: BankUnited Financial of Miami Lakes, Fla., Corus Bankshares of Chicago, Doral Financial of San Juan, Puerto Rico, Downey Financial of Newport Beach, Calif., and FirstFed Financial of Santa Monica, Calif. But executives at the banks said their businesses are in no danger of failing. “The flaw in what he’s done is that he’s assuming all non-performing portfolios are the same,” Ramiro Ortiz, president and chief operating officer of BankUnited, told Financial Week. Some 40% of BankUnited non-performing loans are covered by mortgage insurance, softening the financial blow to the bank, Mr. Ortiz said. Doral, which operates in Puerto Rico and New York City, said in a statement that it had “more than sufficient equity to address balance sheet risk needs, including non-performing assets.” Both its New York and Puerto Rico banks were “well-capitalized” according to Federal Deposit Insurance Corp. guidelines as of March 31, it said. “The data is not inaccurate,” noted FirstFed Financial CFO Doug Goddard. “We’re being highlighted because of our non-performing assets right now.” But he said FirstFed Financial exited the single-family home mortgage business in 2007. “We stopped adding to the most at-risk portfolio two-and-a-half years ago.” “We don’t envision a situation where we will need to raise capital, let alone dip below well-capitalized [status] in the next year,” Mr. Goddard said. In response to a request for comment on Mr. Bove’s note, Downey Financial sent a statement announcing that it had injected $62 million into Downey Savings and Loan Association, its thrift subsidiary, and stating that the institution exceeded the FDIC’s well-capitalized thresholds. Corus Bankshares CFO Tim Taylor did not return calls seeking comment. But the bank’s first-quarter earnings statement indicated it was “well-capitalized” as determined by FDIC thresholds. In his report, Mr. Bove stressed that the banking industry is not nearly as imperiled as it was during the savings-and-loan crisis of the late 1980s and early 1990s. In a second note sent on Monday, he marshaled data showing that by the criteria he used to evaluate BankUnited, Corus, Doral, Downey and FirstFed, FDIC-insured banks as a group have barely broken a sweat compared with their situation 20 years ago. In a third note, meant to clarify his comments after banking shares took a beating from investors, Mr. Bove wrote: “The main thrust of this report is that the banks are in better condition than is generally perceived.”
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