Using Veritas to Construct the "Per…

29-04-2017 Hits:87213 BoomBustBlog Reggie Middleton

Using Veritas to Construct the "Perfect" Digital Investment Portfolio" & How to Value "Hard to Value" tokens, Pt 1

The golden grail of investing is to find that investable asset that provides the greatest reward with the least risk. Alas, despite how commonsensical that precept seems to be, many...

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The Veritas 2017 Token Offering Summary …

15-04-2017 Hits:81131 BoomBustBlog Reggie Middleton

The Veritas 2017 Token Offering Summary Available For Download and Sharing

The Veritas Offering Summary is now available for download, which packs all the information about Veritas in a single page. A step by step guide to purchasing Veritas can be downloaded here.

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What Happens When the Fund Fee Fight Hit…

10-04-2017 Hits:80973 BoomBustBlog Reggie Middleton

What Happens When the Fund Fee Fight Hits the Blockchain

A hedge fund recently made news by securitizing its LP units as Ethereum-based tokens and selling them as tradeable (thereby liquid) assets. This brings technology to the VC industry that...

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Veritaseum: The ICO That's Ushering in t…

07-04-2017 Hits:85446 BoomBustBlog Reggie Middleton

Veritaseum: The ICO That's Ushering in the Era of P2P Capital Markets

Veritaseum is in the process of building peer-to-peer capital markets that enable financial and value market participants to deal directly with each other on a counterparty risk-free basis in lieu...

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This Is Ground Zero for the 2017 Veritas…

03-04-2017 Hits:81944 BoomBustBlog Reggie Middleton

This Is Ground Zero for the 2017 Veritas Offering. Are You Ready to Get Your Key to the P2P Capital Markets?

This is the link to the Veritas Crowdsale landing page. Here is where you will be able to buy the Veritas ICO when it is launched in mid-April. Below, please...

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What is the Value Proposition For Verita…

01-04-2017 Hits:84132 BoomBustBlog Reggie Middleton

What is the Value Proposition For Veritas, Veritaseum's Software Token?

 A YouTube commenter asked a very good question that we will like to take some time to answer. The question was, verbatim: I've watched your video and gone through the slides. The exchange...

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This Real Estate Bubble, Like Some Relat…

28-03-2017 Hits:55194 BoomBustBlog Reggie Middleton

This Real Estate Bubble, Like Some Relationships, Is Complicated...

CNBC reports US home prices rise 5.9 percent to 31-month high in January according to S&P CoreLogic Case-Shiller. This puts the 20 city index close to an all time high, including...

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Bloomberg Chimes In With My Warnings As …

28-03-2017 Hits:83389 BoomBustBlog Reggie Middleton

Bloomberg Chimes In With My Warnings As Landlords Offer First Time Ever Concessions to Retail Renters

Over the last quarter I've been warning about the significant weakness in retailers and the retail real estate that most occupy (links supplied below). Now, Bloomberg reports: Manhattan Landlords Are Offering...

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Our Apple Analysis This Week - This Comp…

27-03-2017 Hits:83130 BoomBustBlog Reggie Middleton

Our Apple Analysis This Week - This Company Is Not What Most Think It IS

We will releasing our Apple forensic analysis and valuation this week for subscribers (click here to subscribe - lowest tier is the same as a Netflix subscription). As can be...

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The Country's First Newly Elected Lame D…

27-03-2017 Hits:83020 BoomBustBlog Reggie Middleton

The Country's First Newly Elected Lame Duck President Will Cause Massive Reversal Of Speculative Gains

Note: Subscribers should reference  the paywall material here for stocks that should give a good risk/reward scenario for bearish trades. The Trump administration's legislative outlook is effectively a political desert, with...

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Sears Finally Throws In The Towel Exactl…

22-03-2017 Hits:89280 BoomBustBlog Reggie Middleton

Sears Finally Throws In The Towel Exactly When I Predicted "has ‘substantial doubt’ about its future"

My prediction of Sears collapsing once interest rates started ticking upwards was absolutely on point.

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The Transformation of Television in Amer…

21-03-2017 Hits:86994 BoomBustBlog Reggie Middleton

The Transformation of Television in America and Worldwide

TV has changed more in the past 10 years than it has since it's inception nearly 100 years ago This change is profound, and the primary benefactors look and act...

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Here is a comparison of more banks and thrifts. In looking over this, I continue to doubt the wisdom of BAC's acquiring CFC. The upside does not seem to justify risking the downside. The spreadsheet below  compares the five banks I have looked closely at over the last few months – WFC, STI, BAC, MTB and ZION across various parameters, primarily with respect to their asset quality. Please note our observations on the same and be aware that this is backwards looking from research I commissioned some time ago:

 

1.       STI has high real estate exposure, higher NPA and 90+ days loan delinquent as proportion of tangible shareholders’ equity, lower allowance as a percent of NPAs, higher Texas ratio, higher ET shortfall to tangible equity, and lower NIM. Though STI does not report the geographic distribution of its operations, its primary markets include Florida, Georgia, Maryland, North and South Carolina among others. High exposure to Florida could make the bank highly susceptible to rising risk of loan losses. However, a noteworthy factor is that the stock has already gone down by around 50% over the last year.

 

2.       BAC has the lowest tier 1 leverage and NIM among the group and relatively higher gross charge-offs and NPAs to tangible equity. We believe that BAC prospects should be considered together with the probable impact of the impending CFC takeover. This requires a detailed analysis of CFC’s state of affairs, which is horrible from the anecdotal research that I have gathered. Since I am in a rush, I will simply post the spreadsheet and comment on it throughout the day.

 

3.       M&T also has a high real estate exposure and high NPA and 90+ days delinquent loans to tangible equity. However, it seems better provisioned that STI and has higher NIM than STI.

 

4.       WFC also seems vulnerable primarily owing to high exposure to California and Florida, higher proportion of gross charge-offs and poorer capitalization.

 

Comparison of banks          
  Wells Fargo SunTrust Bank of America M&T Bank Zions Banc
  WFC STI BAC MTB ZION
           
Stock price (last close) As on June 6, 2008                25.42                46.32                30.50                81.18                39.45
Price Performance (Absolute)          
  1 months -13.48% -16.16% -18.30% -11.26% -12.08%
  3 months -9.57% -15.89% -16.98% 5.03% 12.33%
12 months -29.33% -47.48% -39.06% -25.91% -50.84%
           
Market cap 84.75 bn 16.28 bn 136.26 bn 8.94 bn 4.24 bn
           
  1Q08
  Wells Fargo SunTrust Bank of America M&T Bank Zions Bank
  WFC STI BAC MTB ZION
           
Total loans ($ mn) 386,333 123,713 873,870 49,279 40,064
           
Loan composition:          
Commercial (other than real estate) 24.0% 30.2% 30.5% 27.4% 46.0%
Commercial real estate 16.6% 10.4% 7.2% 37.0% 34.8%
Residential real estate (including home equity) 38.4% 49.5% 44.0% 23.6% 16.0%
Consumer loans 19.2% 9.9% 18.3% 12.0% 1.9%
           
Total real estate exposure 55.0% 59.9% 51.2% 60.6% 50.8%
           
Growth in total loans (q-o-q) 1.1% 1.1% -0.3% 2.6% 2.1%
Commercial (other than real estate) 2.3% 3.8% 1.0% 6.0% 3.2%
Commercial real estate 2.9% 2.3% 2.4% 9.3% 2.1%
Residential real estate (including home equity) 0.8% -0.4% -1.3% NA -0.1%
Consumer loans -1.0% -0.1% -0.8% NA -6.1%
           
Shareholders' equity 48,159 18,431 156,309 6,488 5,328
Goodwill and intangibles 13,148 8,353 87,693 3,422 2,150
Tangible shareholders' equity 35,011 10,078 68,616 3,066 3,178
           
Total NPAs 4,495 2,320 7,827 548 434
NPAs as per cent of total loans 1.2% 1.9% 0.9% 1.1% 1.1%
Growth in NPAs (q-o-q) 16.2% 40.1% 31.6% 12.4% 53.0%
           
NPA composition (as % of respective loans):          
Commercial (other than real estate) 0.6% 0.3% 0.5% 0.6% NA
Commercial real estate 1.0% 0.5% 2.6% 0.8% NA
Residential real estate (including home equity) 1.2% 3.0% 1.1% 3.3% NA
Consumer loans 0.3% 0.4% 0.3% 0.6% NA
           
Loans 90 days or more delinquent still accruing 1,631 744 4,160 81 85
As % of total loans 0.4% 0.6% 0.5% 0.2% 0.2%
           
NPAs and 90+ days delinquent loans as % of total loans 1.6% 2.5% 1.4% 1.3% 1.3%
NPAs and 90+ days delinquent loans as % of shareholders' equity 12.7% 16.6% 7.7% 9.7% 9.7%
NPAs and 90+ days delinquent loans as % of tangible shareholders' equity 17.5% 30.4% 17.5% 20.5% 16.3%
           
Gross Charge offs 1,764 323 3,180 56 54
Gross charge-offs as per cent of total loans 0.5% 0.3% 0.4% 0.1% 0.1%
Growth in gross charge-offs (q-o-q) 23.62% 68.60% 39.17% -12.58% 79.03%
           
Gross charge-off compisition (as % of respective loans):          
Commercial (other than real estate) 0.28% 0.10% 0.19% NA 0.01%
Commercial real estate 0.07% 0.00% 0.17% NA 0.22%
Residential real estate (including home equity) 0.36% 0.38% 0.17% NA NA
Consumer loans 1.15% 0.43% 1.19% NA NA
           
Gross charge-offs as % of shareholders' equity 3.7% 1.8% 2.0% 0.9% 1.0%
Gross charge-offs as % of tangible shareholders' equity 5.04% 3.2% 4.63% 1.8% 1.7%
           
Provision for loan loss charge 2,028 560 6,021 60 92
As per cent of total loans 0.5% 0.5% 0.7% 0.1% 0.2%
As per cent of NPAs 45.1% 24.1% 76.9% 11.0% 21.2%
As per cent of gross charge-offs 114.97% 173.54% 189.34% 107.52% 171.68%
           
Reserve for loan losss (EOP) 6,013 1,545 14,891 774 501
As per cent of total loans 1.6% 1.2% 1.7% 1.6% 1.3%
As per cent of NPAs 133.8% 66.6% 190.3% 141.2% 115.4%
As per cent of gross charge-offs 340.87% 478.88% 468.27% 1386.27% 932.60%
           
Texas ratio 14.9% 26.4% 14.4% 16.4% 14.1%
Change in Texas ratio from preceding quarter (bps)                  1.38                  5.85                  2.26                  1.53                  4.05
           
Eyles Test reserve for loan loss 8,606 3,688 22,182 841 825
Shortfall as a % of tangible book value 7.4% 21.3% 10.6% 2.2% 10.2%
           
NIM 4.7% 3.1% 2.7% 3.4% 4.2%
           
Leverage ratio (Tier 1 capital / average assets)                  7.04                  7.20                  5.61                  7.04                  7.18
           
           
High-risk geographic exposure          
           
Commercial real estate loans in California & Florida 37%        
Home equity loans in California and Florida 41%        
Residential real estate loans in California, Florida and Nevada 40%        
           
Residential mortgage loans in California and Florida     39%    
Home equity loans in California and Florida     40%    
Credit card loans in California and Florida     19%    
Commercial real estate loans in California & Florida     24%