The trouble with being in the auto business right now
Posted on October 8, 2009 at 12:41 pm
Companies in many sectors are complaining about the lack of available credit, but few could say they have it as bad as automotive suppliers. WPLN’s Daniel Potter reports on the hunt for capital and the rays of hope in auto manufacturing.
“Even good suppliers are being viewed skeptically by and large because they’re associated with the automotive industry. And the industry as a whole is in fairly difficult shape.”
DeKoker has tracked about 50 parts supplier bankruptcies so far – nowhere near the fallout he would’ve predicted in this economy. He chalks that up to companies “hibernating” – slowing production in hopes of lasting until business can pick up again.
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This hotel sector snapshot ain’t pretty
Posted on at 11:31 amThe downturn in hotel management is likely to last well into 2011 and has one economist saying up to 20 percent of all hotel loans could default before we’re in the clear.
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SunTrust CEO: Banks still tightening
Posted on August 25, 2009 at 9:06 am
Speaking to the Rotary Club of Atlanta, Jim Wells said the industry is still very much in pre-recovery mode and that “quality loan demand” remains low. Shares of SunTrust (Ticker: STI) are down 23 percent year to date, trailing the Dow Jones U.S. Banks Index by more than 20 points.
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J. Alexander’s faces material adverse effects
Posted on August 13, 2009 at 8:09 amThe Nashville-based restaurant company (Ticker: JAX) says the slide in its same-store sales could result in it falling short of bank loan covenants. (Search here for ‘Risk factors.’) The company will try to get waivers if that happens, but…
However, if these efforts were not successful, the unused portion of the Company’s revolving bank line of credit would not be available for borrowing and amounts outstanding under the Company’s bank loans would become immediately due and payable, and there could be a material adverse effect on the Company’s financial condition and operations.
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One reason to avoid financial stocks
Posted on August 12, 2009 at 11:40 amGluskin Sheff economist David Rosenberg points out what several others are saying: As much as housing’s collapse has hurt lenders, the expected crash coming in commercial real estate will hurt worse.
Zillow just reported that 23% of U.S. homeowners are “upside down” on their mortgages (negative net equity), up from 21% in 1Q, and under current home price trends, with all deference to the tentative signs of ‘stabilization’ at the low end, that share will rise to 30% next year. That cannot possibly be good news for the U.S. financials, especially since we know that commercial real estate loan defaults are going to be an even bigger problem for the lending community.
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Cadence: It’s all your fault, Nashville
Posted on July 23, 2009 at 9:28 am
Mississippi-based bank holding company Cadence Financial (Ticker: CADE) says it’s beefing up its special-asset staff to handle its large load of sour Middle Tennessee loans. In the banking equivalent of running to the hills, the bank slashed its local real estate portfolio by about $40 million in the second quarter.
Banking’s flotsam and jetsam
Posted on July 1, 2009 at 7:38 amCNNMoney.com’s David Ellis looks into what happens to the ‘nontraditional’ assets regulators seize during bank shutdowns. The story also highlights the emergence of some new bank investors.
And while the bidding for real estate and loans sales has been dominated by institutional investors so far, there are indications that average Joes are also starting to express interest in scooping up toxic assets.
Bill Bartmann, a former distressed bank debt investor who recently published a book entitled “Bailout Riches” aimed at teaching people how to profit from buying bad loans on the cheap, notes several of his students have invested as little as $5,000 in loans once owned by failed banks.
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Local C&D loans bite Cadence
Posted on April 22, 2009 at 7:43 amThough just two of its almost 40 branches are in the Nashville MSA, Missisissippi-based Cadence Financial (Ticker: CADE) says its Middle Tennessee loan portfolio is primarily responsible for its sorry first-quarter numbers. The company expects a per-share loss of $1.48; analysts had been expecting a loss of just 20 cents.
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First Horizon loss bigger than expected
Posted on April 17, 2009 at 8:34 amThe parent of First Tennessee Bank lost $82.8 million in the first quarter as it increased its loan loss provision by $20 million and charge-offs rose to a shade under 4 percent. Per-share losses from continuing operations were 39 cents, well above the 25 cents analysts had been expecting. That has shares (Ticker: FHN) down almost 10 percent in early trading.
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Analyst action: CHS, Tennessee Commerce
Posted on April 8, 2009 at 10:02 am
Goldman Sachs has kicked Community Health Systems off its Conviction Buy List. Shares of the Franklin-based company (Ticker: CYH) are down about 6 percent today and close to break-even for the year.
Over at Howe Barnes, analyst Jeff Davis has slashed his rating on Tennessee Commerce to ’sell’ after the bank said it will write down the value of its owned real estate by almost $3 million and further beef up loan loss reserves. Davis, who is based in Nashville, said CEO Art Helf and his team will have to slow loan growth to maintain their capital ratios. He expects Tennessee Commerce shares (Ticker: TNCC) will struggle in the coming months.
Our investment thesis assumed for the shares to rise from a pedestrian valuation that TNCC would have to prove to investors that it could manage through the deep recession and remain profitable… With this quarter’s loss, the shares will likely remain in the penalty box until the economy strengthens and/or the company strings together several quarters of profitability.
Almost 90 minutes into today’s session, Tennessee Commerce’s very thinly traded stock has yet to change hands.
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Bank bear roars again
Posted on April 6, 2009 at 12:24 pm
Noted analyst Michael Mayo has changed employers, but not his dour outlook for the banking sector.
Loan losses are going to exceed what the industry suffered in the Depression. Loss totals for the industry could reach $1 trillion to as much as $1.5 trillion. Players haven’t moved swiftly enough to write down the value of bad loans. The government doesn’t have the ability to resolve the problems.
Here’s more via Business Pundit. The main financial sector ETF (Ticker: XLF) is down about 3 percent. Regions Bank, First Horizon and Pinnacle are among the regional players down more than 5 percent.
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Say it ain’t so, Sallie
Posted on March 21, 2009 at 4:48 pmThe world of student loans is looking to change:
The running joke about student loans: Don’t ever graduate, since you don’t have to start paying them back until you do.
Starting Monday, that will no longer be the case for students borrowing from Sallie Mae, the nation’s largest private student lender.
The company, formally known as SLM Corp. is replacing its signature loan with a shorter-term version that requires students to make interest payments while in school. For many families, the move is expected to push private loans out of reach in an already tight credit market.
The upside is that the cost of a private student loan will be cut by about 40 percent, said Jack Hewes, chief lending officer for Sallie Mae, which is based Reston, Va.
Families would also repay loans between five and 15 years, compared with the previous 15 to 30 years. Despite the shorter term, Sallie Mae says the monthly bills upon graduation wouldn’t rise dramatically.
This is because the interest payments students make while in school would avoid negative amortization, where the loan balance grows because of deferred interest.
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Zacks: We need ‘real effort’ from lenders
Posted on January 5, 2009 at 8:45 pmDespite a “modicum of encouragement” from the latest federal stats, analyst Eric Rothmann says government spending – which is at record levels even before the oncoming stimulus program – will have to carry the load even more. Oh, and the banks?
The only way the economy will move forward is for financial institutions to stop with the “deer in the headlights” mentality, start to put a real effort into reworking loans that are on the verge of going bad, and stop looking for government handouts and start managing their franchises again.
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Still very much in the middle of the woods
Posted on January 2, 2009 at 5:13 pmSynovus Financial (Ticker: SNV), the parent of the Bank of Nashville, says it needs to hike its loan loss reserves and charge-offs, mainly because of Atlanta’s housing market.
UPDATE: Uh, it’s actually worse – by $100 million.
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Lower mortgage rates not getting passed on to homebuyers
Posted on December 18, 2008 at 1:07 pmVia Bloomberg:
While the average rate on a fixed 30-year mortgage fell to 5.18 percent last week from 6.47 percent in October, according to Mortgage Bankers Association data, the historical relationship between home loans and mortgage bonds shows rates should be at least half a percentage point lower. Though the U.S. is paying nothing to borrow in some cases, homebuyers are paying about $730 more a year than they would otherwise on a $200,000 mortgage.
The demise of lenders including Countrywide Financial Corp. of Calabasas, California, and Seattle-based Washington Mutual Inc. reduced competition as refinancings soar. At the same time, surviving mortgage banks face a credit crunch that limits their lending ability, industry officials say.
“Lenders have raised their prices over the last few weeks because of capacity concerns amid all this additional business,” said Brian Simon, chief operating officer at Freedom Mortgage Corp. The Mount Laurel, New Jersey-based firm is among the five biggest independent mortgage companies.
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