The Institutional Risk Analyst

The good news is that Webster is not a bad bank and SAN is not overpaying, although the low level of capital and reserves may represent be a significant expense for SAN in the near term. We kind of liked the fact that SAN’s management team had avoided another bank acquisition and instead focused on consumer finance...

We think the chart below from FRED is worth any amount of words on the impact of QE on equity market valuations.

One reason why banks are selling off is the prospect of significant layoffs and operating losses in the mortgage sector. Rising costs and tight production spreads have driven the mortgage industry into the red this quarter, with many shops not even meeting minimum production levels to achieve break even. Rob Chrisman warned in his weekly comment that he expects to see at least one large bank shedding “thousands” of people this summer...