hardincap Posted March 22, 2012 Share Posted March 22, 2012 can anyone tell me if moynihan/bac has said anything about returning capital to shareholders this year through buybacks and dividend? Last I read, they were planning to do so in '13 after building up capital ratios for basel iii, but capital ratios are all pretty high right now so i dont see why they should wait until next year. also now that jpm has started returning capital bigtime im wondering if bac plans to follow suit soon. Link to comment Share on other sites More sharing options...
Parsad Posted March 22, 2012 Share Posted March 22, 2012 They want to end all doubts about capital and Basel III, so they are going to just continue to build the balance sheet this year. When they apply to return capital next year, they won't have any issues. Cheers! Link to comment Share on other sites More sharing options...
hardincap Posted March 22, 2012 Author Share Posted March 22, 2012 thanks. I wish they'd start repurchases earlier to take advantage of the beaten down stock price. I think at $10 its still very undervalued. Link to comment Share on other sites More sharing options...
Parsad Posted March 22, 2012 Share Posted March 22, 2012 Use Fairfax as a guide. Prem took care of the business instead of buybacks, and the stock price followed. BAC needs to make sure their balance sheet can withstand almost any liquidity crisis that would hurt their peers...so is it better they buy back shares or focus on strengthening their balance sheet? My choice is the latter, and the stock price will follow over time. Buybacks should only happen once you've taken care of everything else and have excess capital, and then at that point you have to decide if your stock is cheap to intrinsic value and there is no other better alternative. You don't buy back shares just because they are cheap, but because there is no other use for the capital that would provide a better return. Currently, BAC can use all the capital they can get to quell any sort of innuendo or rumour. Look at how one comment created such a whirlwind this week. They just need to shut the critics up and give them no excuse whatsoever, and that will happen after 2012. Just like it did at Fairfax! Cheers! Link to comment Share on other sites More sharing options...
hardincap Posted March 22, 2012 Author Share Posted March 22, 2012 i dont think its quite so black and white that they need to meet basel rules, which they are already ahead of schedule on, before doing buybacks. they can do buybacks and still meet basel rules ahead of time. JPM started huge buybacks, and i may be wrong but their capital ratios are similar to bac. Link to comment Share on other sites More sharing options...
hardincap Posted March 22, 2012 Author Share Posted March 22, 2012 tier 1 common ratio of 9.86% bac vs 10% jpm. jpm is doing better on basel iii tier 1, but not by a whole lot Link to comment Share on other sites More sharing options...
Uccmal Posted March 22, 2012 Share Posted March 22, 2012 i dont think its quite so black and white that they need to meet basel rules, which they are already ahead of schedule on, before doing buybacks. they can do buybacks and still meet basel rules ahead of time. JPM started huge buybacks, and i may be wrong but their capital ratios are similar to bac. It is vitally important that they reach Basel3 as fast as they can. They want to be seen as able to withstand any shock the same as JPM or WFC, otherwise they will not get capital as cheap. JPM was able to issue long bonds at generational lows last summer. Link to comment Share on other sites More sharing options...
Parsad Posted March 22, 2012 Share Posted March 22, 2012 tier 1 common ratio of 9.86% bac vs 10% jpm. jpm is doing better on basel iii tier 1, but not by a whole lot JPM does not have billions in litigation coming up, and their business is not going through a complete restructuring. BAC's turnaround is more than half-way done, but they need to drive earnings forward while dealing with the overhang of litigation and loan loss provisions from the previous leadership group. The more solid the balance sheet, the more confidence the markets have. Look at what one stress test did for them! Can you imagine if they plow right through 11% in Tier 1 Common before their main competitors? They added over one whole percent in the 4th quarter, so the cash flow and assets are there to get the job done. Once they hit that, the stock will move up and then they can spend their cash flows growing their business. Cheers! Link to comment Share on other sites More sharing options...
hardincap Posted March 22, 2012 Author Share Posted March 22, 2012 tier 1 common ratio of 9.86% bac vs 10% jpm. jpm is doing better on basel iii tier 1, but not by a whole lot JPM does not have billions in litigation coming up, and their business is not going through a complete restructuring. BAC's turnaround is more than half-way done, but they need to drive earnings forward while dealing with the overhang of litigation and loan loss provisions from the previous leadership group. The more solid the balance sheet, the more confidence the markets have. Look at what one stress test did for them! Can you imagine if they plow right through 11% in Tier 1 Common before their main competitors? They added over one whole percent in the 4th quarter, so the cash flow and assets are there to get the job done. Once they hit that, the stock will move up and then they can spend their cash flows growing their business. Cheers! JPM has billions in likely repurchase losses to be realized next few years. But yes, not quite as bad as countrywide. I think BAC can repurchase shares at $10 now, or wait till they boost basel iii this year and pay $15-20 one year from now. 50 to 100% difference! Link to comment Share on other sites More sharing options...
enoch01 Posted March 22, 2012 Share Posted March 22, 2012 “We are not asking to change the dividend posture because, frankly, we’re close enough to Basel 3 that we just want to blow through it,” Moynihan said in a Jan. 19 staff meeting. “For 2012, we’re sticking to building back capital.” http://www.bloomberg.com/news/2012-03-14/pandit-repeats-moynihan-misstep-as-fed-rebuffs-citigroup.html Moynihan is going to make BAC pretty close to the safest big bank in the U.S. We can buy this right now at a discount to TBV. Link to comment Share on other sites More sharing options...
Uccmal Posted March 22, 2012 Share Posted March 22, 2012 We can buy this right now at a discount to TBV. Hardincap, there is your answer. Bac has 12 per share of TBV and over 20 BV, once goodwill can be assumed ok. Rather than waiting for BAC to buy back shares, you can buy as many as you want at a price cheaper than BAC will ever get. Link to comment Share on other sites More sharing options...
hardincap Posted March 22, 2012 Author Share Posted March 22, 2012 We can buy this right now at a discount to TBV. Hardincap, there is your answer. Bac has 12 per share of TBV and over 20 BV, once goodwill can be assumed ok. Rather than waiting for BAC to buy back shares, you can buy as many as you want at a price cheaper than BAC will ever get. you're missing my point. I WANT bac to buy back shares at these valuations alongside me. Link to comment Share on other sites More sharing options...
ERICOPOLY Posted March 22, 2012 Share Posted March 22, 2012 We can buy this right now at a discount to TBV. Hardincap, there is your answer. Bac has 12 per share of TBV and over 20 BV, once goodwill can be assumed ok. Rather than waiting for BAC to buy back shares, you can buy as many as you want at a price cheaper than BAC will ever get. you're missing my point. I WANT bac to buy back shares at these valuations alongside me. You wouldn't like it. Were they to repurchase a substantial amount of shares, the stock would plunge on capital fears. Link to comment Share on other sites More sharing options...
Parsad Posted March 22, 2012 Share Posted March 22, 2012 We can buy this right now at a discount to TBV. Hardincap, there is your answer. Bac has 12 per share of TBV and over 20 BV, once goodwill can be assumed ok. Rather than waiting for BAC to buy back shares, you can buy as many as you want at a price cheaper than BAC will ever get. you're missing my point. I WANT bac to buy back shares at these valuations alongside me. Would you rather they blow through capital to buy back shares or actually strengthen the business? Unless you plan on selling your shares shortly after, I would think you would prefer the latter if you are a long-term shareholder. It's a leveraged business that had serious issues just a year and a half ago. Everything is not ok. They are recovering and it will take another year to truly have a business that can compete head on with JPM and WFC. They are not in the same league right now, but will be if they continue to build capital. If they do what you are asking, then they are risking a step back if economic conditions deteriorate or litigation and losses are higher than provisioned. Cheers! Link to comment Share on other sites More sharing options...
zippy1 Posted March 22, 2012 Share Posted March 22, 2012 We can buy this right now at a discount to TBV. Hardincap, there is your answer. Bac has 12 per share of TBV and over 20 BV, once goodwill can be assumed ok. Rather than waiting for BAC to buy back shares, you can buy as many as you want at a price cheaper than BAC will ever get. you're missing my point. I WANT bac to buy back shares at these valuations alongside me. We are not "missing" your point at all as many of us were through the Fairfax journey. We just don't agree with you that it is the priority right now. Link to comment Share on other sites More sharing options...
enoch01 Posted March 22, 2012 Share Posted March 22, 2012 (Channeling Jack Nicholson from A Few Good Men): "You want capital?! You can't handle the capital!!" Link to comment Share on other sites More sharing options...
redskin Posted March 23, 2012 Share Posted March 23, 2012 We can buy this right now at a discount to TBV. Hardincap, there is your answer. Bac has 12 per share of TBV and over 20 BV, once goodwill can be assumed ok. Rather than waiting for BAC to buy back shares, you can buy as many as you want at a price cheaper than BAC will ever get. you're missing my point. I WANT bac to buy back shares at these valuations alongside me. We are not "missing" your point at all as many of us were through the Fairfax journey. We just don't agree with you that it is the priority right now. I am 100% in agreement with hardnicap. BAC's capital and liquidity ratios are higher than they have been at any point in their history. If BAC were to buy back $5 billion of stock this year or 5% of the outstanding shares, it would be the gift that would keep giving for decades in the future. Even with a buy back of this amount they would still continue to generate capital throughout the year. Someone mentioned that the stock would fall if they announced a buyback because of fears of capital. I think that would be great! If the stock was cut in half and they were repurchasing $5 billion, they would retire nearly 10% of the shares outstanding. Link to comment Share on other sites More sharing options...
ERICOPOLY Posted March 23, 2012 Share Posted March 23, 2012 We can buy this right now at a discount to TBV. Hardincap, there is your answer. Bac has 12 per share of TBV and over 20 BV, once goodwill can be assumed ok. Rather than waiting for BAC to buy back shares, you can buy as many as you want at a price cheaper than BAC will ever get. you're missing my point. I WANT bac to buy back shares at these valuations alongside me. We are not "missing" your point at all as many of us were through the Fairfax journey. We just don't agree with you that it is the priority right now. I am 100% in agreement with hardnicap. BAC's capital and liquidity ratios are higher than they have been at any point in their history. If BAC were to buy back $5 billion of stock this year or 5% of the outstanding shares, it would be the gift that would keep giving for decades in the future. Even with a buy back of this amount they would still continue to generate capital throughout the year. Someone mentioned that the stock would fall if they announced a buyback because of fears of capital. I think that would be great! If the stock was cut in half and they were repurchasing $5 billion, they would retire nearly 10% of the shares outstanding. 90 days ago they were SELLING shares. Think about it. Link to comment Share on other sites More sharing options...
redskin Posted March 23, 2012 Share Posted March 23, 2012 We can buy this right now at a discount to TBV. Hardincap, there is your answer. Bac has 12 per share of TBV and over 20 BV, once goodwill can be assumed ok. Rather than waiting for BAC to buy back shares, you can buy as many as you want at a price cheaper than BAC will ever get. you're missing my point. I WANT bac to buy back shares at these valuations alongside me. We are not "missing" your point at all as many of us were through the Fairfax journey. We just don't agree with you that it is the priority right now. I am 100% in agreement with hardnicap. BAC's capital and liquidity ratios are higher than they have been at any point in their history. If BAC were to buy back $5 billion of stock this year or 5% of the outstanding shares, it would be the gift that would keep giving for decades in the future. Even with a buy back of this amount they would still continue to generate capital throughout the year. Someone mentioned that the stock would fall if they announced a buyback because of fears of capital. I think that would be great! If the stock was cut in half and they were repurchasing $5 billion, they would retire nearly 10% of the shares outstanding. 90 days ago they were SELLING shares. Think about it. Yes. Conversion of debt to equity. Very expensive to shareholders selling those shares to retire debt. Link to comment Share on other sites More sharing options...
ERICOPOLY Posted March 23, 2012 Share Posted March 23, 2012 We can buy this right now at a discount to TBV. Hardincap, there is your answer. Bac has 12 per share of TBV and over 20 BV, once goodwill can be assumed ok. Rather than waiting for BAC to buy back shares, you can buy as many as you want at a price cheaper than BAC will ever get. you're missing my point. I WANT bac to buy back shares at these valuations alongside me. We are not "missing" your point at all as many of us were through the Fairfax journey. We just don't agree with you that it is the priority right now. I am 100% in agreement with hardnicap. BAC's capital and liquidity ratios are higher than they have been at any point in their history. If BAC were to buy back $5 billion of stock this year or 5% of the outstanding shares, it would be the gift that would keep giving for decades in the future. Even with a buy back of this amount they would still continue to generate capital throughout the year. Someone mentioned that the stock would fall if they announced a buyback because of fears of capital. I think that would be great! If the stock was cut in half and they were repurchasing $5 billion, they would retire nearly 10% of the shares outstanding. 90 days ago they were SELLING shares. Think about it. Yes. Conversion of debt to equity. Very expensive to shareholders selling those shares to retire debt. VERY expensive. They sold common shares... why? Because they have SO MUCH excess cash to return to shareholders. HEAPS OF IT. So much so, that they had to SELL SHARES at like $6 per share. Because they are swimming in so much excess cash. And yet you want them to return the excess to shareholders... It's not in the realm of reality. Link to comment Share on other sites More sharing options...
redskin Posted March 23, 2012 Share Posted March 23, 2012 We can buy this right now at a discount to TBV. Hardincap, there is your answer. Bac has 12 per share of TBV and over 20 BV, once goodwill can be assumed ok. Rather than waiting for BAC to buy back shares, you can buy as many as you want at a price cheaper than BAC will ever get. you're missing my point. I WANT bac to buy back shares at these valuations alongside me. We are not "missing" your point at all as many of us were through the Fairfax journey. We just don't agree with you that it is the priority right now. I am 100% in agreement with hardnicap. BAC's capital and liquidity ratios are higher than they have been at any point in their history. If BAC were to buy back $5 billion of stock this year or 5% of the outstanding shares, it would be the gift that would keep giving for decades in the future. Even with a buy back of this amount they would still continue to generate capital throughout the year. Someone mentioned that the stock would fall if they announced a buyback because of fears of capital. I think that would be great! If the stock was cut in half and they were repurchasing $5 billion, they would retire nearly 10% of the shares outstanding. they can't buy stock because they are forbidden. Why? Because the fed does not believe they have enough capital to do And survive a depression like economic scenario. Yes wouldn't it be great, in a perfect world, that bac could buy stock back. But they can't. It's impossible right now. BAC needs to build confidence. There will be plenty of time for bac to buy back stock. It's not going to suddenly become ZYNGA overnight. They didn't request a buyback this year. They could've requested to buy back shares and would have remained above the stress test minimum. JPM will go below BAC's levels after their dividend and buyback. I am all for having a Fortress balance sheet and keeping a margin of safety. I just think they are already at that point and should take advantage of the current share price to buy a few shares in. Link to comment Share on other sites More sharing options...
ERICOPOLY Posted March 23, 2012 Share Posted March 23, 2012 We can buy this right now at a discount to TBV. Hardincap, there is your answer. Bac has 12 per share of TBV and over 20 BV, once goodwill can be assumed ok. Rather than waiting for BAC to buy back shares, you can buy as many as you want at a price cheaper than BAC will ever get. you're missing my point. I WANT bac to buy back shares at these valuations alongside me. We are not "missing" your point at all as many of us were through the Fairfax journey. We just don't agree with you that it is the priority right now. I am 100% in agreement with hardnicap. BAC's capital and liquidity ratios are higher than they have been at any point in their history. If BAC were to buy back $5 billion of stock this year or 5% of the outstanding shares, it would be the gift that would keep giving for decades in the future. Even with a buy back of this amount they would still continue to generate capital throughout the year. Someone mentioned that the stock would fall if they announced a buyback because of fears of capital. I think that would be great! If the stock was cut in half and they were repurchasing $5 billion, they would retire nearly 10% of the shares outstanding. they can't buy stock because they are forbidden. Why? Because the fed does not believe they have enough capital to do And survive a depression like economic scenario. Yes wouldn't it be great, in a perfect world, that bac could buy stock back. But they can't. It's impossible right now. BAC needs to build confidence. There will be plenty of time for bac to buy back stock. It's not going to suddenly become ZYNGA overnight. They didn't request a buyback this year. They could've requested to buy back shares and would have remained above the stress test minimum. JPM will go below BAC's levels after their dividend and buyback. I am all for having a Fortress balance sheet and keeping a margin of safety. I just think they are already at that point and should take advantage of the current share price to buy a few shares in. Sheila Blair commented this week that she wouldn't have approved JPM's capital plans because it leaves them with a 4% leverage ratio at the end of 2013 under the stressed scenario. Link to comment Share on other sites More sharing options...
txlaw Posted March 23, 2012 Share Posted March 23, 2012 They didn't request a buyback this year. They could've requested to buy back shares and would have remained above the stress test minimum. JPM will go below BAC's levels after their dividend and buyback. I am all for having a Fortress balance sheet and keeping a margin of safety. I just think they are already at that point and should take advantage of the current share price to buy a few shares in. Take a look at the CCAR results. The minimum stressed capital ratio for BAC assuming no capital actions after Q1 2012 is lower than WFC, C, and JPM. When you consider the minimum stressed capital ratio with all proposed capital actions, BAC's ratio is still lower than WFC's, even after WFC's proposed dividend increase and stock buy back. I would rather BAC conserve capital so that they have a minimum stressed capital capital ratio comparable to WFC, particularly because of the legal overhang uncertainty. We're not yet at a fortress balance sheet, but we're getting there. Link to comment Share on other sites More sharing options...
JSArbitrage Posted March 23, 2012 Share Posted March 23, 2012 Sheila Blair commented this week that she wouldn't have approved JPM's capital plans because it leaves them with a 4% leverage ratio at the end of 2013 under the stressed scenario. I also recently read an article about how analyst applied the recent US stress to European banks and European banks passed as well. So I am always take stress test results with a grain of salt. Link to comment Share on other sites More sharing options...
Aberhound Posted March 23, 2012 Share Posted March 23, 2012 The big banks and their shareholders will soon realize that it is not a good idea to be in a position where the government gets to tell them what to do. The reality of Dodd Frank will continue to get worse as the regulations are written. Congress always wants more power and they will use that power to turn the banks into utilities which buy government debt. Then the big banks will seek to escape the heavy regulation. Will they point out that their geographical and business diversity and fortress balance sheets means that they do not require deposit insurance so that there is no need for the heavy regulation? Trust in governments are eroding so more and more people do not believe governments when they say they will actually pay what they promise. Better to rely on a fortress balance sheet rather than more government "insurance". Insurance companies don't insure huge risks like nuclear accidents or war damage because it is impossible to pay. Nor should there be deposit insurance available to those with trillions in derivatives as taxpayers do not have the ability to pay. So once JPM and WFC determine that it is in their interest to not use deposit insurance they have a compelling reason to escape the regulatory burden. The deposit insurance and heavy regulation go hand in hand. BAC should hold onto its cash so when JPM and WFC lobby for lighter regulation and limited on no deposit insurance they are in a position to do the same. Link to comment Share on other sites More sharing options...
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