First Horizon is another interesting company to me because of its business model.

Are management changes beginning to change the balance of this company’s business mix and ultimately its earnings power?  There is the arrival of Bryan Jordan, previously CFO with Regions (RF), to CFO at FHN, the promotion of Jerry Baker to CEO and a new Chairman of the Board, Michael Rose, who had been a director for more than 20 years, but took the helm of the Board in January of this year.  Also joining the team this year was David Powell to lead the Memphis, TN market.  Mr. Popwell is a long time Memphian and previously Chairman, President and CEO of SunTrust Memphis.  Is this talent beginning to transform this franchise?

CEO, Jerry Baker and CFO, Bryan Jordan recently outlined further steps to enhance shareholder value including expense reductions as well as shrinking both the balance sheet and its …

Another company to highlight going into earnings season is Sovereign Bancorp.  The majority of banks and thrifts are expected to post earnings during the weeks of October 15th and 22nd. 

The company is working diligently to rejuvenate its -retail franchise, including strategic changes to its balance sheet, front line, and re-energizing focus on customer service.  Are the benefits of its strategic objectives to rejuvenate the retail franchise enough:  Enough to improve the quality of earnings, restore its capital position, and build shareholder value? I am not convinced it is sufficient.

While the relative size of SOV’s correspondent home equity portfolio is minuscule at approximately 1% of the total portfolio, there $76MM of reserves allocated which represent roughly 15% of its allowance.  So it is in this context that it is clearly worthy of prose as well as caution.  The company has $567MM of correspondent home equity loans on the balance sheet at the end …

We are entering the pre-announcement period for many banks and thrifts, in the back half of September.  the bulk of these companies will report third quarter earnings during the weeks of October 15th and 22nd. the heavier earnings period for the S&P 500 companies should be the fourth week of October and the brokers begin posting number on September 18th.  It’s going to be an ugly, messy quarter.

At recent conferences as well as company specific releases, many companies have presented lackluster outlooks.  Given the headwinds, who would have expected anything else?  With that being said, I thought there would have been more reports akin to Washington Mutual (WM), Sovereign (SOV), and First Horizon (FHN).  My only explanation is that it’s either still to early or the gap of uncertainty is simply still too wide as it relates to the portfolio marks and rationalization of company businesses.

I’ve got some thoughts on …