Commercial banks in the United States are required to prove to their regulators that their investments are in fact "investment grade" as defined by the regulators. In this note we analyze the current levels and past history of default probabilities for Goldman Sachs Group (GS). We compare those default probabilities to credit spreads on 1,162 bond trades in 134 different company bond issues on July 31, 2013. This trading volume made Goldman Sachs Group the second most heavily traded name on the day, trailing only General Electric (GE) Credit Corporation. Goldman Sachs Group has some of the lowest default probabilities of any firm analyzed in this series of credit notes to date. Trading volume in these 134 Goldman Sachs Group bonds on July 31 totaled $358.3 million, and the analysis in this note is based on those traded prices.
5 Best Bank Stocks To Buy Right Now: Wilshire Bancorp Inc.(WIBC)
Wilshire Bancorp, Inc. operates as the holding company for Wilshire State Bank that offers a range of financial products and services. It accepts various deposit products that include certificates of deposit, regular savings accounts, money market accounts, checking and negotiable order of withdrawal accounts, installment savings accounts, and individual retirement accounts. The company?s loan portfolio comprises commercial real estate and home mortgage loans, commercial business lending and trade finance, and small business administration lending, as well as consumer loans, including personal loans, auto loans, and other loans. It also provides trade finance services that include issuance and negotiation of letters of credit, handling of documentary collections, advising and negotiation of commercial letters of credit, transfer and issuance of back-to-back letters of credit, and trade finance lines of credit. In addition, the company offers Internet banking services, auto matic teller machines, and armored carrier services. It has 24 full-service branch offices in Southern California, Texas, New Jersey, and the greater New York City metropolitan area; and 6 loan production offices in Colorado, Georgia, Texas, New Jersey, and Virginia. The company was founded in 1980 and is headquartered in Los Angeles, California.
- [By Philip]
Shares of Wilshire Bancorp (WIBC) of Los Angeles closed at $3.42 Friday, down 55% year-to-date. The shares have 18% upside potential, based on a mean 12-month price target of $4.04, among analysts polled by FactSet.
The company had $2.7 billion in total assets as of Sept. 30, with 24 branches in Southern California, Texas, New Jersey, and the New York City area, and six loan production offices in n Colorado, Georgia, Texas (two offices), New Jersey, and Virginia.
Wilshire Bancorp owes $62.2 million in federal bailout funds received through the Troubled Assets Relief Program, or TARP. The company raised $100 million in common equity during the second quarter, following an agreement with the Federal Deposit Insurance Corp. and state regulators to bring main subsidiary Wilshire State Bank’s Tier 1 leverage ratio up to at least 10%. The Bank subsidiary’s Tier 1 leverage ratio was 13.24% as of Sept. 30.
The holding company reported third-quarter net income available to common shareholders of $10.2 million, or 14 cents a share, increasing from $2.1 million, or 4 cents a share, during the second quarter, and $5.0 million, or 14 cents a share, during the third quarter of 2010.
The main factor in the earnings improvement was a reduction in credit costs, with a third-quarter provision for loan losses of $2.5 million, declining from $10.3 million the previous quarter and $18.0 million a year earlier. A $5.7 million decline in loan loss reserves during the third quarter directly boosted earnings.
With the company continuing its aggressive reduction of its commercial real estate loan portfolio and its nonperforming loans, Wilshire Bancorp’s total assets declined 17% from a year earlier. During the third quarter, the company sold $28.7 million in loans, most of which were nonperforming, for a gain of $1.7 million.
Net interest income declined 14% year-over-year to $25.5 million in the third quarter, reflecting the balance sheet reduction.
The net interest margin — t! he difference between a bank’s average yield on loans and investments and its average cost for loans and deposits — was a strong 4.23% in the third quarter, which was down from 4.42% the previous quarter, but up from 3.393% a year earlier.
Wilshire Bancorp’s ratio of nonperforming assets to total assets was 2.46% as of Sept. 30, improving from 3.22% the previous quarter and 2.87% a year earlier. The annualized ratio of net charge-offs — loan losses less recoveries — to total loans was 0.46%, and with reserves covering 5.27% of total loans, the company appeared well-positioned for continued significant releases of reserves.
FIG Partners analyst Timothy Coffey on Oct. 28 reiterated his "Outperform" or "Buy" rating for Wilshire Bancorp, raising his 12-month price target to $4.50 from $3.80, also "estimating tangible book values of $3.43 in 2011, $4.21 in 2012 and $4.84 in 2013." The analyst said that he anticipated that "could start to reverse the DTA-Deferred Tax Asset valuation allowance over the coming quarters," and that "the improvement in the earnings power has resulted in losses below management’s projections, which has increased the valuation allowance to $40 million." Coffey estimated that "company could have no tax expense or very limited expense in 2012 before a normalized expense returns in 2013."
The shares trade for 6.8 times the consensus 2012 earnings estimate of 50 cents, among analysts polled by FactSet, and just above their Sept. 30 tangible book value of $3.27, according to SNL Financial.
Four out of seven analysts covering Wilshire Bancorp rate the shares a buy, while the remaining analysts all have neutral ratings.
5 Best Bank Stocks To Buy Right Now: National Bank of Greece SA (NBG)
National Bank of Greece S.A. (the Bank), incorporated on March 30, 1841, is a Greece-based financial institution. It offers a range of integrated financial services, including corporate and investment banking, retail banking (including mortgage lending), leasing, stock brokerage, asset management and venture capital, insurance, real estate and consulting services. In addition, the Company is involved in various other businesses, including hotel and property management, real estate and information technology (IT) consulting. On May 19, 2009, the Bank established Ethniki Factors S.A., a wholly owned subsidiary. On June 8, 2009, Finansbank A.S. established Finans Faktoring Hizmetleri A.S. (Finans Factoring), a wholly owned subsidiary. On June 30, 2009, NBG Luxemburg Holding S.A. and NBG Luxfinance Holding S.A. were merged to NBG Asset Management Luxemburg S.A. On January 18, 2010, the Bank acquired 35% of the share capital of AKTOR FM. On October 16, 2009, United Bulgarian Ba nk A.D. (UBB) established UBB Factoring E.O.O.D., a wholly owned subsidiary of UBB. On September 15, 2009, the Bank disposed of its investment in Phosphoric Fertilizers Industry S.A.
At December 31, 2009, the Bank operated in Greece through 575 branches, one private banking unit, one unit for financial institutions and 10 specialized banking units that deal exclusively with troubled and non-performing loans. At December 31, 2009, the Bank had over 1500 automated teller machines (ATMs).
The Bank offers retail customers a number of different types of deposit and investment products, as well as a range of services and products. The Bank offers a range of mortgage products, with floating, fixed, or a combination of fixed and floating interest rates. In February 2009, the Bank introduced a new floating rate product, the ESTIA MIKTO with flexible payment terms. In addition to fire and earthquake property insurance, the Bank o ffers an optional life insurance plan together with mortgage! s.
The Small Business Lending Unit (SBL Unit) a part of the Bank’s retail banking division consists of three credit centers situated in Athens, Thessaloniki and Patrastail. The SBL Unit offers term loans geared towards medium and long-term working capital needs for the financing of asset purchases.
Corporate and Investment Banking
The Bank offers corporate accounts with overdraft facilities, foreign currency loans, variable rate loans, and currency swaps and options for corporate customers. The Bank’s commercial loan portfolio in Greece comprises approximately 50,000 corporate clients, including small and medium sized enterprises. It offers the corporate clients a range of products and services, including financial and investment advisory services, deposit accounts, loans denominated in euro and other currencies, foreign exchange services, insurance products, custody arrangements and trade finance services. The Bank lends primarily in the form of credit lines, which are generally at variable rates of interest with payment terms of up to 12 months. In addition, the Bank provides letters of credit and guarantees for its clients.