In defense of the maligned market
Posted on November 6, 2009 at 9:18 am
NYU professor Viral Acharya says we need to be careful when we talk about the financial crisis being caused by ‘the market’ failing to function properly. Regulators are there to patch up holes and prevent problems, he says, “but regulation also reduces market discipline” by introducing distorted incentives.
For instance, insured depositors are unlikely to “run” but they also freely deposit at the highest-yielding bank, not worrying about its credit risk. Thus, when regulators deem a bank as well-capitalized, the onus is on regulators that this be right. Markets may not have the incentive to gather this information nor possess the details of regulatory supervision that led to such an assessment. Conversely, when regulation allows itself to be arbitraged, the financial sector becomes more opaque exposing markets to unexpected outcomes.
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Preliminary Q3 bank checkup: Better, but symptoms persist
Posted on at 8:10 amChris Whalen says it looks like banks were no more stressed in the third quarter than in Q2. But they are by no means relaxed yet.
Since only the 19 Stress Text banks were really under pressure to window dress Q3 results for compliance purposes with the Fed’s SCAP stress tests, the inference we draw is that the rate of change in terms of stress throughout the industry was likewise more moderate in Q3.
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Methinks we’ll need a 12-step program for this
Posted on November 4, 2009 at 1:25 pm
Dylan Ratigan gets on the soapbox and outlines a few steps Congress should follow to overhaul ‘too big to fail’ and produce some real financial regulatory reform. Among the thoughts guiding his plan: “Fortunes should not be made in minutes, but over years.”
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Local insurer’s chairman floated as BofA boss candidate
Posted on at 9:55 am
Finger Interests, an investment firm critical of Bank of America’s search for a successor to Ken Lewis, has compiled a draft list of executives it says the company should consider to make its process more than “cosmetic.” Among them is Gerald Ford, the chairman and former CEO of Nashville-based auto insurer First Acceptance.
Ford ran Golden State Bancorp before selling it to Citigroup seven years ago for $5.8 billion and building First Acceptance soon after. He also chairs the board of trustees of Southern Methodist University.
Finger says Ford is a “proven entrepreneur” with the chops to handle a turnaround situation, but admits he is a long shot for the BofA job and says First Acceptance’s recent performance — a nine-month loss of $68.3 million on sales of $265 million — isn’t a positive, either.
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HIMSS absorbs Nashville medical biz
Posted on October 30, 2009 at 8:04 am
The Chicago-based Healthcare Information Management Systems Society, a nonprofit membership group, has acquired Nashville’s Medical Banking Project. Read about how the project will bring together health care IT and banking here.
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Browsing Pinnacle’s 10-Q
Posted on at 7:45 amWe had to go pretty deep to find some nuggets of info that weren’t covered in last week’s Q3 earnings release and conference call, but here’s what we found:
- Terry Turner and his crew are still looking to grab market share. They ramped up marketing and business development spending in the quarter to $512,000, a jump of more than a third from a year ago and up 13 percent from their first-half pace.
- A chunk of that cash is going to the trust department, which has grown its assets under management to $607 million from $537 million a year ago.
- Spending on foreclosed real estate fell by almost half during Q3. Is it a sign that the worst has passed or does it mean that Pinnacle, like other lenders, is strategically not foreclosing on troubled properties?
Check out the full filing here.
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Fed orders West Tenn. bank to shape up
Posted on at 7:33 amRegulators from the St. Louis Federal Reserve Bank last week formally ordered the leadership of West Tennessee Bancshares to shape up its oversight and risk management and boost its capital. West Tennessee is the parent of the Bank of Bartlett, which has seven offices and about $450 million in assets but lost $3.1 million in the first half of this year.
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Mike Edwards takes one in the kisser
Posted on October 29, 2009 at 3:12 pm
Now in the River City, the former Nashville-area president for First Tennessee Bank has helped get the Memphis Grizzlies season off to a kickin’ start.
The ball bounced into the stands followed by Tayshaun Prince of the Detroit Pistons. Prince jumped over Edwards.
Well, nearly. One sneaker did not make it over.
HT: Josh Flory
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Former local E&Y partner named to GreenBank board
Posted on October 28, 2009 at 2:03 pmBill Mooningham, who retired as partner in the Nashville office of Ernst & Young two years ago, has been elected to the board of Green Bankshares, the parent of Middle Tennessee’s 10th-largest bank by deposits.
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The housing crisis will peak in 2011
Posted on at 11:59 am
Now that the subprime mortgage default wave has played itself out, it’s time to prepare for the damage that will be inflicted by souring option ARMs. The rates on many of those loans will start resetting next spring.
Pinnacle stages a raid in Franklin
Posted on at 9:27 amPinnacle Financial Partners has recruited three bankers — all with at least 19 years in the industry — from GreenBank to work at one of its Franklin offices. The details:
Long-time resident and Williamson County banker Steve King joins Pinnacle as a senior vice president and financial advisor. Paula Sanders will serve as the Alexander Plaza office manager. Amy Jones, who has worked side-by-side with King for the past 10 years, serves as a financial advisor assistant.
“Steve and Paula have worked together for more than 15 years. Along with Amy, they are tremendous additions to our team at Pinnacle,” said Larry Whisenant, senior vice president and manager of Pinnacle’s Nashville client services group. “Their outstanding reputations in the financial services community demonstrate our success in continuing to attract the most knowledgeable professionals in the market.”
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Another steady retreat from a regional bank
Posted on October 27, 2009 at 10:18 am
Similar to Green Bankshares, Mississippi-based Cadence Financial is flushing out of its system a bunch of soured Middle Tennessee real estate loans. Cadence’s Sept. 30 exposure to Nashville’s development scene totaled $122 million, down 15 percent from June 30 – versus Cadence’s companwide shrinkage of 3 percent – and a whopping 38 percent from the end of 2008.
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Why bank losses are with us for at least two more years
Posted on at 8:16 am
Assume for a second that comparing the current banking climate to that of the Great Depression is a useful exercise. Then look at the first chart linked here and begin to worry again about banks chargeoffs and capital levels, which look like they’ll be elevated until at least 2013.
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It’s not good to be called out by Dick Bove these days
Posted on at 7:31 am
That’s something investors in SunTrust and Fifth Third, Greater Nashville’s third- and fifth-largest banks, came to find out firsthand Monday, when Bove said their banks aren’t valued appropriately given the loan losses they still need to absorb. Other large regional banks active here shared in the misery, though their trading volumes were more in line with normal days.
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Analyst action: Healthways, Pinnacle, Synovus
Posted on October 26, 2009 at 12:46 pm
After Healthways’ big gain following its Q3 report, Stifel Nicolaus analyst Tom Carroll has lowered his rating on the disease manager (Ticker: HWAY) to ‘hold’ from ‘buy.’ The valuation-based call is diametrically opposed to that of Art Henderson at Jefferies, who on Friday upgraded Healthways and raised his target to $20. So far, Carroll is winning: Healthways is down 7 percent today.
At Zacks Investment Research, shares of Pinnacle Financial are now on the ‘exclusive’ list of stocks investors should sell or avoid in the coming months. Pinnacle (Ticker: PNFP) last week reported a larger-than-expected loss.
And in related regional banking news, Wunderlich analyst Kevin Reynolds has some strong words on Synovus Financial Group, the parent of The Bank of Nashville. Reynolds has dropped Synovus to a ’sell’ and slapped a price target of $1.50 on the shares — half the price at the open today. The company last week posted a loss of more than $400 million and its stock (Ticker: SNV) has fallen more than 60 percent this year.
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