M&T Bank 1Q13 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

$MTB Earnings Call Notes

“industry as a whole is subject to a heightened regulatory environment and expectations”

“if you look at recent merger activity in the banking sector, the trend seems to be that it’s taking notably longer to get regulatory approvals.”

“We recently were made aware of the fact that certain deficiencies in our BSA/AML [Bank Secrecy Act and anti-money laundering] compliance program rose to a level of significance such that they would impact our ability to close the merger with Hudson City in the near term”

“Both companies remain strongly committed to this merger as it is a highly beneficial transaction for each of us”

“We have no reason to believe that the issues involve any wrongdoing or illegal conduct by anyone in M&T work or any identifiable instances of actual money laundering activity using our bank.”

“we should be helped by who we are — who and what we are. Compared to some other institutions that have had these issues, M&T is relatively uncomplicated and locally focused business. We don’t have any significant international operations and don’t have the kinds of diverse complex businesses that the larger money center banks are engaged in.”

“return on average tangible assets and average tangible common shareholders’ equity, was 1.48% and 18.71%”

“loan growth for the first quarter was pretty much in line with our outlook…annualized 5%”

“Consumer loans declined an annualized 5%”

“Average core customer deposits, which excludes deposits received at M&T’s Cayman branch and CDs over $250,000, grew at an annualized 2%”

“Annualized net charge-offs as a percentage of total loans were 23 basis points”

“in upstate New York, as we talk to people and actually all the way across through Albany, we’re seeing that some of the clients are actually — have more utilization in their lines, that we’re hearing stories of people looking to make capital investment, a few capital investments. When you flip all the way down to the other end of the franchise, in Washington D.C., it’s more reserved, people are worried about the sequester, the competition has picked up.”

“You’ve got to keep making investments [in compliance]. A huge change is going on in the industry. And it’s not a matter of sort of saying, well, I was okay last year, so I’ll be okay this year. You’ve got to make those investments”

First Republic Bank 1Q13 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

$FRC Earnings Call Notes

“In the first quarter, we chose to capitalize on the strong pricing and robust demand for the high-quality loans that we originate and we sold an unusually large volume.”

“Compared to the first quarter a year ago, bank assets were up 18% year-over-year.”

“if we had operated at last year’s quarterly average then about $600 million in loan sales, our loan portfolio would have grown at an annualized rate of 11% this quarter. This was a deliberate decision to take advantage of the favorable conditions in the secondary mortgage market.”

“The San Francisco Bay Area economy is outperforming the broader U.S. economy with very strong regional trends in employment and housing…Boston and New York…also outperformed the U.S. as a whole. While Southern California did not grow as fast as our other markets, we are seeing clear signs of improvement”

“Home loans accounted for 65% of total originations of which 30% were for purchases.”

“Deposit activity slowed in the first quarter as total deposits declined 1% from the previous quarter. As Jim noted earlier, our clients began to move money into real estate and equity markets.”

“I wouldn’t make too much out of one quarter’s loan sale volume, one way or the other. As Katherine said, our backlog remains very strong. ”

Analyst comment: “I think, Jim, you mentioned, of 11% loan growth this quarter, if you hadn’t sold…but the pace was about 24% last year”

“Your comment about, heaven forbid, the markets stay good. Let us presume they do for a moment to be optimistic and let us presume the real estate stays good as well. Then our real challenge is to have the growth rate, the rate of our acquisition of new clients outrun the growth rate of the loan demand. We have always looked at mortgage banking as a valve, as a control valve. We can sell assets at a profit almost always. If you go back many, many, many quarters, 15, 20 quarters, you would find that we very solemn did not make a profit in the sale in the mortgage banking market. A few quarters we didn’t but not very often.

So we have a valve that is a control mechanism for managing the growth of the enterprise. We find that actually extremely attractive and somewhat unique in the model versus others. We utilize it as we see appropriate. We also use it for asset liability matching. I don’t really want to be booking a low 3%, 30 year fixed rate mortgages at this point and we are going to. So what we have to do is outrun the decline in the excess liquidity that our particular type of clients.

Remind yourself of the makeup of the client base of the bank. It is not a broadly diversified mass consumer funding source. It’s a concentrated version of a type. Mostly people who have self made a fair amount of money. They tend to be very activists. When they see a turn, they act. That’s what’s going on.”

“It’s worth noting that business banking and wealth management now fund more than half of our deposits in total.”

Citigroup 1Q13 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

$C Earnings Call Notes

“tier one common ratio increasing to an estimated 9.3% on a Basel III basis, and we now expect the ratio to reach at least 10% by the end of this year”

“reduced our assets in Citi Holdings by $7 billion. Holdings assets now total just under $150 billion, or 8% of our balance sheet.”

“deposits grew 3% to $934 billion”

“Total Citicorp loans grew 5%, with consumer loans up 1% and corporate loans up 9%”

“Credit quality in our international consumer portfolio remained strong in the first quarter, with stable to improving credit trends on a sequential basis across each region. In Asia, the NCL rate returned to below 1%, with 90-plus day delinquencies at around 50 basis points. And, in Latin America, the NCL rate was fairly stable at 4.6%.”

“I think the world continues to be somewhat of a fragile place, and I expect the markets to remain volatile.”

Analyst Q: “are you sensitive to big price swings in some of these commodity prices out there?”

Answer: “Not really.”

“Latin America, it slowed down a little bit in the first quarter, as primary the Mexican economy slowed down a little bit. But you still, on a sequential basis, and you take a look at the average loans, we’re still growing card loans. And there’s some seasonality. Normally you’re going to have a little bit of a lower first quarter anyway. So we’re still getting growth in Latin America out of cards and the retail banking loans

The issue for us remains Asian…quite frankly, you’d go back to the first quarter of 2012 and we have flat average loans…We’re getting decent growth in Hong Kong, in Singapore. The issue, and I hate to keep bringing it up, Korea is a drag on us right now. And it’s one that we just have to work our way through”

“But it’s not just Korea. There’s deleveraging, there are regulatory constraints being put on in several countries throughout Asia.

And so we’re facing some headwinds in Australia, in Taiwan, and in Korea as well.”

“Mortgage for us is not a big business…we’re not looking to significantly grow share in mortgages, other than with our existing retail banking base.”

“The one thing that you have to assume is that the legal community is very creative, and so I would say that there always is the opportunity for additional litigation, even in matters that you might otherwise think would have passed the statute of limitations. I don’t think lawyers have statute of limitations.”

Webster Bank 1Q13 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

$WBS Earnings Call Notes

“Underlying asset quality trends remain favorable.”

“Return on tangible common shareholders’ equity was 11.3% compared to 12.04% a year ago due to a 9% increase in tangible common equity.”

“Commercial banking continues to surge as commercial loans grew 16% year-over-year and commercial real estate loans grew 15%.”

“Central to becoming a high-performing bank is identifying ways to be more efficient in everything we do.”

“We’re also very focused on growing our noninterest income.”

“The Commercial Bank pipeline was really depleted at year-end from all those record fourth quarter closings, in part that borrowers were motivated to close ahead of anticipated tax changes in 2013. It’s really important to note we’ve rebuilt pipeline up to $320 million as of March 31, and we expect it to continue to grow from there.”

“deposit trends…The top chart highlights the 5% growth from a year ago while we reduced expenses by 11 basis points.”

“Net interest margin pressure continues, although we think we’re nearing the bottom given the continuing loan rate environment and an MBS CPR in the mid-20s, we expect further compression in the range of 5 basis points in Q2, driven primarily by anticipated decline in the investment portfolio yields.”

“we think that most of [weak industry loan growth] was the pull forward into the fourth quarter, and we haven’t seen a material shift in attitude from our clients.”

[analyst comment] “do you guys feel that you’re giving up anything in terms of growth initiatives? [by focusing on cost cutting]”

[answer] “I think that, though your point is well taken, that you don’t want to deny future revenue growth because of what you’re doing in a particular period. But I think there’s got to be a balance here, and that’s what we’re keeping in mind. I think the beauty of what we’ve done so far is that we’ve been adding revenue-producing people while becoming more efficient in terms of how we deliver the services, which has allowed us to actually have core reduction in expenses over comparable periods. Once we get under 60% [efficiency ratio] sustainably, I think the answer is, yes, we will be able to invest more aggressively even than we are now in adding bankers that will produce more revenue that will help to drive the positive operating leverage that we see in the future periods.”

JP Morgan 1Q13 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“There is a reason our numbers are good because we have cross-selling clients come to us and there are reasons for global banks just like there are reasons for community banks. I think that the real issue again, you guys do the numbers is the banking system has gotten so much stronger in the United States and it’s not just capital but it capital, liquidity, oversight, sort of activities that people didn’t like, [no longer] [ph] being done, derivatives going to clearing houses and the initial wave of OLA and Living Wills et cetera, those things should all work. I hope at one point we declare victory and just stop eating our young at this time.”

“So the Fed I think is feeling more and more comfortable, not just individual banks but the system as a whole.”

[reasons for soft loan growth] “people thought in the fourth quarter just given the year end issues that people were concerned about, and so that has had an impact. I think it’s slightly less of an impact and in terms of competitive landscape and there are deals being done with terms and conditions and pricing that we’re not comfortable at the moment, and we’re just remaining very disciplined, so that has had an impact for us.”

[analyst comment] “I think a lot of companies have told us that they think that they’ve got through most of the low hanging fruit with HARP, and that the people that aren’t HARPing they doubt they will ever HARP.”

Wells Fargo 1Q13 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

$WFC Earnings Call Notes

“Our core loan portfolio grew by $50.9 billion, up 8%. Our credit losses reflected the benefit of a slowly improving economy and the high quality loans we’ve been originating over the past few years. Our credit losses in the first quarter declined to 72 basis points, the lowest level since second quarter 2006”

“growing deposits by $80 billion, up 9% from a year ago”

“grew our return on assets, or ROA, by 18 basis points to 1.49%, and our return on equity increased by 145 basis points to 13.59%. We continued to increase our capital levels, growing our estimated tier one common equity under Basel III to 8.39%.”

“We do not need additional legislation aimed at big banks. Important and significant regulatory changes have been made since the financial crisis, and we need to give existing regulations a chance to work”

“We also funded 1 in 4 U.S. home mortgages in 2012, a total of over 2 million mortgage loans”

“The momentum from the housing rebound during 2012 has remained strong in the early months of 2013.”

“With over 80 businesses, they’re not all going to grow every quarter.”

“Our servicing portfolio continued to perform better than the industry. Our total delinquency and foreclosure rate was 6.54% in the first quarter, down 50 basis points linked quarter”

“With respect to M&A, remember that the biggest users of capital on an M&A side would be in the deposit side of the franchise, of which of course we are at our federal statutory number, or close to it…We’re still interested in things around wealth, help with retirement, but I don’t see that as a huge draw on our capital.”

[analyst question] “Now that you’re starting to see a more sustained slowdown in mortgage applications, pipeline, and originations, how are you thinking about the headcount in this division? And have you begun to address some of the variable costs there?”

[answer] “We actually added to the number of team members in the mortgage business in the fourth quarter, because we wanted to improve the customer service in the business.”

“when we think about our mortgage repurchase reserve…We need to be very comfortable that not only current demands but also future expected demands are going to come down. Hopefully it will be in the next few quarters…You know, John, an improving housing market sure is a good sign regarding that issue.”

“But remember, housing is improving every day. More people have more equity in their homes. Americans have not lost their emotional attachment to home ownership.”

“Well, I wouldn’t jump to any conclusions about loan growth in the industry in the first quarter. If you look at the HA data, for the last few years the first quarter tends to be a seasonally low quarter, and what I would do, and again, this is just me, I’d take the first quarter decline for the industry and also then add to that the fourth quarter that we saw last quarter increase and probably average those together. And remember, the fourth quarter of last year was extremely high, because of some of the changes and decisions that folks were making because of the potential changes in taxes and the code and so on. So again, I think what we’re seeing in the industry is a steady loan growth if you average over the last few years at about one-ish percent on a quarterly basis.”

“If you look at some of the drivers, if you look at household formation, if you look at cost of financing, cost of housing, there’s a lot of tailwinds, a lot of favorable attributes. Now, nobody can predict what’s going to happen, but if anything today there’s probably a shortage of housing on the market.”

“the housing market is as much driven by confidence and by improvements in values as it is with rates. I don’t know of many people are on the sidelines and say, “I’ll only buy a house if the rate’s 3.25%, and I won’t buy at 4.25%.” I think it’s about jobs, about confidence, about feeling good about where things are going. Think about when you buy a house, it’s what you make, what the house costs, and what your financing costs are that are the big three.”

“First of all, I want to tip my hat to all the team members who helped make [the Wachovia] merger the best one I’ve been around, and it was the largest, of course, in U.S. bank history…In fact, if you look at productivity numbers, sales per day, referrals, cross-sell, the gap is closing rapidly. In fact, some of the best innovations and ideas we’re getting now for future growth come from our newest team members. In fact, it’s hard to distinguish east and west anymore.”

“some things, just because you did it that way for 20 years doesn’t mean you need to do it for the next 20 years.”

Glacier Bancorp Acquisition Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

On why the bank GBCI acquired decided to sell:

“I think that it’s just like so many other banks, I mean, especially the smaller community banks. I think that the regulatory burden, Jeff, is — and these are some very, very smart people. I think they recognize that that was not going to get any better. I mean, they’ve seen as even the $350 million bank, the challenges that this regulatory environment creates, the expenses, the resources that it absorbs, and I think that was definitely one of the keys. I think the other one was that if we can partner with a company that gives us the best of both worlds, I mean, gives us that ability to still be a community bank, still be looked upon as a community bank but bring some resource to the table that we would not have had otherwise, especially like when it comes to lending limits, technology, the ability to reduce their regulatory [ph] — those were the probably 3 key issues. Probably, as a secondary issue, don’t think it affects this bank as much as most other community banks, and that is the interest rate environment. I mean, with where they’re located and the types of business they’ve done, they’ve been able to maintain a very healthy margin in that. But to some degree, I think all banks, Jeff, are looking at the fact that if we’re down here 2 or 3 more years in this rate environment, it’s just going to continue to whittle away at that net interest income. I don’t think that was the major issue for them, though, because — again, because of where they are located, because of a lower level of local competition, they just don’t have as many local competitors as other markets. Their ability to keep their margins intact has been very, very good, so I don’t think that was the main driver. I think it was more just as they look at the tea leaves, Jeff, they saw that the regulatory environment was not going to get better. The fact that they had some real opportunities to grow and growing independently was going to be a much, much slower process, and bringing the types of technology and services to their customer base was going to be a slower, slower goal than if they partnered with us. So we’re just thrilled they did and we really, really like the transaction and like the bank and like the people. So I think it’s going to be good.”

Thomson Reuters Analyst Day 2013

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

$TRI Analyst Day Notes

“The ship has turned. We are confident you’ll see a steady, but meaningful improvement in our operating performance going forward.”

“If you’re going to go back to 18 months ago, this is all about focus, and we had to make a choice about where we’re focused. And we — as a team, we sat around and we made a decision to focus our efforts on Eikon in trading. And what I’m about to show you is how we — we’re now moving that to — switching our focus for the buy side…We have pivoted the entire organization to face the buy side…it means is that every developer who used to work for me now works for Philip. All our product managers are focused on Eikon, all of them. Our content guys, and there are a lot of them, too, are focused on content, innovation, content quality, and they’re focused on measuring it with inside Eikon. In short, what we’ve done is, is that the organization for the first time is acting as in one organization. It’s operating at scale, and it’s also solely focused on the buy side.”

“In Investment Management alone, we had 13 — we were going to market with 13 platforms. 13 platforms. As you know, our competitors go to market with 1, maybe 2. 13 platforms, clearly not a recipe for success”

“My name is Philip Brittan, and I am the Global Head of our Desktop Platform. I joined Thomson Reuters a little under 2 years ago. It’s about a month or so before Ralf did. And I was previously at Google, where I was the Global Head of Google Finance. And before that, I was at Bloomberg for a number of years, where I built and ran the foreign exchange business..I was just very excited to come to Thomson Reuters to take on this interesting mission of making Eikon the best financial desktop in the world, and that is absolutely, unequivocally, our mission….with the launch of Eikon 1, we had a product that wasn’t quite ready for our customers yet. So we’ve been very focused over the last 1.5 years or so on getting on track and on driving an innovation agenda and a quality agenda to really put Eikon where it needed to be, and it’s something that’s truly going to delight our customers… Delighting our customers is the absolute core thing that we’re all about, and of course, by doing that, we’re rewarded with being competitive and an ability to take share in this market.”

“banks are not only cutting costs. They’re having to reengineer their internal supply chain…HSBC revealed that they have 27,000 developers, which is more than Microsoft, and they’re asking themselves, why do we need that many? And that’s a big opportunity for us.”

“the one that I’m most proud of is the ECB, the European Central Bank…all central banks in the European Union will be using Eikon.”