Our online training courses are designed to provide novice currency traders with a broad overview of the Forex market. Covering everything from the factors that drive currency movements through to reading and analysing charts, and effectively utilising leverage, the course will prepare you with the skills you need to trade forex.
Our courses are available free of charge to clients - find out more from one of our forex experts, or apply for an account now to get started today.
Spot metals and oil
FOREX.com also offers trading in spot gold and silver and Brent Crude Oil, providing interesting alternatives to diversify your portfolio beyond currencies. Learn more about these dynamic markets in our online Spot Metals Guide and Oil Guide
Monday, August 24, 2009
New to the Forex market?
If you're new to the Forex market our online Forex Guide will take you through the basics: Learn how currencies trade, the importance of leverage and margin, and how to calculate profit and loss. We also explain the basics of technical and fundamental analysis and how to use these indicators to inform your trading decisions.
Test your skills risk free
Take advantage of a free 30-day practice account with £50,000 of virtual money. Test your trading skills with full access to our trading platforms including charting and analytical tools, and unique research and analysis available to clients of FOREX.com. Sign up for a practice account.
Attend interactive webinars
Join us for a free interactive webinar for hands on training, demonstrations and techniques to help you learn how to trade and analyse the Forex market. See our webinar schedule for upcoming events.
Test your skills risk free
Take advantage of a free 30-day practice account with £50,000 of virtual money. Test your trading skills with full access to our trading platforms including charting and analytical tools, and unique research and analysis available to clients of FOREX.com. Sign up for a practice account.
Attend interactive webinars
Join us for a free interactive webinar for hands on training, demonstrations and techniques to help you learn how to trade and analyse the Forex market. See our webinar schedule for upcoming events.
Forex.com UK LTD
FOREX.com UK Ltd is a trading name of GAIN Capital - FOREX.com UK Limited, a subsidiary of GAIN Capital Holdings, Inc. GAIN Capital is a global leader in foreign exchange trading, serving retail and professional clients in over 140 countries worldwide through its direct and partner brands, and supporting average trade volume of nearly $200 billion per month.
With FOREX.com UK, you have 24 hour access to the global foreign exchange market, plus powerful charting tools, expert market research and commentary, and advanced forex trading tools. We also offer a wealth of education and training, covering everything from getting started in forex to understanding technical analysis and developing a trading strategy. Register for a practice account today to see for yourself.
With FOREX.com UK, you have 24 hour access to the global foreign exchange market, plus powerful charting tools, expert market research and commentary, and advanced forex trading tools. We also offer a wealth of education and training, covering everything from getting started in forex to understanding technical analysis and developing a trading strategy. Register for a practice account today to see for yourself.
Thursday, August 20, 2009
General American Investors Files Certified Shareholder Report for Period Ended June 30, 2009
NEW YORK--(BUSINESS WIRE)--General American Investors Company, Inc., a closed-end investment company listed on the New York Stock Exchange (GAM), filed with the U.S. Securities and Exchange Commission (SEC) its Certified Shareholder Report (Form N-CSR) for the six month period ended June 30, 2009. The Form N-CSR contains the Company’s June 30, 2009 Semi-Annual Report and is available at the SEC’s website: www.sec.gov and the Company’s website: www.generalamericaninvestors.com. The Semi-Annual Report is expected to be mailed to stockholders shortly.
Financial Information
The Semi-Annual Report indicates that as of or for the six months ended:
| | | | 6/30/09 | | | 6/30/08 |
| | | | | | | |
| Net Assets Applicable to Common Stock | | | $732,059,359 | | | $1,141,320,885 |
| | | | | | | |
| Net Assets Per Common Share | | | $22.89* | | | $36.15 |
| | | | | | | |
| Net Investment Income | | | $3,648,823 | | | $5,704,953 |
| | | | | | | |
| Per Share | | | $.11 | | | $.18 |
| | | | | | | |
| Net Gain (Loss) on Investments | | | $58,521,196 | | | ($54,567,810) |
| | | | | | | |
| Per Share | | | $1.85 | | | ($1.72) |
| | | | | | | |
| Common Shares Outstanding | | | 31,980,872 | | | 31,573,058 |
| * | After dividends and distributions of $.215294 per share paid in February 2008 and $.44 per share paid in December 2008. |
Securities Transactions and Positions
The Company reported that it made new commitments during the second quarter of 2009 in Alpha Natural Resources, Devon Energy, International Game Technology, The Travelers, and Wyeth. In addition, it increased its holdings in Arch Capital, Fidelity National, Nelnet, PepsiCo, and Wal-Mart during the second quarter.
A position in Patterson-UTI Energy was eliminated, while reductions were made in the holdings of American Express, AXIS Capital, CEMEX, Lamar Advertising, M&T Bank, NetEase.com, and Target.
The largest stock holdings in the Company’s portfolio at June 30, 2009 included: The TJX Companies, Inc., Weatherford International Ltd., Apache Corporation, QUALCOMM Incorporated, and Wal-Mart Stores, Inc.
American investors won’t come to Ghana: It’s their money, not the President’s
President Obama came to Ghana to endorse the country’s good democratic process. In the midst of chaos, needless bloodshed, and tainted elections and accompanying violence in Africa, Ghana stands out on the continent as a good example.
But beyond democratic stability, the country also needs economic stability and growth.
In an editorial, ghanabusinessnews.com looked at the possible ripples of President Obama’s visit and wondered if American investors would come into the country to do business.
The Managing Editor of ghanabusinessnews.com posted the editorial on his blog titled Rightup at www.emmanuelwrites.blogspot.com.
In direct response to the question of whether American investors would come and invest in Ghana because President Obama has endorsed the country, a reader sent an email to the editor.
He began by writing, “Came across your blog After Obama’s Ghana visit, would American investors come? and wanted to share some thoughts with you. The short answer is no! And that is because it is not the President’s money that will be invested.
The author of the mail, Ramesh Kanthilal, Spokesperson and Director of Operations for AFREECON. AFREECON is the acronym title for Africa’s Economic Emancipation Conference, it is written on the organisation’s website.
Enumerating further reasons why American investors will not come, he said, African countries, Ghana included, are clueless about how to attract capital–the right kind of capital. Not the exploitative capital that has come from Europe for almost six centuries. If Europe is a good source of capital and ideas for African economies, why are African countries not doing better than they are? After all Europeans have been coming since the 1400s.
On Africa’s leadership he wrote: “African countries are lead by people who would rather “pocket” the people’s money, than invest it in efforts to market their economies and their countries.”
On the foreign missions of African countries abroad, he cited the Ghana Embassy in Washington and asked a question: “Have you ever tried to call the Ghanaian Embassy in Washington?”
“You should try it. It is an illuminating experience. The experience has been a very mixed bag for our team and would not inspire us to want to invest in Ghana”, he said.
“African embassies, as a whole”, he said, “do such a poor job of representing their countries in the arena of marketing the opportunities for investment in their countries, that it is a wonder there is any interest at all.”
He remarks that in an organized environment, chaos is not tolerated. “And the way and manner in which we correspond with the outside world at best, denotes a chaotic existence and at worst demonstrates incompetence of the highest order. There is the image of African countries.”
He argued further that no investor would invest his hard earned money in a place where all you read about is bad news.
He goes on to talk about Africa’s failure to educate Americans about the continent. He said, “in the case of Africa all the countries are in the same boat. Most Americans think Africa is one country because their embassies have failed to do anything about the image of the continent’s countries in the almost 40 years that I am personally aware of.”
Adding “history shows that the drumbeat of bad press and perception has been filtering into the minds of US consumers for more than 100 years–in fact, since the advent of mass media.”
He also blamed Africans for not being willing to put any effort to communicate that they would like U.S investors and what kind they would like? “They are waiting for someone to come and “spoon feed” them the answers,” he said.
He had some advise for the media also. “You and your colleagues in the media”, he said , “are responsible for getting out the word and pressuring leaders to make unselfish decisions.”
Commenting on export data used in doing the analysis in the editorial, he said, “you have to not just talk about the poor export performance and low-level of U.S investments, you have to ask why that is the case? Why is it not better, why have African countries–Ghana included–failed so badly where the Asians seem to be doing so well…why has South Korea come from behind African countries to not just overtake African countries, but to now be in the position where they are playing the role of “teachers” of African leaders?”
He is however hopeful that if the media and everyone else including his organization do their bit the trend could be reversed.
They are therefore organizing the AFREECON business conference at the famous Navy Pier in Chicago, Illinois from October 19 to 21, 2009.
According to the organizers, AFREECON is about sharing knowledge. Knowledge that will assist African countries to build a better “mouse trap” for attracting Foreign Direct Investments and achieving economic independence; as well as knowledge that will enable U.S. companies and entrepreneurs to make well informed decisions about business opportunities in African countries.
Among some of the speakers are Dr. Ian Giddy, Professor of Finance at New York University’s Stern School of Business and a former Director of the International Product Group at Drexel Burnham Lambert; Dr. Vijay Mahajan, who currently holds the John P. Harbin Centennial Chair in Business at McCombs School of Business, University of Texas at Austin; Dr. Dambisa Moyo, economist and author of Dead Aid: Why Aid is Not Working and How There is a Better Way For Africa.
The others are William “Bill” Strickland, President and CEO of Manchester Bidwell Corporation; Dr. Paul Tiyambe Zeleza, Malawian historian, literary critic, novelist, short-story writer and blogger at The Zeleza Post; Dr. John Gazvinian, author of Untapped-The Scramble for Africa’s Oil and Dr. Pompiliu “Pili” Vezariu, Adjunct Fellow at the Center For Strategic & International Studies.
By Emmanuel K. Dogbevi
Approaching an SBIC
Research the SBICs
If you own or operate a small business and would like to obtain SBIC financing, you should first identify and investigate existing SBICs that may be interested in financing you company. Use this directory as a first step in learning as much as possible about SBICs in your state, or in other areas important to your company's needs. In choosing an SBIC, consider the types of investments it makes, how much money is available for investment and how much might be available in the future. You should also consider whether the SBIC can offer you management services appropriate to your needs.
Plan in Advance
You should determine your company's needs and research SBICs well in advance-long before you will actually need the money. Your research will take time, as will the SBIC's research of your business.
Prepare a Prospectus/Business Plan
When you've identified the SBICs you think are best suited to provide financing for your company, you'll need to prepare a presentation. Our initial presentation will play a major role in your success in obtaining financing. It is up to you to demonstrate that an investment in your firm is worthwhile. The best way to show worth is by presenting a detailed and comprehensive business plan or prospectus that includes, at a minimum, the information contained on this page.
How to Seek SBIC Financing
Small business investment companies (SBICs) exist to supply equity capital, long-term loans and management assistance to qualifying small businesses. The privately owned and operated SBICs use their own capital and funds borrowed from the U.S. Small Business Administration (SBA) to provide financing to small businesses in the form of equity securities and long-term loans. SBICs are profit-seeking organizations that select small businesses to be financed within rules and regulations set by SBA. Specialized SBICs (SSBIC) are a particular type of SBIC that provide assistance solely to small businesses owned by socially or economically disadvantaged persons. SBICs invest in a broad range of industries. Some SBICs seek out small businesses with new products or services because of the strong growth potential of such firms. Some SBICs specialize in the field in which their management has special competency. Most SBICs, however, consider a wide variety of investment opportunities. Only firms defined by SBA as small are eligible for SBIC financing. The SBA defines a company as small when its net worth is $18.0 million or less, and its average net (after tax) income for the preceding two years does not exceed $6.0 million. For businesses in industries for which the above standards are too low, alternative size standards are available. In determining whether a business qualifies, all of the business's parents, subsidiaries and affiliates are considered.
Welcome to American Investors Company
American Investors Company (AIC) is one of the largest privately-owned securities firms headquartered in the San Francisco Bay Area. We are a full-service, general securities and investment advisory firm providing clients access to a full line of non-proprietary securities products, investment brokerage, financial planning and asset management services.
We have been dedicated to addressing the financial planning, investment and retirement needs of our clients since 1966. During the last 40 years, we have built a solid reputation for successfully assisting our clients in meeting their financial goals. Registered representatives associated with our firm are thoroughly trained professionals qualified to work closely with clients to help them achieve their financial objectives.
Come and take a closer look at us. You’ll be glad you did!
AIC is licensed as a broker-dealer in AL, AZ, AR, CA, CO, CT, DE, DC, FL, GA, HI, ID, IL, IN, KS, KY, ME, MD, MA, MI, MN, MS, MO, MT, NV, NJ, NM, NY, NC, OH, OK, OR, PA, RI, SD, TN, TX, UT, VT, VA, WA, WI, and WY and may only transact business in those states.We are also registered with the SEC as a Registered Investment Adviser in AZ, CA, FL, MD, NV, NY, OR, TX, and WA.
If you do not reside in one of those states, we will not attempt to transact securities for your account or provide you with investment advisory services unless and until we are properly licensed in your state.
Nothing contained herein should be construed as an offer or solicitation to purchase any security or to render specific investment advisory services. Such offer or solicitation to purchase can only be done when preceded by appropriate offering materials or subsequent to receipt of AIC’s Form ADV and execution of an investment advisory agreement.
Wednesday, July 29, 2009
Most Expensive Wines in the World
The word wine has its root from the ancient Greek word for vines, vinos. Grapevines produces lush grapes which are then fermented to create the popular yet sophisticated alcoholic drink we know as wine. In many areas, the English word wine and its synonyms in different languages are protected by law, as other beverages similar to wine can be produced from fruits, rice, flowers and honey.
At the highest end, rare, super-expensive wines are often the costliest item on the menu, and exceptional vintages from the best vineyards may sell for thousands of dollars per bottle. Expensive red wines with their complex subtleties are traditionally more costly than other expensive wines.
Here are the most expensive wines in the world.
| 1992 Screaming Eagle around $80,000 At Auction Napa Valley 2008, a charity event, a lot of six magnums of Screaming Eagle were sold for $500,000. In addition to the wine, the lot included a dinner at the winery. The lucky purchaser was Chase Bailey, an executive at Cisco Systems. 1945 Chateau Mouton-Rothschild Jeroboam Sold to an anonymous buyer at a Christie’s auction in 1997, this bottle comes from what is considered by wine enthusiasts to be one of the finest vintages of the 20th century. “Th.J” 1787 Chateau Lafitte A bottle of 1787 Chateau Lafitte which sold at Christie’s London in December of 1985, this wine was originally reported to be from the cellar of Thomas Jefferson, the former US President, and this most expensive bottle of wine had the initials Th.J etched into the glass bottle. It made its way into the hands of American tycoon Bill Koch, who became suspicious of the origins of the four bottles he had purchased. Eventually, he instigated the investigation that debunked the supposed origin of what was, at the time of purchase, the most expensive wine in the world. Shipwrecked 1907 Heidsieck These hundred year old bottles of Champagne from the Heidsieck vineyard in Champagne took over eighty years to reach their destination. Shipped to the Russian Imperial family in 1916, a shipwreck off the coast of Finland caused this champagne to be lost at sea until divers discovered over 200 bottles in 1997. Now they’re finally being sold—to wealthy guests at the Ritz-Carlton hotel in Moscow, at least. Of course, the wine’s extraordinary tale and incredible age are what makes it the world’s most expensive wine. |
Yahoo domains
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You can use standard word processing and drag-and-drop editing to build your web pages, so absolutely no programming knowledge is required!
And since you download SiteBuilder to your computer, you can work on your web site even when you're offline.
Learn more about how SiteBuilder can help you build a world-class web site.
Use Yahoo! SiteBuilder's customizable templates, royalty-free graphics, background colors, and clip art to design a world-class site.
For a quick start, choose from SiteBuilder's more than 380 web site templates. Use the templates as they are or customize them completely to get the site you want.
With total control over every template, you can personalize every aspect of your business or personal web site — from graphics to colors to layout.
Prefer to write your own code? Create your site from scratch using HTML or SiteBuilder's web page editing tools.
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LASIK in Dallas
At Carter Eye Center, we want you to achieve the best vision possible and we want you to have an eye care experience that is second to none. Our goal is to reinvent the LASIK experience, and we continue to work to make it even better for you.
Simply put, we focus on you. We provide:
* State-of-the-art eye surgery technology.
* Uncompromising and exceptional service.
Superior Service is not just a promise, it's a guaranty.
Dr. Harvey Carter has been delivering the most advanced eye surgery in Dallas, Texas for more than 20 years and is considered one of the top LASIK surgeons in the country. Dedicated to providing comprehensive and advanced solutions, Dr. Carter was the first FDA Investigator in North Texas to perform LASIK. He was the first surgeon in North Texas to perform Conductive Keratoplasty (CK). In fact, Dr. Carter was the first surgeon in the United States to perform Crystalens surgery after it was approved by the FDA.Consistently involved in research and new surgical technologies, Dr. Carter and his staff are committed to provide the best possible treatment for you - our patients.
At Carter Eye Center, your LASIK experience is guaranteed from the moment you walk in our door. We go above and beyond to ensure you receive the attention and care you deserve and that you achieve the best possible visual results.
Simply put, we focus on you. We provide:
* State-of-the-art eye surgery technology.
* Uncompromising and exceptional service.
Superior Service is not just a promise, it's a guaranty.
Dr. Harvey Carter has been delivering the most advanced eye surgery in Dallas, Texas for more than 20 years and is considered one of the top LASIK surgeons in the country. Dedicated to providing comprehensive and advanced solutions, Dr. Carter was the first FDA Investigator in North Texas to perform LASIK. He was the first surgeon in North Texas to perform Conductive Keratoplasty (CK). In fact, Dr. Carter was the first surgeon in the United States to perform Crystalens surgery after it was approved by the FDA.Consistently involved in research and new surgical technologies, Dr. Carter and his staff are committed to provide the best possible treatment for you - our patients.
At Carter Eye Center, your LASIK experience is guaranteed from the moment you walk in our door. We go above and beyond to ensure you receive the attention and care you deserve and that you achieve the best possible visual results.
Lasik Dallas
D Magazine - 'Best LASIK Surgeon'
When considering Lasik, you want the very best for your eyes. Dr William Boothe is not only the most experienced intralasik surgeon, but he has been awarded 'Best Lasik Surgeon' in Dallas multiple times from D Magazine. Dr Boothe continues to provide experienced and quality lasik in Dallas because at Boothe Eye Care & Laser Center, the patient is number one.
AMO Confirms Distinction
for Dr Boothe
Dr. Boothe has been confirmed as the highest volume, single site, single surgeon Intralase user in the world, by Abbott Medial Optics, Inc.
Consumers' Choice Award 2009
Boothe Eye Care & Laser Center is proud to announce it has won its fourth consecutive Consumers' Choice Award for Lasik in Dallas. We would like to thank everyone who voted for us in the category of Lasik and we plan to continue providing quality care for our Lasik patients.
50% OFF All Laser LASIK Surgery
for a Limited Time Only!
There is no better time than the present to eliminate or reduce your dependence on contact lenses and glasses. For a limited time only you can get 50% OFF all laser intralasik with the newest iFS technology from Dr. Boothe, the most experienced IntraLASIK surgeon in the world. Dr. Boothe will beat any price using the same technology and warranty period. Ask about zero percent financing for two years. Call 214-328-0444 for a free consultation to see if you are a candidate.
When considering Lasik, you want the very best for your eyes. Dr William Boothe is not only the most experienced intralasik surgeon, but he has been awarded 'Best Lasik Surgeon' in Dallas multiple times from D Magazine. Dr Boothe continues to provide experienced and quality lasik in Dallas because at Boothe Eye Care & Laser Center, the patient is number one.
AMO Confirms Distinction
for Dr Boothe
Dr. Boothe has been confirmed as the highest volume, single site, single surgeon Intralase user in the world, by Abbott Medial Optics, Inc.
Consumers' Choice Award 2009
Boothe Eye Care & Laser Center is proud to announce it has won its fourth consecutive Consumers' Choice Award for Lasik in Dallas. We would like to thank everyone who voted for us in the category of Lasik and we plan to continue providing quality care for our Lasik patients.
50% OFF All Laser LASIK Surgery
for a Limited Time Only!
There is no better time than the present to eliminate or reduce your dependence on contact lenses and glasses. For a limited time only you can get 50% OFF all laser intralasik with the newest iFS technology from Dr. Boothe, the most experienced IntraLASIK surgeon in the world. Dr. Boothe will beat any price using the same technology and warranty period. Ask about zero percent financing for two years. Call 214-328-0444 for a free consultation to see if you are a candidate.
Should You Refinance?
Refinancing can be a great financial move if it reduces your mortgage payment, shortens the term of your loan or helps you build equity more quickly. When used carefully, it can also be a valuable tool in getting your debt under control. Before you refinance take a careful look at your financial situation, and ask yourself: 'How long do I plan to continue living in the house?' and 'How much money will I save by refinancing?'
Again, keep in mind that refinancing generally costs between 3% and 6% of the loan's principal. It takes years to recoup that cost with the savings generated by a lower interest rate or shorter term. So, if you are not planning to stay in the home for more than a few years, the cost of refinancing may negate any of the potential savings It also pays to remember that a savvy homeowner is always looking for ways to reduce debt, build equity, save money and eliminate that mortgage payment. Taking cash out of your equity when you refinance doesn't help
Again, keep in mind that refinancing generally costs between 3% and 6% of the loan's principal. It takes years to recoup that cost with the savings generated by a lower interest rate or shorter term. So, if you are not planning to stay in the home for more than a few years, the cost of refinancing may negate any of the potential savings It also pays to remember that a savvy homeowner is always looking for ways to reduce debt, build equity, save money and eliminate that mortgage payment. Taking cash out of your equity when you refinance doesn't help
Tapping Equity and Consolidating Debt
While the previously mentioned reasons to refinance are all financially sound, mortgage refinancing can be a slippery slope to never-ending debt. It's important to keep this in mind when considering refinancing for the purpose of tapping into home equity or consolidating debt.
Homeowners often access the equity in their homes to cover big expenses, such as the costs of home remodeling or a child's college education. These homeowners may justify such refinancing by pointing out that remodeling adds value to the home or that the interest rate on the mortgage loan is less than the rate on money borrowed from another source. Another justification is that the interest on mortgages is tax deductible. While these arguments may be true, increasing the number of years that you owe on your mortgage is rarely a smart financial decision, nor is spending a dollar on interest to get a $0.30 tax deduction.
Many homeowners refinance in order to consolidate their debt. At face value, replacing high-interest debt with a low-interest mortgage is a good idea. Unfortunately, refinancing does not bring with it an automatic dose of financial prudence. In reality, a large percentage of people who once generated high-interest debt on credit cards, cars and other purchases will simply do it again after the mortgage refinancing gives them the available credit to do so. This creates an instant quadruple loss composed of wasted fees on the refinancing, lost equity in the house, additional years of increased interest payments on the new mortgage and the return of high-interest debt once the credit cards are maxed out again - the possible result is an endless perpetuation of the cycle of debt.
Homeowners often access the equity in their homes to cover big expenses, such as the costs of home remodeling or a child's college education. These homeowners may justify such refinancing by pointing out that remodeling adds value to the home or that the interest rate on the mortgage loan is less than the rate on money borrowed from another source. Another justification is that the interest on mortgages is tax deductible. While these arguments may be true, increasing the number of years that you owe on your mortgage is rarely a smart financial decision, nor is spending a dollar on interest to get a $0.30 tax deduction.
Many homeowners refinance in order to consolidate their debt. At face value, replacing high-interest debt with a low-interest mortgage is a good idea. Unfortunately, refinancing does not bring with it an automatic dose of financial prudence. In reality, a large percentage of people who once generated high-interest debt on credit cards, cars and other purchases will simply do it again after the mortgage refinancing gives them the available credit to do so. This creates an instant quadruple loss composed of wasted fees on the refinancing, lost equity in the house, additional years of increased interest payments on the new mortgage and the return of high-interest debt once the credit cards are maxed out again - the possible result is an endless perpetuation of the cycle of debt.
Converting between Adjustable-Rate and Fixed-Rate Mortgages
While ARMs start out offering lower rates than fixed-rate mortgages, periodic adjustments often result in rate increases that are higher than the rate available through a fixed-rate mortgage. When this occurs, converting to a fixed-rate mortgage results in a lower interest rate as well as eliminates concern over future interest rate hikes.
Conversely, converting from a fixed-rate loan to an ARM can also be a sound financial strategy, particularly in a falling interest rate environment. If rates continue to fall, the periodic rate adjustments on an ARM result in decreasing rates and smaller monthly mortgage payments, eliminating the need to refinance every time rates drop. Converting to an ARM may be a good idea especially for homeowners who don't plan to stay in their home for more than a few years. If interest rates are falling, these homeowners can reduce their loan's interest rate and monthly payment, but won't have to worry about interest rates eventually rising in the future.
Conversely, converting from a fixed-rate loan to an ARM can also be a sound financial strategy, particularly in a falling interest rate environment. If rates continue to fall, the periodic rate adjustments on an ARM result in decreasing rates and smaller monthly mortgage payments, eliminating the need to refinance every time rates drop. Converting to an ARM may be a good idea especially for homeowners who don't plan to stay in their home for more than a few years. If interest rates are falling, these homeowners can reduce their loan's interest rate and monthly payment, but won't have to worry about interest rates eventually rising in the future.
Shortening the Loan's Term
When interest rates fall, homeowners often have the opportunity to refinance an existing loan for another that, without much change in the monthly payment, has a shorter term. For that 30-year fixed-rate mortgage on a $100,000 home, refinancing from 9% to $5.5% cuts the term in half to 15 years, with only a slight change in the monthly payment from $804.62 to $817.08.
Securing a Lower Interest Rate
One of the best reasons to refinance is to lower the interest rate on your existing loan. Historically, the rule of thumb was that it was worth the money to refinance if you could reduce your interest rate by at least 2%. Today, many lenders say 1% savings is enough incentive to refinance.
Reducing your interest rate not only helps you save money, but increases the rate at which you build equity in your home, and can decrease the size of your monthly payment. For example, a 30-year fixed-rate mortgage with an interest rate of 9% on a $100,000 home has a principal and interest payment of $804.62. That same loan at 6% reduces your payment to $599.55.
Reducing your interest rate not only helps you save money, but increases the rate at which you build equity in your home, and can decrease the size of your monthly payment. For example, a 30-year fixed-rate mortgage with an interest rate of 9% on a $100,000 home has a principal and interest payment of $804.62. That same loan at 6% reduces your payment to $599.55.
Mortgages: The ABCs Of Refinancing
Refinancing a mortgage means paying off an existing loan and replacing it with a new one. There are many common reasons why homeowners refinance: the opportunity to obtain a lower interest rate; the chance to shorten the term of their mortgage; the desire to convert from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage, or vice versa; the opportunity to tap a home's equity in order to finance a large purchase; and the desire to consolidate debt. Some of these motivations have both benefits and pitfalls. And because refinancing can cost between 3% and 6% of the loan's principal and - like taking out the original mortgage - requires appraisal, title search and application fees, it's important for a homeowner to determine whether his or her reason for refinancing offers true benefit.
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Monday, July 27, 2009
Second Quarter 2009 Financial Summary
Revenue and Expense
Revenue net of interest expense on a fully taxable-equivalent basis rose 60 percent to $33.1 billion compared with $20.7 billion a year ago.
Net interest income on a fully taxable-equivalent basis rose 9 percent to $11.9 billion from $10.9 billion in the second quarter of 2008 due to an improved rate environment and the addition of Countrywide and Merrill Lynch. These improvements were partially offset by a shift in loan mix and the sale of securities. Net interest yield narrowed 28 basis points to 2.64 percent due to the addition of lower yielding assets from Countrywide and Merrill Lynch, sales of securities, and a shift in loan mix, partially offset by the favorable rate environment.
Noninterest income rose to $21.1 billion from $9.8 billion a year earlier. Higher mortgage banking income, trading account profits and investment and brokerage services income reflected the addition of Merrill Lynch and Countrywide. Additionally, the increase was driven by a $5.3 billion pretax gain on the sale of CCB shares. Bank of America continues to own approximately 11 percent of the common shares of CCB. Noninterest income in the period also included a $3.8 billion pretax gain from the completed sale of the merchant processing business to a joint venture. These increases were partially offset by $3.6 billion in losses related to mark-to-market adjustments including the Merrill Lynch structured notes as a result of narrowing credit spreads during the quarter. Card income declined due to higher credit losses on securitized credit card loans and lower fee income.
Noninterest expense increased to $17.0 billion from $9.7 billion a year earlier. This reflects higher personnel and general operating expenses, driven in part by the Merrill Lynch and Countrywide acquisitions and the FDIC special assessment. Pretax merger and restructuring charges rose to $829 million from $212 million a year earlier.
The efficiency ratio on a fully taxable-equivalent basis was 51.44 percent compared with 46.60 percent a year earlier.
Pretax, pre-provision income on a fully-taxable equivalent basis was $16.1 billion compared with $11.1 billion a year earlier.
Credit Quality
Credit quality deteriorated further as the economic environment weakened. Consumers remained under significant stress as unemployment and underemployment increased and individuals spent longer periods without work. These conditions led to higher losses in almost all consumer portfolios compared with the prior quarter.
Declining home values and reduced spending by consumers and businesses negatively impacted the commercial portfolios resulting in broad-based increases in criticized and nonperforming loans. Commercial loan losses rose from the prior quarter as commercial domestic and small business portfolios were impacted in sectors dependent on discretionary consumer spending. Losses in the commercial real estate portfolio also increased.
The provision for credit losses was $13.4 billion, flat with the first quarter. Credit losses were higher than the prior quarter and reserves, which were increased by $4.7 billion, were added across most consumer portfolios and the commercial portfolio reflecting the impact of the weak economy. Nonperforming assets were $31.0 billion compared with $25.6 billion at March 31, 2009, reflecting the continued deterioration in economic conditions. The 2009 coverage ratios and amounts shown in the following table include Merrill Lynch.
Credit Quality
(Dollars in millions) Q2 2009 Q1 2009 Q2 2008
--------------------- ------- ------- -------
Provision for credit
losses $13,375 $13,380 $5,830
Net Charge-offs 8,701 6,942 3,619
Net Charge-off
ratios(1) 3.64% 2.85% 1.67%
Total managed net
losses $11,684 $9,124 $5,262
Total managed net
loss ratio(1) 4.42% 3.40% 2.16%
At 6/30/09 At 3/31/09 At 6/30/08
---------- ---------- ----------
Nonperforming assets $30,982 $25,632 $9,749
Nonperforming
assets ratio(2) 3.31% 2.64% 1.13%
Allowance for loan
and lease losses $33,785 $29,048 $17,130
Allowance for
loan and lease
losses ratio(3) 3.61% 3.00% 1.98%
(1) Net charge-off/loss ratios are calculated as annualized held net
charge-offs or managed net losses divided by average outstanding
held or managed loans and leases during the period.
(2) Nonperforming assets ratios are calculated as nonperforming assets
divided by outstanding loans, leases and foreclosed properties at
the end of the period.
(3) Allowance for loan and lease losses ratios are calculated as
allowance for loan and leases losses divided by loans and leases
outstanding at the end of the period.
Note: Ratios do not include loans measured at fair value in accordance
with SFAS 159.
Capital Management
Total shareholders' equity was $255.2 billion at June 30. Period-end assets were $2.3 trillion. The Tier 1 Capital ratio was 11.93 percent, up from 10.09 percent at March 31, 2009 and from 8.25 percent a year ago. The Tier 1 Common ratio was 6.90 percent, compared with 4.49 percent at March 31, 2009 and 4.78 percent at June 30, 2008. The Tangible Common Equity ratio was 4.67 percent, up from 3.13 percent at March 31, 2009 and 3.24 percent a year earlier. Tangible book value per share of common stock was $11.66, compared with $10.88 at March 31, 2009 and $11.87 a year earlier.
During the quarter the bank increased its Tier 1 common capital by nearly $40 billion, easily exceeding the $33.9 billion Supervisory Capital Assessment Program (SCAP) buffer set by the Federal Reserve in May. Actions contributing toward that goal during the quarter included: issuing shares of common stock; exchanging certain non-government preferred stock for common stock; the sale of a portion of shares in CCB; and the sale of the company's merchant processing business to a joint venture.
During the quarter, Bank of America issued 1.25 billion, or $13.5 billion, of common shares. Bank of America exchanged the equivalent of $14.8 billion of non-government preferred shares for approximately 1 billion shares of common stock through private exchanges and a tender offer. A cash dividend of $0.01 per common share was paid. The company recorded $1.4 billion in preferred dividends, partially offset by $576 million related to the exchange of preferred stock in the calculation of net income available to common shareholders. Period-end common shares issued and outstanding were 8.65 billion for the second quarter of 2009, 6.40 billion for the first quarter of 2009 and 4.45 billion for the year-ago quarter.
Revenue net of interest expense on a fully taxable-equivalent basis rose 60 percent to $33.1 billion compared with $20.7 billion a year ago.
Net interest income on a fully taxable-equivalent basis rose 9 percent to $11.9 billion from $10.9 billion in the second quarter of 2008 due to an improved rate environment and the addition of Countrywide and Merrill Lynch. These improvements were partially offset by a shift in loan mix and the sale of securities. Net interest yield narrowed 28 basis points to 2.64 percent due to the addition of lower yielding assets from Countrywide and Merrill Lynch, sales of securities, and a shift in loan mix, partially offset by the favorable rate environment.
Noninterest income rose to $21.1 billion from $9.8 billion a year earlier. Higher mortgage banking income, trading account profits and investment and brokerage services income reflected the addition of Merrill Lynch and Countrywide. Additionally, the increase was driven by a $5.3 billion pretax gain on the sale of CCB shares. Bank of America continues to own approximately 11 percent of the common shares of CCB. Noninterest income in the period also included a $3.8 billion pretax gain from the completed sale of the merchant processing business to a joint venture. These increases were partially offset by $3.6 billion in losses related to mark-to-market adjustments including the Merrill Lynch structured notes as a result of narrowing credit spreads during the quarter. Card income declined due to higher credit losses on securitized credit card loans and lower fee income.
Noninterest expense increased to $17.0 billion from $9.7 billion a year earlier. This reflects higher personnel and general operating expenses, driven in part by the Merrill Lynch and Countrywide acquisitions and the FDIC special assessment. Pretax merger and restructuring charges rose to $829 million from $212 million a year earlier.
The efficiency ratio on a fully taxable-equivalent basis was 51.44 percent compared with 46.60 percent a year earlier.
Pretax, pre-provision income on a fully-taxable equivalent basis was $16.1 billion compared with $11.1 billion a year earlier.
Credit Quality
Credit quality deteriorated further as the economic environment weakened. Consumers remained under significant stress as unemployment and underemployment increased and individuals spent longer periods without work. These conditions led to higher losses in almost all consumer portfolios compared with the prior quarter.
Declining home values and reduced spending by consumers and businesses negatively impacted the commercial portfolios resulting in broad-based increases in criticized and nonperforming loans. Commercial loan losses rose from the prior quarter as commercial domestic and small business portfolios were impacted in sectors dependent on discretionary consumer spending. Losses in the commercial real estate portfolio also increased.
The provision for credit losses was $13.4 billion, flat with the first quarter. Credit losses were higher than the prior quarter and reserves, which were increased by $4.7 billion, were added across most consumer portfolios and the commercial portfolio reflecting the impact of the weak economy. Nonperforming assets were $31.0 billion compared with $25.6 billion at March 31, 2009, reflecting the continued deterioration in economic conditions. The 2009 coverage ratios and amounts shown in the following table include Merrill Lynch.
Credit Quality
(Dollars in millions) Q2 2009 Q1 2009 Q2 2008
--------------------- ------- ------- -------
Provision for credit
losses $13,375 $13,380 $5,830
Net Charge-offs 8,701 6,942 3,619
Net Charge-off
ratios(1) 3.64% 2.85% 1.67%
Total managed net
losses $11,684 $9,124 $5,262
Total managed net
loss ratio(1) 4.42% 3.40% 2.16%
At 6/30/09 At 3/31/09 At 6/30/08
---------- ---------- ----------
Nonperforming assets $30,982 $25,632 $9,749
Nonperforming
assets ratio(2) 3.31% 2.64% 1.13%
Allowance for loan
and lease losses $33,785 $29,048 $17,130
Allowance for
loan and lease
losses ratio(3) 3.61% 3.00% 1.98%
(1) Net charge-off/loss ratios are calculated as annualized held net
charge-offs or managed net losses divided by average outstanding
held or managed loans and leases during the period.
(2) Nonperforming assets ratios are calculated as nonperforming assets
divided by outstanding loans, leases and foreclosed properties at
the end of the period.
(3) Allowance for loan and lease losses ratios are calculated as
allowance for loan and leases losses divided by loans and leases
outstanding at the end of the period.
Note: Ratios do not include loans measured at fair value in accordance
with SFAS 159.
Capital Management
Total shareholders' equity was $255.2 billion at June 30. Period-end assets were $2.3 trillion. The Tier 1 Capital ratio was 11.93 percent, up from 10.09 percent at March 31, 2009 and from 8.25 percent a year ago. The Tier 1 Common ratio was 6.90 percent, compared with 4.49 percent at March 31, 2009 and 4.78 percent at June 30, 2008. The Tangible Common Equity ratio was 4.67 percent, up from 3.13 percent at March 31, 2009 and 3.24 percent a year earlier. Tangible book value per share of common stock was $11.66, compared with $10.88 at March 31, 2009 and $11.87 a year earlier.
During the quarter the bank increased its Tier 1 common capital by nearly $40 billion, easily exceeding the $33.9 billion Supervisory Capital Assessment Program (SCAP) buffer set by the Federal Reserve in May. Actions contributing toward that goal during the quarter included: issuing shares of common stock; exchanging certain non-government preferred stock for common stock; the sale of a portion of shares in CCB; and the sale of the company's merchant processing business to a joint venture.
During the quarter, Bank of America issued 1.25 billion, or $13.5 billion, of common shares. Bank of America exchanged the equivalent of $14.8 billion of non-government preferred shares for approximately 1 billion shares of common stock through private exchanges and a tender offer. A cash dividend of $0.01 per common share was paid. The company recorded $1.4 billion in preferred dividends, partially offset by $576 million related to the exchange of preferred stock in the calculation of net income available to common shareholders. Period-end common shares issued and outstanding were 8.65 billion for the second quarter of 2009, 6.40 billion for the first quarter of 2009 and 4.45 billion for the year-ago quarter.
Second Quarter 2009 Business Highlights
•Bank of America increased its Tier 1 common capital by nearly $40 billion through multiple actions during the quarter that included issuing shares of common stock, exchanging certain non-government preferred stock for common stock, and asset sales.
•Bank of America Merrill Lynch ranked No. 1 in high-yield debt and leveraged loans based on volume, and the firm was No. 2 and No. 3, respectively, in U.S. and global investment banking fees for the first half of 2009, according to second quarter league tables.
•Sales and trading revenue, excluding credit valuation adjustments on derivative liabilities and market disruption charges, rose to a record $6.7 billion.
•During the quarter, Bank of America announced the sale of its merchant processing business to a joint venture, which included First Data Corp. The transaction is expected to deliver next-generation payments solutions to merchants.
•Bank of America funded $110.6 billion in first mortgages, helping nearly 500,000 people either purchase a home or refinance their existing mortgage, including $24.3 billion in mortgages made to 154,000 low- and moderate-income borrowers. Approximately 29 percent of first mortgages were for purchases.
•Credit extended during the quarter, including commercial renewals of $55 billion, was more than $211 billion, compared with $183 billion in the first quarter. New credit included $111 billion in mortgages, $78 billion in commercial non-real estate, approximately $9 billion in commercial real estate, $4 billion in domestic and small business card, $4 billion in home equity products and more than $5 billion in other consumer credit.(1)
•During the second quarter, Small Business Banking extended more than $580 million in new credit comprised of credit cards, loans and lines of credit to more than 35,000 customers.
•To help homeowners avoid foreclosure, Bank of America has provided rate relief or agreed to modifications with approximately 150,000 customers for the first six months of 2009, compared with more than 230,000 for all of 2008 for Bank of America and Countrywide. In addition, approximately 80,000 Bank of America customers are already in a trial period modification or were in the process of responding to an offer under the Making Home Affordable program through mid-July.
•Average retail deposits in the quarter increased $136.3 billion, or 26 percent, from a year earlier, including $104.3 billion in balances from Merrill Lynch and Countrywide. Excluding Countrywide and Merrill Lynch, Bank of America grew retail deposits $32.0 billion, or 6 percent, from the year-ago quarter.
(1) Preliminary data as of July 17, 2009
Transition Update
The Merrill Lynch integration is on track and meeting expected goals. The company in 2009 expects to achieve in excess of 40 percent of the previously announced goal of approximately $7 billion in cost savings, ahead of the original goal of 25 percent for the year.
Since June 1, approximately 6,500 affluent banking-only clients in Bank of America have been referred to Merrill Lynch financial advisors. Of that group, approximately 1,400 now have added an investment relationship with the company. Merrill Lynch financial advisors referred more than 1,100 clients to the commercial bank of Bank of America.
The Countrywide transition and related cost savings are on track.
The new Bank of America Home Loans and Insurance brand was introduced to consumers during the quarter as part of the transition.
•Bank of America Merrill Lynch ranked No. 1 in high-yield debt and leveraged loans based on volume, and the firm was No. 2 and No. 3, respectively, in U.S. and global investment banking fees for the first half of 2009, according to second quarter league tables.
•Sales and trading revenue, excluding credit valuation adjustments on derivative liabilities and market disruption charges, rose to a record $6.7 billion.
•During the quarter, Bank of America announced the sale of its merchant processing business to a joint venture, which included First Data Corp. The transaction is expected to deliver next-generation payments solutions to merchants.
•Bank of America funded $110.6 billion in first mortgages, helping nearly 500,000 people either purchase a home or refinance their existing mortgage, including $24.3 billion in mortgages made to 154,000 low- and moderate-income borrowers. Approximately 29 percent of first mortgages were for purchases.
•Credit extended during the quarter, including commercial renewals of $55 billion, was more than $211 billion, compared with $183 billion in the first quarter. New credit included $111 billion in mortgages, $78 billion in commercial non-real estate, approximately $9 billion in commercial real estate, $4 billion in domestic and small business card, $4 billion in home equity products and more than $5 billion in other consumer credit.(1)
•During the second quarter, Small Business Banking extended more than $580 million in new credit comprised of credit cards, loans and lines of credit to more than 35,000 customers.
•To help homeowners avoid foreclosure, Bank of America has provided rate relief or agreed to modifications with approximately 150,000 customers for the first six months of 2009, compared with more than 230,000 for all of 2008 for Bank of America and Countrywide. In addition, approximately 80,000 Bank of America customers are already in a trial period modification or were in the process of responding to an offer under the Making Home Affordable program through mid-July.
•Average retail deposits in the quarter increased $136.3 billion, or 26 percent, from a year earlier, including $104.3 billion in balances from Merrill Lynch and Countrywide. Excluding Countrywide and Merrill Lynch, Bank of America grew retail deposits $32.0 billion, or 6 percent, from the year-ago quarter.
(1) Preliminary data as of July 17, 2009
Transition Update
The Merrill Lynch integration is on track and meeting expected goals. The company in 2009 expects to achieve in excess of 40 percent of the previously announced goal of approximately $7 billion in cost savings, ahead of the original goal of 25 percent for the year.
Since June 1, approximately 6,500 affluent banking-only clients in Bank of America have been referred to Merrill Lynch financial advisors. Of that group, approximately 1,400 now have added an investment relationship with the company. Merrill Lynch financial advisors referred more than 1,100 clients to the commercial bank of Bank of America.
The Countrywide transition and related cost savings are on track.
The new Bank of America Home Loans and Insurance brand was introduced to consumers during the quarter as part of the transition.
Bank of America Earns $3.2 Billion in Second Quarter
Strong Pretax, Pre-provision Income of $16 Billion
Another Good Quarter in Capital Markets and Home Loans
Enhanced Capital Strength, Tier 1 Capital Ratio at 11.93 Percent
Extends More Than $211 Billion in Credit in the Second Quarter
Adds $4.7 Billion to Credit Loss Reserves
CHARLOTTE, N.C., July 17 /PRNewswire/ -- Bank of America Corporation today reported second-quarter 2009 net income of $3.2 billion. After deducting preferred dividends of $805 million, including $713 million paid to the U.S. government, diluted earnings per share were $0.33.
(Logo: http://www.newscom.com/cgi-bin/prnh/20050720/CLW086LOGO-b )
Those results compared with net income of $3.4 billion, or diluted earnings per share of $0.72 during the year-ago period.
For the first half of 2009, Bank of America earned $7.5 billion, or $0.75 per share.
Results were driven by continued strong revenue performance in the wholesale capital markets businesses as well as in home loans, complemented by the previously announced gains on the sale of China Construction Bank (CCB) shares and the sale of the company's merchant processing business to a joint venture. These positives were somewhat offset by continuing high credit costs, including additions to the reserve for loan and lease losses, as well as significant negative credit valuation adjustments on certain liabilities including the Merrill Lynch structured notes and the impact of a special Federal Deposit Insurance Corp. (FDIC) assessment.
Bank of America finished the second quarter with its strongest capital position in recent memory, with a Tier 1 Capital ratio of 11.93 percent as well as a leading liquidity position among global banks.
"Having positive net income in an extremely challenging environment speaks to the diversity and strength of our business model as well as the extraordinary effort put forth by all of our associates," said Kenneth D. Lewis, chief executive officer and president. "Our goals during this difficult time have been to enhance the strength of our balance sheet and capital position and to continue to improve our earning power while dealing with the credit issues facing our industry due to the recession.
"Difficult challenges lie ahead from continued weakness in the global economy, rising unemployment and deteriorating credit quality that will affect our performance for the rest of the year and into 2010," Lewis said. "However, we are convinced that Bank of America will weather the storm and emerge as an acknowledged leader in financial services in the United States and around the world."
"Most importantly, we continue to serve our customers and clients around the world every day, helping them with their accounts, meeting their financial needs and adding new business," Lewis added.
Another Good Quarter in Capital Markets and Home Loans
Enhanced Capital Strength, Tier 1 Capital Ratio at 11.93 Percent
Extends More Than $211 Billion in Credit in the Second Quarter
Adds $4.7 Billion to Credit Loss Reserves
CHARLOTTE, N.C., July 17 /PRNewswire/ -- Bank of America Corporation today reported second-quarter 2009 net income of $3.2 billion. After deducting preferred dividends of $805 million, including $713 million paid to the U.S. government, diluted earnings per share were $0.33.
(Logo: http://www.newscom.com/cgi-bin/prnh/20050720/CLW086LOGO-b )
Those results compared with net income of $3.4 billion, or diluted earnings per share of $0.72 during the year-ago period.
For the first half of 2009, Bank of America earned $7.5 billion, or $0.75 per share.
Results were driven by continued strong revenue performance in the wholesale capital markets businesses as well as in home loans, complemented by the previously announced gains on the sale of China Construction Bank (CCB) shares and the sale of the company's merchant processing business to a joint venture. These positives were somewhat offset by continuing high credit costs, including additions to the reserve for loan and lease losses, as well as significant negative credit valuation adjustments on certain liabilities including the Merrill Lynch structured notes and the impact of a special Federal Deposit Insurance Corp. (FDIC) assessment.
Bank of America finished the second quarter with its strongest capital position in recent memory, with a Tier 1 Capital ratio of 11.93 percent as well as a leading liquidity position among global banks.
"Having positive net income in an extremely challenging environment speaks to the diversity and strength of our business model as well as the extraordinary effort put forth by all of our associates," said Kenneth D. Lewis, chief executive officer and president. "Our goals during this difficult time have been to enhance the strength of our balance sheet and capital position and to continue to improve our earning power while dealing with the credit issues facing our industry due to the recession.
"Difficult challenges lie ahead from continued weakness in the global economy, rising unemployment and deteriorating credit quality that will affect our performance for the rest of the year and into 2010," Lewis said. "However, we are convinced that Bank of America will weather the storm and emerge as an acknowledged leader in financial services in the United States and around the world."
"Most importantly, we continue to serve our customers and clients around the world every day, helping them with their accounts, meeting their financial needs and adding new business," Lewis added.
Bank Beats Forecasts, Reassuring Investors
After so much bad news from the nation’s financial industry, Bank of America heartened Wall Street on Monday with quarterly profits that easily surpassed analysts’ gloomy forecasts.
While results from a slew of other banks this week could yet disappoint investors, the report from Bank of America, the nation’s largest retail bank, added to the sense of cautious optimism that some big banks are starting to find their footing.
Bank of America, with its $3.4 billion second-quarter profit, was the fourth major bank to report stronger-than-expected results in recent days. While that result represented a 44 percent decline from the same period a year earlier, it nonetheless exceeded most forecasts and left investors impressed by the company’s ability to offset hefty credit losses with higher lending margins and fees. Bank of America’s share price rose almost 4 percent in heavy trading.
“We see things improving sequentially,” Kenneth D. Lewis, Bank of America’s chairman and chief executive, said during a conference call with investors. “We have a ray of optimism now that we haven’t had for a few quarters.”
Mr. Lewis said that while consumer loan losses were rising, he expected them to peak in the next two or three quarters. He forecast that the economy would remain sluggish for the rest of 2008 and slowly recover during the first half of next year. And he suggested that for Bank of America, at least, the days of enormous dollar write-offs on loans for corporate buyouts and for complex mortgage investments would end soon.
Few analysts say the banking industry as a whole has turned the corner. Nearly every major institution is wrestling with surging losses tied to real estate, credit card and construction loans. But investors are starting to recognize that the losses may not be as severe as they had initially feared. They are also realizing that banks may have the earnings power to offset bad loans and absorb further write-downs.
“It is too early to say things are getting better, but this is coming off extreme fears,” said Mark Fitzgibbon, the director of research at Sandler O’Neill & Partners in New York.
Financial shares have swung erratically during the last week and a half as the Bush administration moved to bolster the nation’s two largest mortgage finance companies, Fannie Mae and Freddie Mac, and federal regulators seized a large California lender, IndyMac Bancorp. But the sector roared back late last week after Wells Fargo, JPMorgan Chase and Citigroup reported strong results.
Bank of America has another reason for optimism: The Countrywide Financial Corporation, the troubled mortgage lender it recently acquired, is now expected to turn profit this year, Bank of America said Monday. When the acquisition was announced in January, Bank of America said the deal would have no impact on earnings this year.
Still, investors fear that losses from Countrywide’s $111 billion loan portfolio could spiral higher, and that Bank of America could be saddled with billions of dollars in litigation costs stemming from Countrywide’s business practices.
But Mr. Lewis said on Monday that given Bank of America’s current analysis of the environment, he was confident that Countrywide’s losses would total about $18.9 billion. Some analysts have previously estimated they could reach $30 billion or more.
Mr. Lewis also told investors that Bank of America’s dividend was safe for now. And with about $26 billion in unrecognized gains related to its ownership stake in China Construction Bank, Bank of America executives said they felt good about their company’s financial position.
While Mr. Lewis has struck a more optimistic note than several other bank chiefs, he said in an interview that he was trying to be “realistic.”
“Even what we think would be reasonable comments are thought to be Pollyanna-ish” in today’s bearish environment, he said. “The psychology in the market is worse than things really are.”
Even so, Bank of America’s credit losses are rising sharply. On Monday, the bank said that it would set aside $2.2 billion more to cover future losses tied to real estate, credit card and construction loans. The bank is also experiencing heavy losses from loans made to small-business customers. And though losses might peak in the coming quarters, many investors expect them to remain high for some time.
Bank of America still has several billion dollars’ worth of buyout loans to sell, and some Wall Street analysts worry the bank has been slow to mark down the values of those loans on its books. The bank took write-offs of $64 million on buyout loans and an additional $645 million on complex mortgage investments it could not sell.
Recent acquisitions are likely to keep Mr. Lewis from pursuing another blockbuster deal in the near future. Bank of America has its hands full integrating Countrywide and LaSalle Bank, a Midwest lender it bought last year, and is brushing up against a federal cap on deposits.
“The focus now is on profits sequentially and building our capital back to our targets. It’s an inward focus on one sense,” Mr. Lewis said. “We are actually having great success in the marketplace given that others are so inwardly focused.”
While results from a slew of other banks this week could yet disappoint investors, the report from Bank of America, the nation’s largest retail bank, added to the sense of cautious optimism that some big banks are starting to find their footing.
Bank of America, with its $3.4 billion second-quarter profit, was the fourth major bank to report stronger-than-expected results in recent days. While that result represented a 44 percent decline from the same period a year earlier, it nonetheless exceeded most forecasts and left investors impressed by the company’s ability to offset hefty credit losses with higher lending margins and fees. Bank of America’s share price rose almost 4 percent in heavy trading.
“We see things improving sequentially,” Kenneth D. Lewis, Bank of America’s chairman and chief executive, said during a conference call with investors. “We have a ray of optimism now that we haven’t had for a few quarters.”
Mr. Lewis said that while consumer loan losses were rising, he expected them to peak in the next two or three quarters. He forecast that the economy would remain sluggish for the rest of 2008 and slowly recover during the first half of next year. And he suggested that for Bank of America, at least, the days of enormous dollar write-offs on loans for corporate buyouts and for complex mortgage investments would end soon.
Few analysts say the banking industry as a whole has turned the corner. Nearly every major institution is wrestling with surging losses tied to real estate, credit card and construction loans. But investors are starting to recognize that the losses may not be as severe as they had initially feared. They are also realizing that banks may have the earnings power to offset bad loans and absorb further write-downs.
“It is too early to say things are getting better, but this is coming off extreme fears,” said Mark Fitzgibbon, the director of research at Sandler O’Neill & Partners in New York.
Financial shares have swung erratically during the last week and a half as the Bush administration moved to bolster the nation’s two largest mortgage finance companies, Fannie Mae and Freddie Mac, and federal regulators seized a large California lender, IndyMac Bancorp. But the sector roared back late last week after Wells Fargo, JPMorgan Chase and Citigroup reported strong results.
Bank of America has another reason for optimism: The Countrywide Financial Corporation, the troubled mortgage lender it recently acquired, is now expected to turn profit this year, Bank of America said Monday. When the acquisition was announced in January, Bank of America said the deal would have no impact on earnings this year.
Still, investors fear that losses from Countrywide’s $111 billion loan portfolio could spiral higher, and that Bank of America could be saddled with billions of dollars in litigation costs stemming from Countrywide’s business practices.
But Mr. Lewis said on Monday that given Bank of America’s current analysis of the environment, he was confident that Countrywide’s losses would total about $18.9 billion. Some analysts have previously estimated they could reach $30 billion or more.
Mr. Lewis also told investors that Bank of America’s dividend was safe for now. And with about $26 billion in unrecognized gains related to its ownership stake in China Construction Bank, Bank of America executives said they felt good about their company’s financial position.
While Mr. Lewis has struck a more optimistic note than several other bank chiefs, he said in an interview that he was trying to be “realistic.”
“Even what we think would be reasonable comments are thought to be Pollyanna-ish” in today’s bearish environment, he said. “The psychology in the market is worse than things really are.”
Even so, Bank of America’s credit losses are rising sharply. On Monday, the bank said that it would set aside $2.2 billion more to cover future losses tied to real estate, credit card and construction loans. The bank is also experiencing heavy losses from loans made to small-business customers. And though losses might peak in the coming quarters, many investors expect them to remain high for some time.
Bank of America still has several billion dollars’ worth of buyout loans to sell, and some Wall Street analysts worry the bank has been slow to mark down the values of those loans on its books. The bank took write-offs of $64 million on buyout loans and an additional $645 million on complex mortgage investments it could not sell.
Recent acquisitions are likely to keep Mr. Lewis from pursuing another blockbuster deal in the near future. Bank of America has its hands full integrating Countrywide and LaSalle Bank, a Midwest lender it bought last year, and is brushing up against a federal cap on deposits.
“The focus now is on profits sequentially and building our capital back to our targets. It’s an inward focus on one sense,” Mr. Lewis said. “We are actually having great success in the marketplace given that others are so inwardly focused.”
Bank of America Downgraded by Fox-Pitt Kelton
Bank of America (BAC) shares were downgraded this morning by Foxx-Pitt Kelton from Outpeform to In Line after the bank reported earnings last week.
The firm believes major banks will struggle throughout 2009 and profits will be unlikely when excluding one-time gains. Citigroup (C) announced earnings last week that showed the bank had turned a profit in the quarter, but after one-time gains from the brokerage unit partnership with Morgan Stanley (MS) were removed, the bank actually had a loss in the quarter.
Furthermore, Foxx-Pitt does not believe Bank of America will be in the financial position to repay its $45 billion loan from the US Treasury by the end of the year as CEO Ken Lewis had hoped.
The firm believes major banks will struggle throughout 2009 and profits will be unlikely when excluding one-time gains. Citigroup (C) announced earnings last week that showed the bank had turned a profit in the quarter, but after one-time gains from the brokerage unit partnership with Morgan Stanley (MS) were removed, the bank actually had a loss in the quarter.
Furthermore, Foxx-Pitt does not believe Bank of America will be in the financial position to repay its $45 billion loan from the US Treasury by the end of the year as CEO Ken Lewis had hoped.
Bank of America stock plummets
Bank of America Corp.’s stock, which had already dropped more than 27 percent this month, fell another 18 percent in Thursday trading.
BofA’s stock, which has traded between $10.01 and $45.08 over the last year, closed at $8.32 per share Thursday, down from Wednesday’s closing price of $10.20.
Bank of America has 61 branches and deposits of $5.7 billion in the four-county region, according to the most recent report issued by the Federal Deposit Insurance Corp. Bank of America at the time of the report had the top spot in local marke tshare at 18.9 percent. Since that report, however, Wells Fargo Bank, which had 17.7 percent deposit market share has taken over the operations of Wachovia Bank, which had 9 percent deposit market share.
The bank's shares drop in value follows a report from The Wall Street Journal late Wednesday that the federal government may commit billions more in aid to BofA as it acquires Merrill Lynch & Co. Inc.
According to the report, which cites individuals familiar with the situation, discussions over the funds began last month when BofA told the U.S. Treasury Department it might not acquire Merrill because of the securities firm’s larger-than-expected losses in the fourth quarter.
The government agreed to a plan that includes new federal funds because it was concerned that a failed deal could affect the financial markets.
The report says details are slated to be released Tuesday when BofA announces its fourth-quarter earnings.
A possible arrangement might protect BofA from some losses on Merrill’s bad assets, the newspaper says.
A BofA spokesman had no comment on the Journal ’s report.
So far, BofA has received $25 billion through the federal bailout of the nation’s financial system. Under the Troubled Asset Relief Program (TARP) program, the Treasury Department is purchasing up to $250 billion in preferred stock in U.S. banks. The program was designed to stabilize the ailing financial system and to encourage banks to increase lending and stimulate the economy.
The bank received $15 billion in late October. Another $10 million was originally intended for Merrill. Because BofA acquired the securities firm Jan. 1, the Charlotte-based bank (NYSE:BAC) got the $10 billion. Treasury forwarded the funds through the Troubled Asset Relief Program on Jan 9.
Concerns have grown about BofA’s financial position in recent weeks. The $2.7-trillion-asset bank has enormous exposure to consumer loans, which are deteriorating along with the economy. It also is juggling two merger integrations in Countrywide Financial Corp. and Merrill, eliminating 42,500 jobs across the company tied to those two deals.
This week Citigroup Inc. (NYSE:C) analyst Keith Horowitz said he expected BofA to post a $3.6 billion loss in the fourth quarter, and he also believes the company will cut its dividend again, to 5 cents from 32 cents. In the third quarter the bank cut its dividend by 50 percent.
In a research note last night, Standard & Poor’s analyst Stuart Plesser said that even with additional government funding, BofA’s capital levels will still be low relative to peers. Banks are required to maintain a certain amount of capital to protect against loan losses, and Plesser expects BofA will likely have to raise additional equity capital in the coming months and cut its dividend again. A capital raise via a common stock offering would dilute existing shareholders’ equity further; in October the bank raised $10 billion in new capital through a common stock offering. Plesser continues to rate BofA’s shares a “sell.”
Christoper Mutascio, an analyst with Stifel Nicolaus, says he is reserving judgment on the latest capital infusion from the government. In a note this morning, Mutascio says while “the initial take on this is negative,” the devil will be in the details and terms of the capital infusion. If the government assistance is “punitive, then it is a bailout of (BofA), which is not good. If it is advantageous then it would appear that (BofA) earned some ‘goodwill’ from the federal government and any initial negative reaction would be premature.” Mutascio rates the shares a “buy.”
BofA reported net income of $1.17 billion in the third quarter, down from $3.7 billion a year earlier. Analysts polled by Thomson Financial expect the company to report fourth-quarter earnings of $1.2 billion, or 8 cents per share.
Sunday, June 28, 2009
BAI Maverick 2009 Agenda
Monday, May 4
2:30 p.m. - 3:00 p.m.
Being Maverick in a New Financial Services Paradigm Debbie Bianucci, President & Chief Executive Officer, BAI
In today's environment, "maverick" and "banking" might be perceived as an oxymoron. Thankfully, this is untrue. Learn why it's become more important than ever for banking executives to be free-thinking, collaborative, change agents in their organizations. Maverick thinking will provide focus and enable you to find ways of getting important things done inside your banking institution faster, with greater quality, and better outcomes.
3:00 p.m. - 4:15 p.m.
Building Brand and Consumer Confidence in Anxious Times Interactive Dialogue with Clyde Fessler, Former Vice President of Business Development, Harley-Davidson Motor Company
Maverick vision can produce unimaginable results. For Harley-Davidson, people have tattooed their bodies with, and have created a lifestyle around, the brand. The Harley-Davidson marketing story explains the strategy that took a company on the verge of bankruptcy, to one of the top performing corporations on the New York Stock Exchange; and one of the world's most respected brands. Clyde Fessler, the man behind the strategy, spent twenty-five years creating and leading the plan. Don't miss this opportunity to have an open dialogue with Clyde about what it takes to create a lasting brand and confidence. Hear what he learned by finessing a remarkable turnaround so you can leverage this insight to drive your organization's strategy.
4:15 p.m. - 5:30 p.m.
Richard K. Davis, Chairman, President & Chief Executive Officer, U.S. Bancorp
Richard Davis leads this financial holding company with more than $247 billion in total assets. His strategic vision influences the company's consumer banking, wholesale banking, private client, trust, asset management, risk management and payments businesses. In a candid exchange with Tom Brown of Second Curve Capital, Richard will share insights into his leadership of the company and the choices that steered it away from the current financial services storm to result in delivering quality and results to all its stakeholders.
5:30 p.m. - 6:30 p.m.
Reception
6:30 p.m. - 8:00 p.m.
Networking Dinner
Join us for dinner and discourse led by Tom Brown, Chief Executive Office, Second Curve Capital, and one of the industry's leading mavericks. Tom will share his thoughts around what banking investors are looking for as they try to identify the superior-performing banking organizations; and his predictions for the future of the industry.
Media Alert: Relive Live Earth: MSN Keeps Landmark Concerts, Cause Alive Online
REDMOND, Wash. — July 8, 2007
What: Music fans can relive yesterday’s Live Earth performances all over again online, only on MSN®, the exclusive online media partner for the seven-continent concert series. LiveEarth.MSN.com will also feature recorded interviews with many of the performers and continue to offer information designed to help viewers turn their interest in global climate change into action. People can add their voice to the debate by sharing homemade videos about environmental issues or favorite Live Earth performances at the Soapbox on MSN Video (http://soapbox.msn.com).
Who: People can view performances from more than 100 artists at no charge at LiveEarth.MSN.com. The MSN Web portal features easy-to-navigate lists of acts, venues and songs from the concerts. With just a few clicks, fans can enjoy performances from cities such as London, Sydney, Tokyo and more.
When: Now
Where: All performances, interviews, photos, community features and more are located at http://liveearth.msn.com. The Live Earth video on Soapbox on MSN Video, located at http://soapbox.msn.com/video.aspx?vid=f688e6ce-20b4-459a-808e-c5a7ad104fb7, provides an interactive experience.
Note to editors: If you are interested in viewing additional information on Microsoft, please visit the Microsoft® Web page at http://www.microsoft.com/presspass on Microsoft’s corporate information pages. Web links, telephone numbers and titles were correct at time of publication, but may since have changed. For additional assistance, journalists and analysts may contact Microsoft’s Rapid Response Team or other appropriate contacts listed at http://www.microsoft.com/presspass/contactpr.mspx.
Resources for Architects and Developers
| |  Capital Markets Architecture Center - Now Available! Enterprise Architecture Website MSDN Insurance Industry Center Windows Mobile for Developers Reference Application Pack for Loan Origination Systems MSDN Subscriptions – How to get one? If you are interested in getting an individual subscription you can do so through our many resellers. Please visit the How to Buy section of the MSDN website. If you are interested in getting a subscription or multiple subscriptions for your development group through your company and not sure who to talk to internally? Feel free to contact us at fsmkt@microsoft.com and we can talk to you about your options and try to put you in touch with the right person at your company.
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| |  Read these new case studies, and learn how leading organizations in the financial services industry are using Microsoft technology to improve the way they do business.
Read more case studies here. Learn more about the value we provide to financial institutions at http://www.microsoft.com/industry/financialservices/default.mspx | ||
Developer Connection
| |  At Microsoft®, we're committed to serving the needs of developers in the financial services industry. Now you can save time by using this convenient Web site to access the latest resources, tools and technologies to help build fast, deployable, and enterprise level solutions. Be sure to check back frequently for updates.
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| |  Microsoft Financial Services Developer Conference 2008 Recap WFS Innovation Awards
Download the Silverlight 2 (Beta 1) Retail Financial Services Demonstrator!
Why use Silverlight 2 and the Demonstrator?
Developing Managed Applications for Microsoft Windows Mobile 6 Training Developing Native Applications for Microsoft Windows Mobile 6 Training Become a Microsoft Certified Professional! Microsoft Financial Services Developer Newsletter – Spring Edition UX in the Enterprise Author Bio: .NET StockTrader Sample Application - An End-to-End Sample Application Illustrating Windows Communication Foundation and .NET Enterprise Technologies The application offers full interoperability with J2EE and IBM WebSphere's Trade 6.1 sample application. As such, the application offers an excellent opportunity for developers to learn about .NET and building interoperable, service-oriented applications. .NET in the Fast Lane - Developers Find Ways to Open Windows to Business-Critical Applications Excel Services: Develop A Calculation Engine For Your Apps Microsoft "Acropolis" Silverlight Visibility and Control in a Service Oriented Architecture | ||
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