Using Veritas to Construct the "Per…

29-04-2017 Hits:84585 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:79054 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:78906 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:83387 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:79953 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:82263 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:53240 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:81266 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:81274 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:81078 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:86928 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:84941 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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The more I think about this transaction, the more it stinks. I am trying my best to give BAC's management the benefit of the doubt since banking is their profession, after all.  Then again, my profession is ferreting out profitable opportunities, and methinks a shorting is in the air if they close on this deal. Most know how bad off Countrywide is, but let's waltz through and overview of Bank of America... 

  1Q-2008 4Q-2007 3Q-2007 2Q-2007 1Q-2007
Total Allowances at EOP 14,891 11,588 9,535 9,060 8,732
           
Gross Charge off's as % of Loans          
Residential mortgage 0.03% 0.01% 0.01% 0.01% 0.01%
Credit card - domestic 1.57% 1.25% 1.36% 1.56% 1.65%
Credit card - foreign 0.87% 0.86% 0.89% 0.88% 0.89%
Home equity 0.49% 0.16% 0.05% 0.03% 0.02%
Direct/Indirect consumer 0.89% 0.96% 0.62% 0.54% 0.57%
Other consumer 2.75% -0.96% 1.84% 1.50% 1.45%
Total consumer 0.47% 0.34% 0.30% 0.30% 0.31%
Commercial - domestic  0.05% 0.05% 0.02% 0.03% 0.13%
Commercial real estate 0.17% 0.03% 0.07% 0.01% 0.01%
Commercial lease financing 0.09% 0.09% 0.07% 0.05% 0.05%
Commercial - foreign 0.02% 0.02% 0.03% 0.03% 0.04%
Small business commercial - domestic  1.83% 1.46% 1.51% 1.35% NA
Total commercial 0.18% 0.13% 0.12% 0.11% 0.10%
Total Gross Charge offs as % of Loans 0.36% 0.26% 0.24% 0.24% 0.24%
           
Provision as % of Loans 0.69% 0.38% 0.25% 0.24% 0.17%
Provision as % of NPA's 77% 56% 60% 76% 60%
           
Gross Charge off to Loans 0.36% 0.26% 0.24% 0.24% 0.24%
Gross Charge off to NPA's 41% 38% 56% 75% 85%
           
Allowances as % of Loans 1.70% 1.32% 1.20% 1.19% 1.21%
Allowances as % of NPA's 190% 195% 283% 379% 424%
           
NPA's to Loans 0.90% 0.68% 0.42% 0.32% 0.28%
           
Shareholder's equity 156,309 156,309 138,510 135,751 134,856
Goodwill 77,872 77,530 67,433 65,845 65,696
Intangible assets 9,821 10,296 9,635 8,720 9,217
Adjusted Equity 68,616 68,483 61,442 61,186 59,943
           
Diluted shares outstanding 4,461 4,497 4,476 4,477 4,497
           
BVPS 35.0 34.8 30.9 30.3 30.0
Adj BVPS 15.4 15.2 13.7 13.7 13.3
           
NPAs as a % of shareholders' equity 5.0% 3.8% 2.4% 1.8% 1.5%
NPAs as a % of adjusted shareholders' equity 11.4% 8.7% 5.5% 3.9% 3.4%
 More than 11% of shareholder's value is in non performing assets, and this is before buying the worst bankn in the country!!!  
Texas Ratio 14.4% 12.1% 8.9% 7.4% 7.2%
      The Texase (insolvency) ratio has doubled in the last year
Eyles Test 22,181.8 19,324.2 15,120.4 14,017.9 13,570.1
Shortfall from current reserve for loan loss 7,290.8 7,736.2 5,585.4 4,957.9 4,838.1
Shortfall as % of tangible shareholders' equity 10.6% 11.3% 9.1% 8.1% 8.1%
The Eyles Test shows that reserves are sparse    
 
NIM 2.73% 2.61% 2.61% 2.59% 2.61%

 Leverage is increasing even as margins will freeze or reverse as the US Banks

Tier 1 leverage ratio                        5.61                        5.04                        6.20                        6.33                        6.25

 

This what the portfolio looks like. They are heaviest in the things that are hurting the industry the most!

 

Loan Portfolio (March, 2008)                
  Loan Portfolio % of Total NPA % of Total NPA NPA/ Loans Charge-offs % of NPA % of Loans
Consumer                
Residential mortgage 266,145 30.6% 2,576 35.1% 0.97% 85 3% 0.03%
Credit card – domestic 60,393 7.0% NA NA NA 950 NA  
Credit card – foreign 15,518 1.8% NA NA NA 135 NA  
Home equity 118,381 13.6% 1,786 24.4% 1.51% 582 33% 0.49%
Direct/Indirect consumer 80,446 9.3% 6 0.1% 0.01% 719 11983% 0.89%
Other consumer 3,746 0.4% 91 1.2% 2.43% 103 113% 2.75%
Total consumer 544,629 62.7% 4,459 60.8% 0.82% 2,574 58% 0.47%
Commercial – domestic  188,089 21.6% 996 13.6% 0.53% 102 10%  
Commercial real estate 62,739 7.2% 1,627 22.2% 2.59% 108 7% 0.17%
Commercial lease financing 22,132 2.5% 44 0.6% 0.20% 21 48% 0.09%
Commercial – foreign 31,101 3.6% 54 0.7% 0.17% 7 13% 0.02%
Small business commercial – domestic  20,123 2.3% 153 2.1% 0.76% 368 241% 1.83%
Total commercial at historical cost 324,184 37.3% 2,874 39.2% 0.89% 606 21% 0.19%
                 
Total Loans 868,813 100% 7,333 100% 0.84% 3,180 43% 0.37%

 

 

Level 3 Assets are present in a decent amount

 

  Level 1 Level 2 Level 3 Nettings Assets/Liabilities at Fair Value
Federal funds sold and securities purchased under agreements to resell 0 2,661 0 0                      2,661
Trading account assets 54,062 106,109 5,522 0                  165,693
Derivative assets 1,082 782,438 10,834                (743,429)                    50,925
Available-for-sale debt securities 2,221 209,981 9,658 0                  221,860
Loans and leases(2) 0 0 5,057 0                      5,057
Mortgage servicing rights 0 0 3,163 0                      3,163
Other assets(3) 19,019 12,411 5,496 0                    36,926
Total 76,384 1,113,600 39,730                (743,429)                  486,285

 

Check out Geographic Concentrations amongst troubled lending products!

 

  1Q-2008 4Q-2007
Consumer Loan State Concentration – Managed Basis  
     
Residential Mortgage    
California 87,815 88,703
Florida 16,588 16,497
New York 16,889 15,333
Texas 12,990 13,193
New Jersey 10,184 10,346
Virginia 11,355 11,535
Other U.S./Foreign 113,904 123,126
Total 269,725 278,733
     
Credit Card    
California 22,645 22,231
Florida 12,639 12,503
New York 9,368 9,420
Texas 10,032 10,098
New Jersey 5,952 5,937
Virginia 4,605 4,669
Other U.S./Foreign 118,517 118,833
Total 183,758 183,691
     
Home Equity    
California 31,646 29,891
Florida 16,035 15,442
New York 7,666 7,439
Texas 2,269 2,231
New Jersey 7,921 7,779
Virginia 4,007 3,861
Other U.S./Foreign 48,961 48,352
Total 118,505 114,995
     
Direct/Indirect    
California 10,180 9,743
Florida 6,627 6,244
New York 4,483 3,275
Texas 6,334 6,050
New Jersey 2,116 1,911
Virginia 1,932 1,784
Other U.S./Foreign 50,014 49,571
Total 81,686 78,578
     
Other     
California 115 121
Florida 195 203
New York 63 67
Texas 224 231
New Jersey 12 13
Virginia 51 54
Other U.S./Foreign 3,086 3,161
Total 3,746 3,850
     
Commercial real estate loan concentration    
     
California 10,073 9,369
Northeast 9,113 8,951
Midwest 8,230 7,832
Illinois 6,830 6,731
Southeast 6,756 6,472
Southwest 5,798 5,400
Florida 4,828 4,870
Midsouth 3,014 2,843
Northwest 2,755 2,417
Other 1,932 3,370
Geographically diversified 2,357 2,282
Non-U.S. 1,293 1,065
Total 62,979 61,602

 

Now if I were to overlay a similar chart of Countrywide on top of this, it would stop your heart. Can I hold myself back from a long term bearish play on this company if they buy CFC without subsidies? Does BAC management know something that I don't? I'd like to hear from readers who know more about this deal and the players than I do.