January 18, 2024 | Premium Service | In this issue of The Institutional Risk Analyst, we mourn the passing of David Stevens, former FHA Commissioner, President of Long & Foster, and head of the Mortgage Bankers Association. Dave represented the mortgage industry at MBA from 2011 through 2018, and dealt with some of the most challenging times following the 2008 market collapse. The IRA interviewed David back in 2022 and collaborated with him on many initiatives.
Meanwhile, as earnings roll out for Q4, one reader commented about the obvious question: Why do the banks go first with earnings?
The short answer is that banks are prepared to drop their minimal quarterly disclosure early in the quarter, then file the full quarterly data with regulators and the SEC about 20 days later. Since banks are seen as higher quality credits, they tend to go first in terms of public disclosure. The less attractive names or issuers that simply need more time to prepare interim financials tend to hide in the back of the disclosure period.
This week’s earnings are confirming a number of trends for banks that we have noted over the past year. The down trend in industry earnings is confirmed by the results from JPMorgan (JPM) and other large commercial banks. The hiatus on credit build seen in Q3 2023 clearly is at an end. We discuss our takeaway on earnings so far below.