The earnings of 10 banks expected to report in the next week suggest that while most banks will make money -- four will make more than last year, three will make less -- three others will be unprofitable.
Here are the top performers based on how much more they're expected to make this year than last:
- State Street Corporation +56%
- Bank of New York Mellon Corp. +19%
- Northern Trust +19%
- JPMorgan Chase & Co. +3%
Here are the three that are expected to make less money this year than last:
- M&T Bank Corporation -13%
- U.S. Bancorp -11%
- Wilmington Trust -7%
Here are the three that are expected to lose money:
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Citigroup Inc. ($0.97)
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Washington Mutual ($1.20)
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Wells Fargo & Company ($0.19)
These forecasts tell me that the banks that made more money last year got their revenues from helping the rich get richer. The ones that lost money helped the middle class and poor get poorer by issuing mortgages to people who couldn't afford them or holding mortgage-backed securities whose value they should have known were overestimated.
Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He owns Citigroup and Wells Fargo shares and has no financial interest in the other securities mentioned in this post.
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Reader Comments (Page 1 of 1)
1-11-2008 @ 4:47PM
David Huston said...
My Bank, National City, is certainly in a recession, down more than 50% in its stock price from its high last year, and leading the charge in slashing its dividend to folks like me - an investor since 1994 who has always participated in the dividend reinvestment plan at the bank. Instead of simply restricting its dividends to stock, thereby preserving its cash, NCC cut the dividend in half thereby shafting its stockholders. Hopefully a knight in shining armor (JPM?) will come along and staff NCC with people who actually understand the banking business.
1-11-2008 @ 7:19PM
gerry cull said...
Mr. Angelo Mozilo, who built Countrywide, will earn
7.5 % of the 4 billion (already paid C-W 2 Billion by BAC) this past year: !48 mil. plus his out-the-door lucre. No personal liability re: C-W.
Lewis (BA) may inherit some C-W litigation, but not all. Problem: no one knows the true value of C-W. Lewis pre-empted this move when he loaned
the 2 bil. He has internal info. This may be a long term money maker for BA. circa 3Q. 2009. BA was not deep in CDOs.
1-11-2008 @ 8:34PM
Patrick Donovan said...
I have been a stockholder of Huntington Bancshares for a long time and have a lot invested (for me).
I did not understand their lack of judgment when they first allowed themselves to get involved in the subprime market and used apparent poor judment in large loans in Southeastern Michigan that they are now eriting off.
Then in July they took over Sky Financial Group and all of a sudden discovered they had also taken over 300 M of sub prime debt that they now must write off and set up reserves.
These are bankers? Negligence does noy do justice to these behaviours.
The board and COO and all responsible for lack of due dilligence shold be removed immediately and be prosecuted
1-14-2008 @ 8:54AM
Louanna Ritter said...
Do you believe BAC stock will recoup this year's loss within the next 24 months?