Johnathan Weill has an excellent article on Bloomberg today illustrating just how BS the BS FASB accounting changes regarding mark-to-market really were. For all of those who wondered why I have stayed so bearish on the banks, stay tuned, but before we read this oh so interesting story, let me provide you with a graphical recollection of recent history via this chart sourced from Bloomberg:

fasb_mark_to_market_chart.png

If the engineered bear market rally is running off of the FASB generated lies, then we certainly do have another crash coming, don't we?

Taubman Centers, Inc. 4Q09 results

TCO reported weak 4Q09 results with sagging core revenues and operating results. The rental income (minimum rents and percentage rents) declined 5.8% (y-o-y) to $92.5 mn from $98.2 mn in 4Q08. However, the decline in non-cash expenses like depreciation helped reduce the impact on bottom line from an accounting perspective with net income (excluding impairment charges and a litigation charge) declining lower 1.8% (y-o-y). Adjusted FFO which excludes the impact of non-cash items like deprecation declined 5.1% (y-o-y) to $76.6 mn from $80.8 mn in 4Q08.

Minimum rents declined 5.0% (y-o-y) to $87.1 mn from $91.6 mn in 4Q08. Average occupancy dipped to 89.5% from 90.5% in 4Q08 and average base rent declined 3.2% (y-o-y) to $42.56 PSF (per sq ft) from $43.96 PSF in 4Q08. While the tenant sales per square feet were reported to improve 3.8% (y-o-y), the percentage rents declined 17.1% (y-o-y) to $5.5 mn from $6.6 mn in 4Q08 largely owing to reduced occupancy and reduced percentage rents as % of mall tenant sales. Other revenues which include shopping centre related revenues and lease cancellation revenues dropped nearly 50% (y-o-y) to $8.4 mn from $16.8 mn in 4Q08 largely owing to negligible lease cancellation revenues of 0.5 mn against $7.5 mn in 4Q08. The decline in core revenues were offset by increase in management fees from Macao Studio City development fees as well as higher expense recoveries. Total revenues were down 1.9% (y-o-y) to $186.3 mn from $189.9 mn in 4Q08.

Published in BoomBustBlog

Taubman Centers, Inc. 4Q09 results

TCO reported weak 4Q09 results with sagging core revenues and operating results. The rental income (minimum rents and percentage rents) declined 5.8% (y-o-y) to $92.5 mn from $98.2 mn in 4Q08. However, the decline in non-cash expenses like depreciation helped reduce the impact on bottom line from an accounting perspective with net income (excluding impairment charges and a litigation charge) declining lower 1.8% (y-o-y). Adjusted FFO which excludes the impact of non-cash items like deprecation declined 5.1% (y-o-y) to $76.6 mn from $80.8 mn in 4Q08.

Minimum rents declined 5.0% (y-o-y) to $87.1 mn from $91.6 mn in 4Q08. Average occupancy dipped to 89.5% from 90.5% in 4Q08 and average base rent declined 3.2% (y-o-y) to $42.56 PSF (per sq ft) from $43.96 PSF in 4Q08. While the tenant sales per square feet were reported to improve 3.8% (y-o-y), the percentage rents declined 17.1% (y-o-y) to $5.5 mn from $6.6 mn in 4Q08 largely owing to reduced occupancy and reduced percentage rents as % of mall tenant sales. Other revenues which include shopping centre related revenues and lease cancellation revenues dropped nearly 50% (y-o-y) to $8.4 mn from $16.8 mn in 4Q08 largely owing to negligible lease cancellation revenues of 0.5 mn against $7.5 mn in 4Q08. The decline in core revenues were offset by increase in management fees from Macao Studio City development fees as well as higher expense recoveries. Total revenues were down 1.9% (y-o-y) to $186.3 mn from $189.9 mn in 4Q08.

 

Taubman Centers, Inc. 4Q09 results

TCO reported weak 4Q09 results with sagging core revenues and operating results. The rental income (minimum rents and percentage rents) declined 5.8% (y-o-y) to $92.5 mn from $98.2 mn in 4Q08. However, the decline in non-cash expenses like depreciation helped reduce the impact on bottom line from an accounting perspective with net income (excluding impairment charges and a litigation charge) declining lower 1.8% (y-o-y). Adjusted FFO which excludes the impact of non-cash items like deprecation declined 5.1% (y-o-y) to $76.6 mn from $80.8 mn in 4Q08.

Minimum rents declined 5.0% (y-o-y) to $87.1 mn from $91.6 mn in 4Q08. Average occupancy dipped to 89.5% from 90.5% in 4Q08 and average base rent declined 3.2% (y-o-y) to $42.56 PSF (per sq ft) from $43.96 PSF in 4Q08. While the tenant sales per square feet were reported to improve 3.8% (y-o-y), the percentage rents declined 17.1% (y-o-y) to $5.5 mn from $6.6 mn in 4Q08 largely owing to reduced occupancy and reduced percentage rents as % of mall tenant sales. Other revenues which include shopping centre related revenues and lease cancellation revenues dropped nearly 50% (y-o-y) to $8.4 mn from $16.8 mn in 4Q08 largely owing to negligible lease cancellation revenues of 0.5 mn against $7.5 mn in 4Q08. The decline in core revenues were offset by increase in management fees from Macao Studio City development fees as well as higher expense recoveries. Total revenues were down 1.9% (y-o-y) to $186.3 mn from $189.9 mn in 4Q08.

 

Saturday, 30 January 2010 23:00

Reggie Middleton vs Goldman Sachs, Round 2

Before I get started, I want all to realize that this is not Goldman bashing piece. I think it is a [relatively] well run company, but its PR machine appears to be from Kindergarten land, and the aura of invincibility that it enjoys(ed?) is highly undeserved, as a consequence its historical "aura-based" premium is absolutely unjustified. Case in point...

On December 8th of last year, I penned "Reggie Middleton vs Goldman Sachs, Round 1"wherein I challenged all to take a critical look at exactly how much money was lost by Goldman Sachs' clients. Well, here comes round 2, which is directed at Goldman (over)valuation.

Three months ago I explicitly warned my readers and subscribers about how outrageously priced Goldman Sachs was: Get Your Federally Insured Hedge Fund Here, Twice the Price Sale Going on Now! Monday, 19 October 2009.. Goldman was closed at $186.10 that day.

Published in BoomBustBlog

Fourth quarter operating results opinions are available for Morgan Stanley and Suntrust for paying subscribers(File Icon STI 4Q09_Review

and File Icon MS 4Q09 result).

Of particular note is the difference between some readers perception of the Suntrust results and mine. If you take a close look at the results, you will see credit performance and asset quality is still deteriorating. The perception of a reprieve or moderation is potentially misleading due to the fact that Suntrust (like most other large banks) is actively shrinking their loan portfolio and transferring bad assets from one category to another.

To the credit of the CEO, he actually appears to tell it like it is and does not appear to be on a marketing binge to sugarcoat reality. This is an impressive, and increasingly rare trait among the C-suite crowd!

Some highlights from the Sun Trust Review:

Published in BoomBustBlog
Tuesday, 26 January 2010 23:00

The Spanish Inquisition is About to Begin...

Now, it is time to see if fundamentals return to the market.

From Bloomberg: BBVA Fourth-Quarter Profit Plunges 94% to $44 Million on Asset Writedowns

Jan. 27 (Bloomberg) -- Banco Bilbao Vizcaya Argentaria SA said fourth-quarter profit slumped to 31 million euros from 519 million euros a year earlier as the lender wrote down the value of some assets.

BBVA fell the most in eight months in Madrid trading after
saying net
income
fell to 31 million euros ($43.6 million) from
519 million euros a year earlier, the Bilbao, Spain-based bank
said in a filing today. That missed the 1.05 billion-euro median
estimate in a Bloomberg survey of nine analysts as the bank took
a 704 million-euro writedown for its U.S. franchise.

BBVA said it took the
writedowns after analyzing its “most problematic portfolios”
as it prepares for a tough year with recessions in its biggest
markets of Spain and Mexico.

“Whenever there are writedowns like this, there must be a
clear negative message behind that,” said Peter Braendle,
who
oversees about $57 billion at Swisscanto Asset Management in
Zurich and holds BBVA shares. “My concern is that the worst may
not be over, especially in Spain.”

Extra Provisions

The bank took 1.05 billion in charges as it adjusted the
value of its U.S. business. Other writedowns included 200
million euros of provisioning charges for assets acquired in
Spain as it reported additional losses on its Iberian consumer
loan book, BBVA said.

Today’s writedown represents about 15 percent of the
goodwill attached to the U.S. business, according to estimates
by Banco BPI SA. U.S. provisions were 715 million euros higher
than in the third quarter as the bank adjusted the value of
commercial real estate collateral. The bank also took a charge
of 73 million euros on its Mexican cards business and a 90
million-euro charge to account for Venezuelan inflation.

Bad loans as a proportion of total lending climbed to 4.3
percent from 2.3 percent a year ago. “Doubtful risks” on
BBVA’s books leapt to 15.6 billion euros from 12.5 billion euros
in September and 8.6 billion euros a year ago.

Loan Losses

“I don’t think the U.S. goodwill writedown is as important
as all the new non-performing loans,” said Simon Maughan,
an
analyst at MF Global Securities Ltd. in London. “It’s catch-up
time for loan losses. For those people who may have had their
doubts about the Spanish methodology for timely reporting of
NPLs, here is some strong evidence to support their view.” Let it be known that I issued this warning one year ago! [Reggie]

Profit from Spain and Portugal fell 24 percent to 496
million euros from a year ago, the bank said. Bad loans as a
proportion of total lending almost doubled to 5.1 percent from
2.6 percent as lending shrank 1.2 percent.

Earnings from Mexico dropped 29 percent to 268 million
euros, the bank said. BBVA booked a loss of 122 million euros
from its U.S. business compared with a 21 million-euro gain a
year ago.

Net interest income climbed to 3.59 billion euros from 3.09
billion euros a year ago.

The bank had a core capital ratio of 8 percent compared
with 6.2 percent a year ago. BBVA said it would keep its
commitment to distribute 30 percent of 2009 profit in dividend
payments.

This was foreseen nearly one year ago, to date. This bank got caught up in the bear rally and apparently (like many banks) was not deserving of the outrageous boost in the share price. Reference the past analysis.

Published in BoomBustBlog

Fourth quarter operating results opinions are available for Morgan Stanley and Suntrust for paying subscribers(File Icon STI 4Q09_Review

and File Icon MS 4Q09 result).

Of particular note is the difference between some readers perception of the Suntrust results and mine. If you take a close look at the results, you will see credit performance and asset quality is still deteriorating. The perception of a reprieve or moderation is potentially misleading due to the fact that Suntrust (like most other large banks) is actively shrinking their loan portfolio and transferring bad assets from one category to another.

To the credit of the CEO, he actually appears to tell it like it is and does not appear to be on a marketing binge to sugarcoat reality. This is an impressive, and increasingly rare trait among the C-suite crowd!

Some highlights from the Sun Trust Review: 

Fourth quarter operating results opinions are available for Morgan Stanley and Suntrust for paying subscribers(File Icon STI 4Q09_Review

and File Icon MS 4Q09 result).

Of particular note is the difference between some readers perception of the Suntrust results and mine. If you take a close look at the results, you will see credit performance and asset quality is still deteriorating. The perception of a reprieve or moderation is potentially misleading due to the fact that Suntrust (like most other large banks) is actively shrinking their loan portfolio and transferring bad assets from one category to another.

To the credit of the CEO, he actually appears to tell it like it is and does not appear to be on a marketing binge to sugarcoat reality. This is an impressive, and increasingly rare trait among the C-suite crowd!

Some highlights from the Sun Trust Review: 

I have decided to release a significant amount of opinion on Wells to the public, and have created an extended version of the report for subscribers with geo-specific charge-off estimates stemming from the FDIC/NY Fed model that we have created in house. A rather comprehensive piece of work. It appears that much of the sell side community is much, much more optimistic on the prospect of Wells than I am. It must be the Warren Buffet investment...

Published in BoomBustBlog