Friday, January 2, 2009

The Banking Landscape Is Under Change

The American Banking landscape is under change. As the financial crisis heated up in 2008 we saw many companies loose billions of dollars and some even go under such as the largest bank failure in U.S. history, the  Washington Mutual Savings Bank. Shall we call it the changing of the guard or the survival of the fittest? It doesn't really matter, for history will decide for us. Today there is a gloomy outlook for the financial industry and the economy, but one thing is for sure the change goes on. With Bank of America (BAC) purchasing the storied Wall Street Brokerage house of Merrill Lynch and Wells Fargo's (WFC) purchase of an old southern regional powerhouse of Wachovia Bank, both will take on bigger rolls. Bank of America will be a much bigger player in the brokerage business as well as a major player in the mortgage business with its purchase of the largest independent mortgage company, Countrywide Financial. Wells Fargo will have an east coast presence now that it owns Wachovia with its many branches throughout the south east. Wells to will even be bigger  in its real estate mortgage business. Then there is PNC Financial (PNC) which was a north eastern regional but suddenly jumped into a new roll as a money center bank with its recent acquisition  of  National City Bank. This gives PNC a larger east coast exposure which will include the the state of Florida who has a huge retirement community. Then their is Bank Branch & Trust (BBT) another North Carolinian bank that has managed to stay out of trouble with its more "Plain Vanilla " bank lending, which it turns out boring can be better after all. We also have another one of Warren Buffett's stocks U.S. Bank (USB) which also has had higher lending standards than some of its competitors. Suntrust has also remained in the mix but paying some what of a price,  by selling some of its Coca Cola (KO) stock, which it has owned since 1919. We can not forget Goldman Sachs(GS) and Morgan Stanley(MS)that were brokerage businesses that have now converted over to chartered banks to escape going under. Citigroup (C) who was once the largest bank might take on a smaller role in the changing of the guard, while JP MorganChases  purchase of Washington Mutual's assets will give them a much larger retail client base.

Where they stand now:
                                        Quote     Yield      PE   MktCap  Revenue           
Bank of America          14.04      9.07       12          70b       87,304b
Branch Bank & Trust  26.66      7.03        9           15b          7894b
Citigroup                       6.96      9.14          -           38b     124,467b
Goldman  Sachs           83.70       2.22      18          33b       53,579b 
JP Morgan Chase        30.71      4.94       15         115b      71,387b
Morgan Stanley           16.44      6.49       14          17b       61,883b
PNC Financial              47.87       5.50       13          17b          6166b
Suntrust                       29.83      7.21         9           11b      10,035b
US Bancorp                  24.57       6.91      12          43b       13,136b
Wells Fargo                   29.65      4.59       15          99b       35,177b

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