CHICAGO, Feb. 23, 2011 /PRNewswire/ -- Zacks.com Analyst
Blog features JPMorgan Chase & Co. (NYSE: JPM), U.S.
Bancorp (NYSE: USB), BB&T Corporation (NYSE: BBT),
Best Buy Company Inc. (NYSE: BBY) and
Wal-Mart Stores Inc. (NYSE: WMT).
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Here are highlights from Tuesday's Analyst Blog:
Bank Failures: 22 Already in 2011
The FDIC insures deposits in 7,760 banks and savings
associations in the country as well as promotes the safety and
soundness of these institutions. When a bank collapses, the FDIC
reimburses deposits of up to $250,000
per account.
Though the FDIC has managed to shore up its deposit insurance
fund during the last few quarters, the outbreak of bank failures
has tested its limits. As of September 30,
2010, the fund remained in the red with a deficit of
$8 billion despite adding
$7.2 billion during the quarter.
The failure of Habersham Bank is expected to be dearer by about
$90.3 million for FDIC, while
Citizens Bank of Effingham will
cost about $59.4 million. The other
two banks, Charter Oak Bank and San Luis Trust Bank, FSB will cost
the FDIC about $21.8 million and
$96.1 million, respectively.
Orangeburg, South
Carolina-based SCBT National Association has agreed to
assume the assets and deposits of Habersham Bank. The FDIC and SCBT
National Association have agreed to share losses on $270.7 million of Habersham Bank's assets.
Albany, Georgia-based Heritage
Bank of the South has agreed to assume the assets and deposits of
Citizens Bank of Effingham. The
FDIC and Heritage Bank of the South have agreed to share losses on
$158.1 million of Citizens Bank of
Effingham's assets.
Novato, California-based Bank
of Marin has agreed to assume all
of the deposits of Charter Oak Bank. The FDIC will retain
$28.5 million of the assets for
future disposal.
Westlake Village,
California-based First California Bank has agreed to assume
the assets and deposits of San Luis Trust Bank, FSB. The FDIC and
First California Bank have agreed to share losses on $241.7 million assets of San Luis Trust Bank,
FSB.
On a separate note, Denver,
Colorado-based United Western Bank, which was closed on
January 21, filed a suit against the
FDIC and the federal Office of Thrift Supervision. Under the suit,
United Western Bank claimed that the decision to close the bank was
untimely.
United Western Bank was just about to raise $200 million in capital, which would have spared
the bank from being padlocked. In fact, allowing the bank to raise
capital would have saved an expected $312.8
million of deposit insurance fund.
In the third quarter of 2010, the number of banks on FDIC's list
of problem institutions grew to 860 from 829 in the previous
quarter and 552 in the year-ago quarter. This is the highest since
the savings and loan crisis in the early 1990s.
Increasing loan losses on commercial real estate are expected to
result in hundreds of bank failures in the forthcoming years. Going
by the current rate of bank insolvencies, the FDIC is likely to
feel a $52 billion pinch over the
next three years.
The failure of Washington Mutual in 2008 was the largest in the
U.S. banking history. It was acquired by JPMorgan Chase &
Co. (NYSE: JPM). The other major acquirers of failed
institutions since 2008 include U.S. Bancorp (NYSE: USB) and
BB&T Corporation (NYSE: BBT).
Best Buy's Strategic Measures
Best Buy Company Inc. (NYSE: BBY), the leading specialty
retailer of consumer electronic products, recently announced a
string of strategic measures to boost its financial performance
across its international and local divisions.
The company intends to increase its investment in sections of
business generating profits, and will close down and restructure
certain sections that no longer contribute significantly to its
growth.
Followed by an extensive evaluation, Best Buy, which faces stiff
competition from Wal-Mart Stores Inc. (NYSE:
WMT), aims to open 150 Best Buy Mobile stand-alone-stores in the
U.S. and 40 to 50 Five Star stores in China by the end of fiscal 2012, bringing the
total to 325 stores in the U.S. and 210 in China.
Moreover, the company plans to open 6 to 8 large-format stores
in the U.S. and a total of 18 stores in the United Kingdom, Mexico and Canada in fiscal 2012.
The International market continues to bring noteworthy prospects
for the company along with financial growth for the
stakeholders.
Best Buy Mobile brought brisk escalation in wireless connection
revenues for the company in the U.S. market and the Five Star
stores continue to produce noteworthy sum of profits for the
company.
Additionally, the retailer will put up the shutters on two
large-format stores in Turkey and
end all existing operations in the country. Moreover, China will also witness the closure of nine
Best Buy-branded stores as the consequence of the restructuring
actions.
As discussed earlier, the company aims to look at other
profitable choices for the Best Buy brand and will revive two of
the China stores later. The
company expects to strengthen the functions of the Best Buy brand
in China with the Five Star
division.
With this move, the retailer expects to produce considerable
savings of $60 to $70 million by
fiscal 2013, reflecting abridged losses and reduced IT
infrastructure costs allied to the proceedings taken in the
China and Turkey markets.
The company also intends to bring certain changes in its supply
chain operations in the U.S., for enhancing efficiency and customer
service and reducing overheads. The company foresees a
restructuring charge of $225 million to $245
million with the major portion to be incurred in fiscal 2011
and the balance in 2012.
The company maintains its fiscal 2011 diluted earnings forecast
of $3.20 to $3.40 per share,
excluding restructuring charges.
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