by Calculated Risk on 1/20/2009 09:37:00 AM

From Bloomberg: State Street Net Falls 71% on Costs to Support Funds

State Street Corp ... Results included costs of more than $800 million to offset losses in its stable value funds, cut jobs and write down the value of investment securities.

Here is the State Street presentation (hat tip Mike in Long Island)

Check out the acceleration in the Unrealized after-tax MTM losses on page 4.

Also Mike suggests looking at page 18 and the exposure to RMBS in Spain and Italy.

And from the WSJ: Regions Financial Swings to Loss on $6 Billion Write-Down

Regions Financial Corp. swung to a fourth-quarter loss as it took a $6 billion goodwill write-down and sharply raised loan-loss provisions, although non-performing assets fell slightly amid the continuing disposal of problem assets.

The bad news continues ...

by Calculated Risk on 1/19/2009 09:10:00 AM

From The Times: RBS losses set to reach record £28 billion

Royal Bank of Scotland (RBS) confirmed today that losses for the full-year could reach as much as £28 billion ...

The bank said this morning that it will make an annual loss of between £7 billion and £8 billion, when it announces its results on February 26.

However, it also expects to announce a charge of between £15 billion and £20 billion related to last year's acquisition of ABN Amro, the Dutch bank, which it acquired with Spain's Santander and Fortis, the Belgium bank.

The potential £28 billion loss is nearly twice the size of Vodafone's £15 billion deficit in 2006, currently the biggest-ever corporate loss in UK history.

From the WSJ: RBS Expects Huge 2008 Loss

Royal Bank of Scotland Group PLC said Monday that tough market conditions in the fourth quarter and mounting impairment charges could push it to a 2008 full-year loss of as much as £28 billion ($41.29 billion), the U.K.'s biggest ever corporate loss.

Ouch!

by Calculated Risk on 1/16/2009 08:16:00 AM

From the WSJ: Bank of America Swings to a Loss

Bank of America Corp. swung to a fourth-quarter loss as provisions for credit-losses nearly tripled, while the company showed why it needed further help from the government to support its acquisition of Merrill Lynch, whose preliminary loss was $15.31 billion.

And from the WSJ: Citigroup Posts Loss, Splits Up Company

Citigroup Inc. reported an $8.29 billion net loss for the fourth quarter, putting the year's red ink at $18.72 billion, as the company announced it will reorganize into two business lines focused on banking and other financial services.

by Calculated Risk on 1/15/2009 12:22:00 PM

From Reuters: Marshall & Ilsley has big loss (hat tip Justin)

In a bad sign for other regional banks, Marshall & Ilsley Corp said it was slashing its dividend and cutting its workforce and posted a surprising fourth-quarter loss as bad loans surged.
...
In the fourth quarter, Marshall & Ilsley increased the amount set aside for bad loans to $850.4 million from $235.1 million, as commercial and construction loan losses surged, especially among residential developers and in the states of Arizona and Florida. Net charge-offs more than tripled to $679.8 million.

"The nation's current recessionary climate is unlike any we have experienced," Chief Executive Mark Furlong said in a letter to shareholders.
emphasis added

This may seem like a small story compared to Citi, BofA and JPMorgan, but the regional banks are going to be hit especially hard in 2009 as the commercial real estate bust unfolds.

by Calculated Risk on 1/14/2009 09:11:00 AM

From the WSJ: Deutsche Bank Expects to Post $6.33 Billion Fourth-Quarter Loss

Deutsche Bank AG Wednesday warned on fourth-quarter and full-year earnings, saying that exceptionally tough market conditions in sales and trading drove it to an after-tax loss of about €4.8 billion ($6.33 billion) for the fourth quarter ...

Just a reminder that the confessional remains only for the banks ...

by Calculated Risk on 11/05/2008 08:22:00 AM

From Bloomberg: GMAC Posts Quarterly Loss, ResCap Unit Faces Doubt on Survival

GMAC ... third-quarter net loss widened to a record $2.52 billion from $1.6 billion a year earlier ...

GMAC's results were crushed by slumps in the housing market, where foreclosures are running at record levels, and in auto sales, which GM labeled the worst since 1945 when it reported October results this week.

The story mentions that GMAC will only lend to car buyers with the highest credit ratings - and that contributed to the dismal sales auto sales in October.

Also GMAC is considering converting to a bank holding company to gain more access to capital. Currently GM owns 49% of GMAC, and entities (like GM) with more than 25% ownership in a bank holding company are subject to strict capital requirements and other regulations. That is why a conversion of GMAC to a bank holding company would probably be part of a GM-Chrysler merger, with Cerberus swapping Chrysler for enough of GM's stake in GMAC to lower GM's ownership below 25%.

by Calculated Risk on 10/22/2008 09:16:00 AM

From Reuters: Wachovia Reports $23.9 Billion Loss for Third Quarter

Wachovia on Wednesday posted a $23.9 billion third-quarter loss, a record for any United States lender in the global credit crisis ... The loss totaled $11.18 per share, and stemmed mostly from an $18.7 billion write-down of good will because asset values declined, as well as a big increase in reserves for soured loans.
...
Much of Wachovia’s troubles stem from a fast-deteriorating $118.7 billion portfolio of “Pick-a-Pay” option adjustable-rate mortgages it largely took on when it bought the California lender Golden West Financial for $24.2 billion in 2006.

Wachovia said it now expects cumulative losses on that 438,000-loan portfolio of $26.1 billion, or 22 percent, up from the 12 percent it had forecast in July.

by Calculated Risk on 10/21/2008 09:26:00 AM

From Bloomberg: National City, Fifth Third, KeyCorp Post Losses on Bad Loans

National City posted a $729 million loss and set plans to cut 4,000 jobs, or 14 percent of the workforce, according to a statement today. Fifth Third said it may ask to be included in the Treasury's plan to buy stakes in U.S. banks, and KeyCorp will limit new student loans and scale back lending for boats and recreational vehicles.
...
Fifth Third in Cincinnati ... reported a loss of $56 million ... and Cleveland-based KeyCorp's loss was $36 million ...

The confessional is still busy, especially for regional banks.

by Calculated Risk on 10/16/2008 08:50:00 AM

From the WSJ: Citigroup Posts Fourth Straight Loss

Citigroup Inc. swung to a third-quarter loss -- its fourth straight quarter in the red -- as it wrote down another $4.4 billion in securities and banking and blamed weak revenues across all businesses on "the impact of a difficult economic environment and weak capital markets."

And on Merrill: Merrill's Net Loss Widens on $9.5 Billion in Write-Downs

Merrill Lynch & Co., which is set to be acquired by Bank of America Corp. in February, posted a wider third-quarter loss amid another $9.5 billion in write-downs of troubled assets.

The company, which already posted some $40 billion in subprime-related write-downs, said it has made "significant progress in balance sheet and risk reduction," having cut 98% of its exposures to U.S. Alt-A mortgages.

The confessional is still busy!

by Calculated Risk on 9/25/2008 08:29:00 AM

The WSJ reports: GE Cuts Earnings Forecast, Suspends Stock Buyback that GE lowered its earning guidance, suspended its stock buyback, and will probably not increase its dividend.

[GE cited] "unprecedented weakness and volatility in the financial-services markets," and ... issued a harrowing projection for the economy, as predicting "that difficult conditions in the financial-services markets are not likely to improve in the near future."

by Calculated Risk on 9/15/2008 07:26:00 PM

From the Wells Fargo 8-K filed with the SEC today:

In connection with the filing today by Lehman Brothers Holdings Inc. (Lehman Brothers) of a Chapter 11 bankruptcy petition, Wells Fargo & Company (the Company) will record other-than-temporary impairment and take a non-cash charge to earnings in third quarter 2008 for investments in senior unsecured notes and perpetual preferred securities issued by Lehman Brothers. The Company’s investments in the notes and preferred securities are included in securities available for sale at a cost of approximately $90 million and $109 million, respectively. The notes currently trade at 25-30 cents on the dollar. The preferred securities currently trade at less than one percent of par value. The Company estimates that as of September 12, 2008, it had approximately $50 million of unsecured counterparty exposure to Lehman Brothers. The Company has no direct lending exposure to Lehman Brothers, and the Wells Fargo Advantage Money Market Funds do not have any direct exposure to Lehman Brothers.

So the $90 million in notes is worth about $25 million, and the $109 million in preferred securities is essentially worthless. With the unsecured counterparty exposure, this loss could be close to $200 million. Just last week, Wells Fargo reported $450 million (or so) in losses associated with Fannie and Freddie.

The Lehman confessional is open!

by Calculated Risk on 9/11/2008 07:08:00 PM

Press release: WaMu Provides Update on Expectations for Third Quarter Performance

WaMu expects the third quarter provision to be approximately $4.5 billion, down from $5.9 billion in the second quarter, but nearly two times expected charge-offs, resulting in an expected increase of approximately $1.8 billion in the allowance for loan losses at quarter end. Residential mortgage provisions are expected to be approximately $3.4 billion, down approximately $2.1 billion from second quarter residential mortgage provision of approximately $5.5 billion. Offsetting this decrease is an expected $600 million increase in the card provision, the majority of which is the result of credit card securitizations maturing in the ordinary course and returning to the balance sheet. The company expects its total loan loss reserve to increase from $8.5 billion at June 30th to approximately $10.3 billion at the end of the third quarter.

From Fitch: Fitch Downgrades Washington Mutual to 'BBB-'; Outlook Negative

Fitch Ratings has downgraded the long- and short-term Issuer Default Ratings (IDRs) of Washington Mutual, Inc. ... The Rating Outlook is Negative.

Today's actions reflect Fitch's expectation for continuing asset quality challenges amidst market conditions that are considered the most difficult in several decades for U.S. retail banks, particularly those with a concentration in residential mortgage assets.

WaMu has posted significant quarterly losses for the past three quarters, primarily as a result of a sharp rise in credit loss provisioning during the past year. ... WaMu announced today that it expects the provision for third-quarter 2008 (3Q08) to start showing evidence of that anticipated trend with a substantially lower provision (estimated at approximately $4.5 billion) in 3Q'08 versus the 2Q'08 provision of $5.9 billion.

... Fitch believes that the flexibility to add to capital is now significantly constrained in light of market conditions.

Update: from reader Nemo: How big is WaMu?

by Calculated Risk on 9/10/2008 12:40:00 PM

BofA Presentation material is here.

Webcast here.

BofA just concluded a presentation. No story yet, but here are some headlines (hat tip Joshua and Brian):

BofA sees some softening on Commercial Asset Quality

Q3 to be "a little choppy" in capital markets.

BofA sees higher loss rates.

BofA's $13B home builder portfolio "not pretty"

BofA home builder losses grew faster than expected.

BofA see elevated credit costs, no "major pain"

BofA other commercial / industrial loans show weakness.

by Calculated Risk on 9/10/2008 07:53:00 AM

Here is the Lehman Press Release.

The conference call number is 800-369-1721 (domestic) or 517-308-9232 (international) at least ten minutes prior to the start of the conference call. The pass code for all callers is 7561430.

The conference call will also be accessible through the “Shareholders” section of the Firm’s Web site under the subcategory “Events and Presentations.” See here.

I'll post some remarks (plus see the comments).

Fuld: "significant deterioration" in 2nd quarter in credit markets.

Fuld: "final stages" of selling majority interest in IMD.

Fuld: "remain committed" to all alternatives.

Project 34% price drop on houses (stress case), compared to 18% decline in house prices so far (pretty quick, I think this is correct).

Reader Brian comments: "Alt-A is real mess. 18% DQ rate at this point, bound to get worse, is a horror show....Of course they are financing the REI spinoff, so there is no risk reduction unless REI can attract external funding"

by Calculated Risk on 9/10/2008 07:30:00 AM

Lehman cuts dividend, to sell majority stake in Neuberger, Spin-off CRE assets, report $3.9 Billion loss.

From Lehman: LEHMAN BROTHERS ANNOUNCES PRELIMINARY THIRD QUARTER RESULTS AND STRATEGIC RESTRUCTURING Excerpts:

Spin-off to Lehman Brothers’ Shareholders of Vast Majority of the Firm’s Commercial Real Estate Assets into a New, Separate Public Company
o Leaves Firm with Limited Commercial Real Estate Exposure
o Shareholders Retain Upside in Commercial Real Estate Portfolio
o Expected to be Completed in First Quarter of Fiscal 2009

Intention to Sell a Majority Interest in Investment Management Division
o Auction Process Highlights Value of Investment Management Business
o Expected to Result in Tangible Book Value Benefit of More Than $3.0 Billion
o Lehman Brothers Expects to Maintain the Majority of the Pre-Tax Income of the Investment Management Division
o Ongoing Strategic Relationship Maintained with Lehman Brothers

Much more in press release.

by Calculated Risk on 9/08/2008 05:24:00 PM

From the WSJ: Wells Fargo Says It Will Take Third-Quarter Write-Down On Fannie, Freddie Holdings

Wells Fargo & Co. said ... its perpetual preferred investments in Fannie and Freddie are included in securities available for sale at a cost of $336 million and $144 million, respectively. Those securities now trade at 5% to 10% of their original value.

The F&F confessional is open.

by Calculated Risk on 8/28/2008 02:03:00 PM

From Bloomberg: Lehman Said to Be Poised to Eliminate as Many as 1,000 Jobs

Lehman ... is preparing to eliminate as many as 1,000 jobs in what would be the firm's fourth round of cuts this year ... The cuts may be announced when Lehman ... releases third-quarter financial results next month ...

And more cost cutting from Citigroup, from Craine's Internal memo reveals Citi penny-pinching

[A]ccording to published reports, management at one of the biggest U.S. banks has not only banned off-site meetings among employees—it’s also asked workers to cut back on the amount of photocopying they do.

According to an internal memo confirmed by a Citigroup spokesman, the bank wants presentations to be printed double-sided to reduce unnecessary paper usage. In addition, the use of certain copiers will be confined to client presentations. “Over time, we will be removing color copiers and printers from the locations where they are not essential,” the memo stated.

... And in perhaps the biggest blow of all to investment bankers, the memo says Citi will be conducting a review of BlackBerry usage.

You know it's tough when they limit color copies.

by Calculated Risk on 8/25/2008 02:55:00 PM

From the JPMorgan SEC 8-K filing today:

JPMorgan Chase & Co. disclosed today that it held approximately $1.2 billion par value of Fannie Mae and Freddie Mac perpetual preferred stock. Such securities are held in the Firm's investment portfolio and are marked to market through the Firm's earnings. The Firm estimates that such preferred stocks have declined in value by approximately an aggregate $600 million in the third quarter to date, based on current market values. The precise amount of losses that may be incurred on these securities for the third quarter is difficult to determine, given the significant volatility being experienced in the market values of these securities.

Many banks hold preferred shares in Fannie and Freddie, and the impact could be widespread.

by Calculated Risk on 8/20/2008 09:30:00 AM

This WSJ article has some interesting stats and comments: Wachovia Unloads Troubled Loans

Over the next five years, U.S. banks could write off as bad debt between $65 billion and $165 billion loans tied to residential construction and land assets, according to research firm Zelman & Associates.

The article also has data on delinquency rates:

Foresight Analytics estimates that land- and construction-loan delinquencies reached 8% in the second quarter for commercial banks, up from 7.1% in the first quarter and 2.3% in the year-earlier period.

The confessional will be busy.

by Calculated Risk on 8/19/2008 08:18:00 AM

From Home Depot: The Home Depot Announces Second Quarter Results

Sales for the second quarter totaled $21.0 billion, a 5.4 percent decrease from the second quarter of fiscal 2007, reflecting negative comparable store sales of 7.9 percent, offset in part by sales from new stores.
...
"We continue to see pressure on our market and the consumer, generally," said Frank Blake, chairman & CEO. ...

Given the continued softness in the housing and home improvement markets as well as the commitment to invest in its key retail priorities, the Company believes fiscal 2008 sales will decline by approximately five percent ... This is consistent with its previous guidance.

And the beat goes on ...