Thursday, December 7, 2017

Observations and Sample of Recent Trades: HBAN, MRK, VLY


The ISM services PMI declined to 57.4% in November, down from a 12 year high at 60.1% in October. ISM The new orders component declined to 58.7 from 62.8. The employment component fell 2.2 to 55.3.

Markit's services PMI declined .2 to 54.5, a five month low. Markit Economics

The JPM Composite PMI for November was steady at a 2½ year high. Survey Press Release 

Senate's ‘Unpleasant Surprise’ Hurts Tax Breaks for Tech, Others - Bloomberg (this relates to keeping the 20% corporate AMT)

Trump defies data with 6% GDP growth forecast (I will come back to that statement in the fullness of time)

Rumblings of a hot trade war? Canada scraps plan to buy Boeing fighters amid trade dispute: sourcesThe day after Boeing filed its trade complaint, Australia offered Canada its used fighter jets - Politics - CBC News (Canada's defense minister would not confirm a Reuter's report, citing three sources, that Canada was about to scrap the Boeing deal and would announce next week that it would buy jets from Australia instead). 

US sets final tariffs on softwood lumber from Canada - BBC NewsU.S. cuts softwood lumber duties on all Canadian producers – except for 2 companies - National |

The duties will raise U.S. lumber prices and increase the cost of new U.S. homes. Calculated Risk: Update: Framing Lumber Prices Up Sharply Year-over-year More increases can now be expected as well as a retaliation by Canada. 

These developments are being ignored by the Stock Jocks. 

Neither Canada nor Mexico seem amenable to kneeling before Trump in the ongoing NAFTA negotiations. Freeland calls U.S. proposals ‘extreme’ as NAFTA round ends without major progress | Toronto Star


Market Commentary and Markets:

Tax cuts are halfway priced into the stock market, J.P. Morgan says - MarketWatch

Flattening Yield Curve Is Relentless, at New 10-Year Low-Bloomberg

JPMorgan's CFO: Trading is down 15 percent this quarter: CNBC

Big Banks Would Benefit from the Tax Bill-After an Initial Hit - Bloomberg (this deals with the tax on foreign earnings that have not been repatriated back to the U.S.)

10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity-St. Louis Fed

If the ten year treasury does not start going up in yield, a yield inversion could occur in the 10 year minus 2 year spread with two .25% increases in the FF rate. One of those is about to occur next week. 

The ten year treasury yield is not acting as as if GDP and job growth will accelerate in 2018 from current levels. 

10-Year Treasury Constant Maturity Rate-St. Louis Fed

2017 Daily Treasury Yield Curve Rates

So far this week, through Wednesday, my best performing sector has been long duration Tennessee Municipal Bonds. 

Closing Prices 12/6/17: 

TLT $127.68 0.44 0.35%: iShares 20+ Year Treasury Bond ETF

VTEB $51.91 $0.22 +0.43%: Vanguard Tax-Exempt Bond ETF

There’s overwhelming evidence that the U.S. stock market is heading for disaster: John Mauldin

Now is the time for investors to loiter around the lifeboats-MarketWatch

IMF warns Chinese banks may be short on assets to offset potential credit losses - MarketWatch


Portfolio Management:

I am shortening my corporate bond duration. Most of this activity involves buying investment grade corporates maturing in 2019 and selling those maturing between 2023 through 2027. I am assuming interest rate risk with Tennessee municipal bonds. I have all of the interest rate risk that I want with that allocation. 

In Item #3 below, I discussed buying 1 Citigroup and 1 Transamerica SU bond maturing in 2021 and 2022 respectively and selling 1 HCP SU bond maturing in 2025.

Subsequent to those two 1 bond purchases, I decided to knock down my 2021-2022 allocation some in favor of more SU bonds maturing in 2019.

I am continuing to look at companies who stand the benefit the most from a cut in corporate taxes. My focus is on stocks that have not benefited from the post-election rally and whose effective tax rates are over 28%. I discuss one in this post: Valley National Bank.  

Here’s what every S&P 500 company actually pays in taxes - MarketWatch


GOP's Tax Reform: Distribution of Benefits by Income and Percent of Population by Income

Distributional Analysis of the Tax Cuts and Jobs Act as Passed by the Senate | Full Report | Tax Policy Center

This is not surprising in the least: Republicans Sought to Undercut an Unfavorable Analysis of the Tax Plan - The New York Times This article refers to the JCT's analysis that the Senate's version would add $1 trillion to the deficit after factoring in growth. Republican senators claim that the tax cuts will pay for themselves. For the reasons mentioned in my prior post, I do view the JCT as likely being way off too, but not in the direction claimed by the GOP. I am anticipating at a minimum a $1.5 trillion addition to the nation's debt directly linked to this tax plan over the next ten years.   

By 2025, I am expecting the federal government's debt to be close to $26 trillion up from the current $20.5+T. Debt to the Penny (Daily History Search Application)

Interest costs on that debt will be rapidly approaching $1 trillion per year by the end of 2025. Government-Interest Expense on the Debt Outstanding

GOP tax plan filled with special interest provisions - CBS News

Trump’s Tax Plan Triggers Ire From China to the EU - Bloomberg

Republican tax plan could grind affordable housing construction to a virtual halt - MarketWatch

This NYT article relates to a point made in my last post. The New York Times The organization called "Americans for Prosperity", a Koch brothers funded group, is trying to convince the middle class that the GOP's tax bill is really and truly for their benefit.

Ryan says Republicans to target welfare, Medicare, Medicaid spending in 2018 - The Washington Post ("
House Speaker Paul D. Ryan (R-Wis.) said Wednesday that congressional Republicans will aim next year to reduce spending on both federal health care and anti-poverty programs, citing the need to reduce America's deficit.") This relates back to the tax bill. The GOP has targeted a number of programs for cuts or eliminations that provide benefits to the poor and the middle class. The approach now will be to argue that there is not enough money to fund the programs after the tax cuts becomes law. 

If successful, and a significant amount of those cuts will be automatic now due to the pay go rules, any benefits that directly flow to the bottom 3 Household Income Quintiles from the GOP's "tax reform" will be taken away and then some by program cuts.  

This is Donald saying "never give suckers an even break" expression.  

It is just not Medicare and Medicaid, but spending on a large number of programs that benefit those citizens rather they realize it or not and most do not.  (e.g. Meals on Wheels: White House Says Cutting Meals on Wheels Is ‘Compassionate’; Appalachian Regional Commission, Delta Regional Authority) 

Some of the budget cuts will be immediately and automatically triggered under the pay go rules by passage of the GOP's "tax reform".   

Unjust GOP budget and tax plan cuts the safety net for seniors | TheHill

More Debt, Big Medicare Cuts: The GOP Budget Is a Mess: Newsweek

219 Republican House Members Just Voted To Cut Medicaid, Medicare, And Public Education To Give Tax Breaks to Millionaires And Corporations 

All of the foregoing is relevant to the economy. 


Donald Trump and Roy Moore:

Two Peas from the Same Pod.

Twiddle Dee and Twiddle Dum. Alice in Wonderland Tweedledee and Tweedledum - YouTube

Donald Trump fully endorses Roy Moore - CNN

From a church pulpit, Moore claimed that he did not know any of the women who have made claims against him. Woman shares new evidence of relationship with Roy Moore when she was 17-The Washington Post

At Trump's insistence, the RNC started to provide financial assistance to Moore's campaign. RNC backs Roy Moore with cash, but no conscience: USA Today


Donald as the First American King

Another echo from Richard Nixon's years has emerged. If the President does it, it is legal even if it is illegal for anyone else. Nixon made that claim and Trump's lawyer is doing the same now. 

The core of this argument is that the U.S. has a King who is above the law, just picture Henry VIII chopping off heads in the exercise of his powers as King, rather than a President who is subject to the law.  Trump's personal lawyer claims the President can't obstruct justice- CNN 

I seriously doubt that argument will be successful in the courts, but nothing is certain as the courts drift further to the right. 

I am old enough to recall Watergate and the Nixon presidency vividly. IMO, Nixon had more character than Trump and was more trustworthy. I am not complementing Nixon here, but slamming Trump again as the most dishonest President that the U.S. has ever had by far and someone totally lacking in character, which I view as really obvious facts. 

The more interesting constitutional question is whether the President can criminally charged while in office.

The contention is that the President has to be removed from office through impeachment before being arrested on a criminal charge. Otherwise, the courts would be interviewing with the exercise of the President's duties. 

The Justice Department has historically taken that position. A Constitutional Puzzle: Can the President Be Indicted? - The New York Times The bottom line is that we do not know the answer until a President is arrested while in office, with the Supreme Court ultimately making the decision. The better course would be to impeach the President first. President Ford pardoned Nixon after Nixon resigned and before Nixon could be indicted for his crimes.

Toobin: History shows president not above law

81% of republicans believe that Mueller's investigation is politically motivated: CBS News poll Sad. 

Republicans hammer Mueller, FBI as Russia investigation intensifies - The Washington Post This is another maneuver out of the republican playbook from the Nixon years. 


Senator Orin Hatch (R-UT)

Senator Hatch (R-UT) views Moore as acceptable since he will vote the right way. 

Hatch, who is just another moralizing hypocrite, was asked about Trump's endorsement of Roy Moore:  

“I don’t think he had any choice but to do that. You know he needs every Republican he can get so he can put his agenda through. So that’s the only Republican you can possibly get down there.”

So as long as Moore votes right, his past does not matter to Hatch-just flush those so called family values down the toilet when they interfere with the raw power necessary to deliver the goods to the GOP's rich benefactors. 

The same approach is now standard in how republicans deal with Trump. As long as he signs what is put in front of him by the congressional republicans, it does not matter to them what he says or does, or what he did in his past. Telling the truth is no longer a conservative value if the GOP is a conservative party.   

Orrin Hatch Says Roy Moore Allegations Are From ‘Decades Ago’ - Bloomberg

GOP senator says it’s hard to fund $14 billion children’s health care program-then advocates for $1 trillion tax cut - Vox (refers to Senator Hatch)


Senator Grassley (R-Iowa)

“I think not having the estate tax recognizes the people that are investing. As opposed to those that are just spending every darn penny they have, whether it’s on booze or women or movies.”

That is what Grassley and other republicans really think about the working poor and middle class citizens. 

Remember Romney's comment that 47% of taxpayers pay no income taxes and are "dependent on the government":

"There are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it. That that’s an entitlement. And the government should give it to them. And they will vote for this president no matter what." 

Senator Hatch (R-UT) made a similar comment last week. Republican Orrin Hatch In Children's Healthcare Debate: Some People Won’t Lift A Finger To Help Themselves  

I would just point out again that the estate tax exemption for a couple is $10.98 million this year and would continue to rise with inflation without further meddling by the GOP. Federal Estate Tax Exemptions 1997 Through 2017  Most American households will never get anywhere close to the exemption amounts, as increased by inflation, even if they avoided spending whatever spare cash they may have on booze, women and movies. 



A. Bought 100 HBAN at $13.58-Used Commission Free Trade:

Quote:  Huntington Bancshares Inc. (HBAN) 
HBAN Analyst Estimates: E.P.S. $.89 2017 & $1.07 2018 as of date of purchase
P/E Using $1.07 at $13.58 Total Cost = 12.69
Y-O-Y Projected E.P.S. Growth = 20.22%

HBAN is one of the larger regional banks with 958 branches in Ohio, Michigan, Florida, Kentucky, West Virginia, Indiana and Pennsylvania. I would label it a super regional.

It recently expanded its geographical footprint by acquiring First Merit. Huntington Bancshares Incorporated Completes Acquisition of FirstMerit Corporation (8/16/16 Press Release). I owned First Merit, formerly traded under the symbol FMER, and viewed its acquisition as a positive for HBAN shareholders. I sold my remaining FMER position after the merger announcement was made: Item # 7 Update For Regional Bank Basket Strategy As Of 1/28/16 - South Gent | Seeking Alpha (profit snapshot = +$468.85)

Dividend: HBAN recently raised its quarterly dividend 38% to 11 cent per share. Huntington Bancshares Incorporated Announces 38% Increase In Quarterly Cash Dividend On Its Common

At that rate, the dividend yield is about 3.24% at a $13.58 total cost per share.

However, HBAN slashed its quarterly dividend in stages during the recent Near Depression, going from a quarterly  rate of $.265  to $.01 per share, a major negative IMO.

As trades, I did buy several small HBAN lots in 2009 after the price plummeted into the single digits:

Sold in 2010 90 shares +$139.84
I had a lousy, though profitable trade, in 2016:

Sold in 2016 50 Shares +$39.54 
Mostly, I have stayed away from HBAN given its past history and the mistakes made by this bank prior to the Near Depression that caused the dividend slashes and share price destruction shown in a ten year chart. HBAN (price over $25 in June 2005 and as low as $1 in early 2009) That is a black mark that permanently stains the company and will never wash out based on the way that I view these matters.

Recent earnings reports have been generally positive, however.

Recent Earnings ReportHuntington Bancshares Incorporated Reports 2017 Third Quarter Earnings

Financial Data/Ratios:

The reference in the preceding snapshot to the "NAL Ratio" means non-accruing loans which is good at .49% of total loans. The efficiency ratio is trending down which is good. ROA is above 1% and ROE exceeds 10%. There was a good acceleration of E.P.S. Y-O-Y but no increase quarter-over-quarter. NIM remains stuck near 3.2%.

Capital Ratios: The capital ratios are okay and exceed the minimum necessary for a well capitalized bank.

Huntington has been using tax loss carryforwards to shelter income from federal income taxes. As of 12/31/16, Huntington's net deferred tax asset related to loss and other carryforwards was $217M. (Page 162 10-K)

This is what the financials look like for 2008 and 2009, the two years responsible for those loss carryforwards:

The effective tax rate has started to move up some Y-O-Y but is still low at 24.7% compared to other regional banks:

10-Q for the Q/E 9/30/17

Last October, HBAN was downgraded to market perform by BMO Capital.

In a report dated 10/25/17, Morningstar gave HBAN a 3 star rating and a $13 fair market value estimate.

In a report dated 11/10/17, S & P gave HBAN a 3 star rating with a twelve month price target of $15. 

B. Added 50 VLY (3 commission free trades):  This brings me up to 100 shares

The first purchase shown by the preceding snapshot was discussed here: Stocks, Bonds & Politics: Item # 4 Bought 50 VLY at $11.89 

As discussed in that post, Valley National is a  significantly out-of-favor bank and justifiably so IMO.

The bank did reduce its quarterly dividend rate to its current $.11 per share from $.1625, effective for the 2013 4th quarter. The payout ratio was close to 100% when that happened. 

"Valley National Bancorp is a regional bank holding company headquartered in Wayne, New Jersey with nearly $24 billion in assets. Its principal subsidiary, Valley National Bank, currently operates over 200 branch locations in northern and central New Jersey, the New York City boroughs of ManhattanBrooklynQueens and Long Island, and Florida. Valley National Bank is one of the largest commercial banks headquartered in New Jersey with executive offices in Manhattan and West Palm Beach."

VLY is in the later stages of acquiring USAmeriBancorp which is headquartered in Clearwater, Florida and currently has 34 branches. Valley National Bancorp To Acquire USAmeriBancorp, Inc. And Substantially Enhance Its Florida

At the current rate of $.44 annually, the dividend yield is about 3.735% at a TC of $11.78 for my 100 shares.  

The current consensus E.P.S. estimate for 2018 is $.8, up from $.69 this year. VLY Analyst Estimates While I do not know for sure, I suspect that the analysts are not yet including the impact of the corporate tax rate reduction to 20%. Wall Street hiking corporate profit forecasts on tax cut expectations: Reuters ("Wall Street equities analysts, which base their forecasts on guidance from the individual S&P 500 companies, have yet to include the lower tax rate in their estimates." emphasis added)   

I have also pointed out in prior posts the unacceptable E.P.S. numbers over the five year period ending in 2016. 

Sourced: 2016 Annual Report SEC Form 10-K

A stock chart encompassing the past five years shows the same stagnation as earnings. Valley National Bancorp Interactive Chart  

The CEO of the holding company has retired since I last discussed VLY, which is probably a positive given the financial numbers since the Near Depression. Valley National Bancorp Announces the Retirement of Gerald H. Lipkin and Appointment of Ira Robbins The President of the operating bank, Valley National Bank, also retired on the same day. Valley National Bancorp Announces the Retirement of Rudy E. Schupp, President of Valley National Both press releases are dated 11/2/17. 

There is turnaround potential with this stock and a decent dividend yield at its current price. However, I would not anticipate any dividend increase in 2018. A lowering of VLY's tax rate may be sufficient to increase the dividend in 2019. The payout ratio based on current earnings is still high.

The 3rd quarter earnings report fell short of the consensus estimate by 1 cent per share. Valley National Bancorp Reports Third Quarter Net Income, Strong Loan Growth And Solid Credit

The NPL, NPA and coverage ratios are good: 

Of the following numbers, only the "core" efficiency ratio is satisfactory: 

E.P.S. did increase $.01 Y-O-Y but declined $.01 quarter-over-quarter.  

The company has a problem in its medallion loans to taxi companies in NYC and Chicago: 

"At September 30, 2017, our commercial and industrial loan portfolio included NYC and Chicago taxi medallion loans totaling $129.3 million and $10.0 million, respectively. At September 30, 2017, the medallion portfolio included impaired loans of $40.5 million with related reserves of $5.0 million within the allowance for loan losses as compared to impaired loans of $37.4 million with related reserves of $3.7 million at June 30, 2017. At September 30, 2017, the impaired medallion loans largely consisted of performing troubled debt restructured (TDR) loans, as well as $5.6 million of non-accrual Chicago." 

Blame Uber and similar services.  I assume that the loans are secured by the Medallions, which is normally the case, and a default on the loan results in a foreclosure sale of the Medallion(s) securing the loan. 

Taxi Medallions, Once a Safe Investment, Now Drag Owners Into Debt - The New York Times

CEO Gerald Lipkin on Q3 2017 Results-Earnings Call Transcript | Seeking Alpha

Investor Presentation 

VLY Effective Tax Rates: 30.1% for the Q/E 9/30/17  

Sourced: Page 61 10-Q for the Q/E 9/30/17

2. Small Ball:

A.  Bought 10 MRK shares at $54.29-Used Commission Free Trade:

History This Account:

As shown in the preceding snapshot, I sold out of a 113+ share position at $65.28 earlier this year. At the moment I am not a fan at $54.29 which opinion is manifested by my 10 share buy at that price. 

Stocks, Bonds & Politics: ITEM # 2.B. Sold 113 MRK at $65.28 (2/19/17 Post)(profit snapshot= +$741.19; that works for me). I mentioned in that post that one reason was that MRK just experienced another drug failure, referring to this press release dated 2/16/17 Merck Announces EPOCH Study of Verubecestat for the Treatment of People with Mild to Moderate Alzheimer’s Disease to Stop for Lack of Efficacy

Recent Earnings ReportMerck Announces Third-Quarter 2017 Financial Results

The charge mentioned in the preceding excerpt relates to the formation of a an oncology collaboration with Astra Zeneca: AstraZeneca and Merck Establish Strategic Oncology Collaboration (7/27/17)("collaboration to co-develop and co-commercialize AstraZeneca’s LYNPARZA (olaparib) for multiple cancer types. LYNPARZA is an innovative, first-in-class oral poly ADP ribose polymerase (PARP) inhibitor currently approved for BRCA-mutated ovarian cancer in multiple lines of treatment. .. Under the terms of the agreement, AstraZeneca and Merck will share the development and commercialization costs for LYNPARZA and selumetinib monotherapy and non-PD-L1/PD-1 combination therapy opportunities. Gross profits from LYNPARZA and selumetinib product sales generated through monotherapies or combination therapies will be shared equally.")

This was a big deal and indicates to me at least that Merck's pipeline was struggling, Merck agreed to pay AZN up to $8.5 billion which included $1.6B paid upfront; $750M "for certain license options and up to an additional $6.15 billion contingent upon successful achievement of future regulatory and sales milestones."

The most recent negative news release was this one where Merck announced the withdrawal of its European application for using Keytruda in combination with other cancer drugs: Merck Provides Update on European Application for KEYTRUDA® (pembrolizumab) in Combination with Pemetrexed and Carboplatin for First-Line Treatment of Nonsquamous Non-Small Cell Lung Cancer (NSCLC)

Keytruda is a critical drug for Merck. The slowdown in the approval process for Keytruda's use in combination with other drugs opens the door for competitor's products like Roche's Tencentriq.

Besides Keytruda and a few other drugs, a large number of existing products are showing revenue declines:

Recent Positive News Developments:

Merck Receives Positive CHMP Opinion for PREVYMIS™ (letermovir) in the European Union;

Merck Receives FDA Approval of PREVYMIS™ (letermovir) for Prevention of Cytomegalovirus (CMV) Infection and Disease in Adult Allogeneic Stem Cell Transplant Patients (11/9/17)

Over the past 11 years, Merck's median effective tax rate was 18.5%. Here’s what every S&P 500 company actually pays in taxes - MarketWatch Over the past two years, the tax rates are not relevant given unusual items.

Merck does have about $20.5B in overseas cash. GOP tax plan: These companies could benefit most - Business Insider

Recent Negative Development

FDA approves Novo Nordisk diabetes drug Ozempic

Novo wins FDA blessing for Ozempic, a weekly diabetes drug carrying big expectations-FiercePharma (possibly eating significantly into Merck's Januvia revenues)  

Ozempic® (semaglutide) approved in the US 

Closing Prices 12/6/17: 

MRK $54.35 -$1.42 -2.55%: Merck & Company, Inc. 

NVO $52.07 $1.37 +2.70%: Novo Nordisk A/S 

3. Intermediate Bond/CD Ladder Basket Strategy:

A. Bought 1 Transcanada 2.5% SU Bond Maturing on 8/1/22-A Roth IRA Account:

Issuer: TransCanada Corp. (U.S.: NYSE)

TRP Analyst Estimates

Finra Page: Bond Detail (prospectus linked)

Moody's at A3

Moody's Affirms TransCanada on Acquisition Announcement; Outlook Stable
DBRS Confirms Ratings of TransCanada Corporation and Subsidiaries

Bought at a Total Cost of 99.758

YTM then at 2.555% (2.6% at purchase price before brokerage commission)
Current Yield at TC = 2.506%

At least the current yield becomes tax free when the bond is owned in a Roth IRA.

I had a short term Transcanada SU bond mature recently in a Roth IRA account.

I bought last February (2/27), and still own this 2022 bond in a taxable account. Stocks, Bonds & Politics: Item # 1.A. (3/16/17 Post)

B. Bought 1 Citigroup 2.35% SU Bond Maturing on 8/2/21:

Issuer:  Citigroup Inc. (C)

C Analyst Estimates

FINRA Page: Bond Detail (Prospectus linked)

Credit Ratings:

Citigroup Credit Ratings (Fitch at A)

Moody's changes outlook on Citigroup to positive, affirms ratings (11/4/17)

Bought at a total cost of 99.225

YTM at TC = 2.572%
Current Yield at TC = 2.369%

I have shortened my duration of Citigroup bonds without sacrificing much in yield (e.g. Item # 3.B. Sold 1 Citigroup 3.5% Bond Maturing on 5/1/26 at 101.18Item # 3.C. Sold 1 Citigroup 3.2% Bond Maturing on 10/21/2026;Stocks, Bonds & Politics: Item # 2.D. Sold 1 Citigroup 3.4% Bond-Roth IRA-Maturing on 5/1/26 at 100.538)

C. SOLD 1 HCP 3.4% SU Bond Maturing on 2/1/2025:

Profit Snapshot: +$17.47

Issuer HCP Inc. (HCP)- A REIT

Moody's downgrades HCP's ratings to Baa2; outlook stable

Fitch Removes HCP from Rating Watch Negative; Affirms 'BBB' IDR

Finra Page: Bond Detail (Prospectus linked)

Sold at 100.3

YTM Then at 3.351%
Current Yield at 3.39%

Bought at a Total Cost of 98.453

Stocks, Bonds & Politics: Item # 1.C. 
YTM at TC = 3.63%

I still own 1 HCP 3.15% SU bond maturing on 8/1/22: Stocks, Bonds & Politics: Item # 1.E. Bought at TC of 99.865

4. Short Term Bond/CD Ladder Basket Strategy

A. Bought 1 Treasury 1.375% Coupon Maturing 6/30/18-A Roth IRA Account: YTM = 1.387%

B. Added 1 McDonalds 1.875% SU Bond Maturing on 5/29/19:

Issuer: McDonald's Corp. (MCD)

MCD Analyst Estimates 
McDonald’s Reports Third Quarter 2017 Results

FINRA Page: Bond Detail (prospectus linked)

Bought at a Total Cost of 99.992

YTM Then at 1.88%

C. Bought 2 Merrick Bank 1.6% CDs (monthly interest) Maturing on 11/29/18 (1 year CDs):

As of 6/30/17, the bank had a five star rating from Bankrate: Merrick Bank Bank Reviews and Ratings -

D. Bought 1 Merrick Bank 1.6% CD (monthly interest) Maturing on 11/29/18 (1 year CD):

Same as above but in a different account.

E. Bought 2 Washington Federal 1.45% CDs (monthly interest payments) Maturing on 9/17/18:

Holding Company: Washington Federal Inc. (WAFD)
WAFD Analyst Estimates
Washington Federal Reports Record Earnings Q/E 9/30/17 and F/Y

As of 6/30/17, this bank had a 5 star rating from Bankrate: Washington Federal, National Association Bank Reviews and Ratings -

F. Bought 1 Treasury .625% Coupon Maturing on 6/30/18

YTM at 1.41+%

G. Early Redemption of 4 BB&T 1.45% SU Bonds Maturing on 1/12/18

The issuer has the right to call on or after 12/12/18 at par value plus accrued and unpaid interest. BBT exercised that right to redeem early on 12/12/18,  so I will have another $4K to reinvest next Tuesday.   

Bonds that have make whole provisions triggered by optional redemptions will frequently allow the issuer to redeem at par value shortly before maturity.  

I still own other BBT bonds. (e.g. Stocks, Bonds & Politics: Item # 1.B. Bought 2 BBT 2.05% SU Bonds Maturing on 5/10/21 at TC of 98.187Bond  Detail)

BB& T Effective Tax Rate:

Sourced Page 23  10-Q

I also own the common shares as part of my regional bank basket. 

Closing price as of 12/6/17. I am no longer reinvesting the dividend. My last transaction was to sell 50 shares at $47.24 last March. That lot was my highest cost one. Item # 3.A.

Some of the remaining lots were acquired in exchange for my National Penn shares. BB&T closes National Penn acquisition
DisclaimerI am not a financial advisor but simply an individual investor who has been managing my own money since I was a teenager. In this post, I am acting solely as a financial journalist focusing on my own investments. The information contained in this post is not intended to be a complete description or summary of all available data relevant to making an investment decision. Instead, I am merely expressing some of the reasons underlying the purchase or sell of securities. Nothing in this post is intended to constitute investment or legal advice or a recommendation to buy or to sell. All investors need to perform their own due diligence before making any financial decision which requires at a minimum reading original source material available at the SEC and elsewhere. A failure to perform due diligence only increases what I call "error creep". Stocks, Bonds & Politics: ERROR CREEP and the INVESTING PROCESS Each investor needs to assess a potential investment taking into account their personal risk tolerances, goals and situational risks. I can only make that kind of assessment for myself and family members.