BBDC, BOTZ, BRKL, CFG, FHB, FHNPRE, HBNC, JQC, KEY, MBWM, OGN, OLP, TRST, TSLX, VKTX, VLY, ZION, ZIONL

All previous links to FINRA pages no longer work. FINRA has made it difficult and inordinately time consuming to find and research bonds.  

Economy: 

US may default on debt as soon as June 1, Yellen reaffirms; White House, Republican team say no progress in debt ceiling talks; The Debt Ceiling—This Time is Different; What the Markets Are Telling Us About the Debt Ceiling - The New York Times If the republicans cause a U.S. debt default, it would cause irreparable and long lasting harm to the U.S.  

If a debt default occurs, even if it lasts only for a brief period, I would view a recession as inevitable. 

World watches U.S. debt ceiling debate as deadline, default looms - The Washington Post

May 2023 Treasury Yield Curve: Strange. 

Walmart (WMT) Q1 2024 (E.P.S. of $1.47 vs. consensus at $1.32, revenues at $152.3B vs. consensus at $148.76; SEC Filed Press Release) 

Home Depot downwardly revised its 2023 revenue guidance last week. The revised estimate is that revenues will decline between 2%-5% compared to 2022. The prior estimate was for flat Y-O-Y revenue. SEC Filed Press Release One reason for the revision was plumenting lumber prices. Lumber Prices - 50 Year Historical Chart | MacroTrends

CSCO SEC Filed Earnings Press Release for the F/Q Ending 4/29/23;  Cisco Sounds an Alarm on Orders. Analysts Not Too Worried About Networking Sector. | Barron's Revenue of $14.571B rose 14% compared to the F/Q ending 4/30/22 but total product orders were down 23%, Cisco Systems (CSCO) Q3 2023 Earnings Call Transcript | The Motley Fool I own 10 shares with a $38.5 AC per share. This is one of the positions that I may liquidate when and if I become more concerned that the republicans will cause a U.S. debt default. This may happen next week. Whatever I sell, I will consider buying back when and if the U.S. defaults.  

Target CEO: “We expect that shrink will reduce our profitability by more than $0.5 billion compared with last year.” Organized Crime Gets Worse. Target Cites $500 Million Cost. | Barron's

Dallas Fed President Logan says current data doesn't justify pausing rate hikes yet Logan is a voting member this year. The market would be shocked by a .25% increase at the next meeting. 

+++

Allocation Shifts Discussed in this Post: 

Treasuries Auction Purchases: $5,000 in principal amount 

Corporate Bonds: $7,000 in principal amount

CDs: $8,000

Net Outflow Common Stocks/Stock Funds: -$232.42

(consisting of $923.9 in proceeds minus $691.48 in purchases)

Weighted Average Yield Common Stock Purchases: 5.76%

(The current goal is to add each week common stocks that have a weighted average dividend yield of >5%, mostly replacing stocks and stock funds will no or miniscule yields)

Realized Gains Stock/Stock Fund: +$567.09

CEFs (senior loan fund): +$24.95 (yield at 11.42%, viewed as high risk)

Bank Holding Company Equity Preferred: +$90.45 (8.98% yield)

Bank Holding Company Exchange Traded Junior Baby Bond: +$110.85 (current yield of 7.84% based on the fixed coupon rate, but will start to float on 9/15/23, if not redeemed, at a 3.89% spread to the 3 month Libor rate or the applicable alternative rate if Libor quotes are not available).  

2023 Net Outflow Stocks/Stock Funds: -$32,619.81

++++

Putin and His Servile Orcs: 

Ukraine intercepts missiles as Russia steps up strikes on Kyiv - The Washington Post The newly installed U.S. Patriot Missile System shot down several Russian hypersonic missiles.  

Putin had repeatedly represented that the new generation of Russian hypersonic missiles could penetrate any air defense system. The old U.S. Patriots had no trouble shooting them down.  

Russian hypersonic missile scientists arrested on treason charges It looks like the "high treason" charge involves a failure to develop a hypersonic missile capable of penetrating an antiquated Patriot Missile Defense system.  

Scale of Russian deaths in Ukraine signals trouble for Putin Russia has suffered over 100,000 casualties this year which includes 20,000 killed in action. While the exact number is not known, one thing is for certain. The Russian government will not provide accurate information on how many Russians have been killed and wounded in Putin's war.

Russia-backed officials claim Crimea train derailment was deliberate act - YouTube

++++

Trump and His Anti-Democracy Party: 

Trump accuses Jack Smith of trying to commit treason in late night attack - Raw Story 

The anti-democracy party controls Tennessee. Inside the Tennessee legislature, where a GOP supermajority reigns - The Washington Post   The article is informative on just how far republicans have strayed from anything resembling conservatism, now having more of a reactionary 19th century vibe; how they pander to their core American Taliban base; and their ignorance about almost everything. The republicans who control Tennessee are far right reactionaries intoxicated by their absolute and unchecked power. 

Montana Legislature Approves Outright Ban of TikTok - The New York Times Montana is controlled by republicans.  

Gov. Ron DeSantis Calls Daniel Penny A ‘Good Samaritan’ After Jordan Neely Killing; Jordan Neely death: Daniel Penny charged with second-degree manslaughter-NPR; Opinion | The Republican Embrace of Vigilantism Is No Accident - The New York Times I am not sure why republicans view it necessary to praise someone involved in killing a disturbed person who apparently had not yet attacked anyone. While Penny may not be found guilty of manslaughter in the second degree, and he has defenses based on what I have read, that is not a reason to praise him or the other republican favorite Kyle Rittenhouse who shot 3 people with an assault rifle, killing 2 of them. Kyle Rittenhouse verdict: Not guilty on all counts-NPR

Rudy Giuliani denies sexual assault allegations made by former employee in $10 million lawsuit - CBS News ("The complaint says that many of the comments were recorded, and include both racist, antisemitic, homophobic and fatphobic remarks." Another allegation contained in the Complaint involves selling pardons and splitting the proceeds with Donald, which sounds far fetched even for Trump but not outside the realm of possibilities given his abysmally low character. Giuliani accused of offering to sell Trump pardons for $2 million each in new lawsuit; Rudy Giuliani said he and Trump were selling pardons for $2m apiece, ex-aide claims | The Independent)

Opinion | Sens. Kennedy and Lee smear Mark Wolf to defend Clarence Thomas - The Washington Post Senator Kennedy (R-LA) only proved that he lacks an ethical core. Senator Lee (R-UT) just confirmed once again that he is a pompous jerk. 

GOP witnesses undermined Jan. 6 cases with conspiracy theories, FBI says The self-proclaimed FBI whistleblowers that Jim Jordan (R-OH) used in his ongoing effort to discredit the FBI were appropriately disciplined by the FBI for misconduct in my opinion. They then wrapped themselves in whistleblower garb to be used by republicans in their hyper partisan attacks against the FBI. Jordan is just another republican who lacks integrity and who replaces fundamental and conservative ethical norms with a combative and obnoxious personality. Six former wrestlers say Rep. Jim Jordan knew about abusive OSU doctor; Jim Jordan accused of ‘begging’ former Ohio State wrestler not to support reports of sexual abuse - The Washington Post

Disney rocks DeSantis ahead of expected White House bid announcement | CNN Politics By pandering to the American Taliban base of the republican party through nonsensical attacks on Disney, DeSantis just cost Florida a $1B Disney project that would have brought 2,000 jobs to that state. 

How GOP attacks on 'wokeism' helped lead the Pentagon to abandon its effort to combat extremism in the military  

+++++

1. Small Ball Sells: 

Regional bank stocks started an anemic rally last week which was nipped in the bud by comments purportedly made by Janet Yellen yesterday. Janet Yellen told bank CEOs more mergers may be necessary, sources say 

A. Eliminated VKTX - Sold 30 at $22.84: 

Quote: Viking Therapeutics Inc.

Proceeds: $685.12

Viking Therapeutics-Pipeline Overview

Website: Viking Therapeutics Home - Viking Therapeutics

Investment Category: Blackjack Hand, part of the Lottery Ticket Basket Strategy. 

Profit Snapshot: $551.7 (5/15/23 sale only)

If I waited another day, I could have sold at near $25. Viking Therapeutics Announces Positive Top-Line Results from Phase 2b VOYAGE Study of VK2809 in Patients with Biopsy-Confirmed Non-Alcoholic Steatohepatitis (NASH) - May 16, 2023 Treatment with VK2809 also significantly reduced LDL  cholesterol and triglycerides. 

The stock closed at $24.65 on 5/16/23, up from $21.99 the prior day, but has been drifting back down since that pop. The stock closed at $22.97 yesterday.  

To receive FDA approval, it is my understanding that there needs to be a significant reduction in liver fat without increasing fibrosis. 

I did not see anything in the press release about whether the treatment increased fibrosis. The trial involved patients with biopsy confirmed NASH and fibrosis. All that I can say is that the initial enthusiasm may prove to be premature. 

Viking Therapeutics Clears Mid-Stage NASH Trial | BioSpace

Last Buy Discussion: Item # 1.I. Added to Lotto VRTX Bought 5 at $4.67; 3 at $4.32; 10 at $3.95 (1/20/22 Post)

Last Loss Report (Q/E 3/31/23): SEC Filing 

-$19.047M or ($.25) per share

Cash, cash equivalents and short term investments: $135.664M

Last Stock Offering (3/31/23): Prospectus (17.242M shares + greenshoe at $14.5) 

Proceeds were received after 3/31/23:  "On April 3, 2023, the Company completed an underwritten public offering of its common stock (the “April 2023 Offering”) pursuant to the 2021 Shelf Registration Statement. In the April 2023 Offering, the Company sold an aggregate of 19,828,300 shares of its common stock at a public offering price of $14.50 per share, which included the exercise in full by the underwriters of their option to purchase 2,586,300 additional shares of common stock. Upon the closing of the April 2023 Offering, the Company received gross proceeds of $287.5 million."

This offering was completed before the NASH trial results were released but shortly after a positive Phase 1 trial for Viking's weight loss drug. Viking Therapeutics Announces Initiation of Phase 1 Study to Evaluate Oral Formulation of Dual GLP-1/GIP Receptor Agonist VK2735 - Mar 28, 2023 

While the weight loss results are encouraging, this is a Phase 1 trial for a compound that will be competing with an already established weight loss drug sold by Novo Nordisk and another one offered by Eli Lilly. FDA Approves New Drug Treatment for Chronic Weight Management, First Since 2014 | FDA (6/4/21); Why Novo Nordisk's Drugs are Anti-Obesity Game-Changers; Novo Nordisk says stopping obesity drug may cause full weight regain in 5 years | Reuters;Eli Lilly releases data for a new weight-loss drug to tackle obesity-NPR

I still own a few shares of Ligand Pharmaceuticals Inc. (LGND) that is entitled to receive royalties from Viking when and if the NASH drugs receives marketing approval. 

The terms are summarized in this press release: Ligand’s Partner Viking Therapeutics Announces Positive Top-Line Results from Phase 2b VOYAGE Study of VK2809 in Patients with Biopsy-Confirmed Non-Alcoholic Steatohepatitis (NASH) 

As of 3/31/23, LGND owned 3.6M Viking common shares after selling 3.6M shares during the first quarter. LGND 10-Q for the Q/E 3/31/23 at page 23 

LGND is primarily a drug discovery company that receives royalties for several compounds marketed by other pharmaceutical companies.

Ligand has a product called Captisol that generated $10.622M in revenues during the first quarter. LGND received a significant boost from Captisol sales when Gilead used the product to manufacture the Covid drug Veklury. Ligand’s Captisol Technology Plays Key Role in the Manufacture of Gilead’s Veklury, the First FDA-Approved COVID-19 Treatment However, no revenues were generated for that use in the first quarter.  

LGND Close on 5/19/23: $74.35 -$2.55 or -3.32%

At $74.35, the LGND market cap is about $1.285B. 

B. Eliminated BOTZ - Sold 9 at $26.53: 

Quote: Global X Robotics & Artificial Intelligence ETF 

Proceeds: $238.78

Profit Snapshot: $15.39

Last Discussed: Item # 4.J. Bought 2 BOTZ at $24.88; 2 at $24 (5/5/22 Post) 

Sponsor's website: Robotics & Artificial Intelligence ETF

Dividends: Only 1 quarterly dividend was paid in the past 4 quarters and that was $.046+ per share. I am cutting back on stock funds that have minimal dividend distributions. 

Last Sell Discussion: Item # 1.J. Sold 5 BOTZ at $39.02 (10/22/21 Post)(profit snapshot = $74.52)

2. Small Ball Buys: 

A. Added 5 to TRST at $28.2: 

Quote: Trustco Bank Corp.  (TRST)

Cost: $56.4

TRST is one of the stocks where I have eliminated duplicate positions and will buy shares only in my Fidelity Account. Item # 2.C. Eliminated TRST in 2 Taxable Accounts - Sold 5 at $36.84; 5 at $37.02 (3/11/23 Post)(profit snapshots = $41.28); Item # 3.A. Eliminated TRST in Schwab Taxable Account - Sold 20 at $38 (12/13/22 Post)(profit snapshot = $129.8) 

TRST SEC Filings

Investment Category: Regional Bank Basket Strategy

Last Buy Discussion: Item # 3.D. Bought 5 TRST at $32.91 (1/30/23 Post)

Average cost per share: $31.1 (25 shares)

Dividend: Quarterly at $.36 per share ($1.44 annually), last raised from $.35 effective for the 2022 4th quarter. 

TrustCo Bank Corp NY (TRST) Dividend History | Seeking Alpha

Yield at AC = 4.63%

Next Ex Dividend: 6/1/23

Last Earnings Report (Q/E 3/31/23): SEC Filing 

E.P.S. = $.93, up from $.89 in the 2022 first quarter but down from $1.10 in the 2022 4th quarter. 

In Thousands except for share data

Deposits: $5.212+B, up from $5.192+B as of 12/31/22

10-Q for the Q/E 3/31/23 

Investment Securities: AFS

As of 3/31/22, I do not see a material problem with deposit flows or the unrealized loss in the investment securities portfolio. 

TRST Trading Profits to Date: $1,408.67

Largest Gain to Date: Sold 308 TRST at $6.64 (10/28/13 Post) There was a 1 for 5 reverse stock split in 2021. The adjusted price for that sale would be $33.2.

B. Restarted KEY - Bought 5 at $9.7; 1 at $9.14; 4 at $8.77-Schwab Account: 

History this Account:

Quote: KeyCorp  (KEY)- Super Regional Bank Holding Company 

Cost $92.7

971 branches in 15 states. 

Approximately $198B in assets as of 3/31/23.

Headquarters in Cleveland, Ohio. 

I have now bought back the 10 shares sold at $18.16 on 1/25/23. 

KEY Analyst Estimates | MarketWatch

KEY SEC Filings

2022 Annual Report 

I eliminated my KEY positions earlier this year. Item # Eliminated KEY - Sold 15 at $17.04; 10 at $18.16; 10 at $18.22 (1/30/23 Post)(profit snapshots = $79.03) As noted in that post, the trigger for the elimination was my unfavorable reaction to the 2022 4th quarter earnings report. SEC Filed Press Release

In taxable accounts, I will buy shares only in my Schwab account.  

Investment Category: Regional Bank Basket Strategy

Average cost per share: $9.27 (10 shares)

Dividends: Quarterly at $.205 per share ($.82 annually), last raised from $.195 effective for the 2022 4th quarter payment. 

KEY Dividend History | Nasdaq

Yield at $9.27 AC per share   =  8.85% 

Next Ex Dividend: 5/26/23

Dividend History: Poor

The quarterly rate was at $.365 prior to the 2008 Near Depression and was cut in stages to just $.01 per share effective for the 2009 second quarter. I will not live to see a return to $.365. 

Last Earnings Report (Q/E 3/31/23): SEC Filed Press Release and SEC Filed Slide Presentation 

Comparisons are to the 2022 first quarter. 

E.P.S. = $.30, down from $.45

There was a $126M build in the loan loss reserve that hit E.P.S. by $.14.  

Net Income available to common shareholders: $275M, down from $420M

NIM: 2.47%, up from 2.46% 

Efficiency Ratio: 68%

NPL Ratio: .35%, down from .41%

NPA Ratio: .37%, down from .44%

Coverage ratio : 138%

Charge off ratio: .15%

Loan to Deposit Ratio: 84.4% 

Total Average Loans: $119.8B, up from $103.8B

Tangible Book Value per share: $9.67, down from $11.41

The depreciation in owned securities in 2022 was the primary cause in the TBV per share decline. 

Deposits: 

Non-interest bearing: 27%

66% Insured or collateralized Page 9 

10-Q for the Q/E 3/31/23 

Investment securities: 

Page 76, 10-Q

KEY Realized Gains to Date: $817.98

Largest Gain: Item # 1. Sold: 140 KEY at $11.8 (7/27/13 Post)(profit snapshot $429.32). Some of those shares were purchased at less than $5. 

C. Added 4 BRKL at $7.79: 

Quote: Brookline Bancorp Inc.

"Brookline Bancorp, Inc., a bank holding company with $11.5 billion in assets and branch locations in Massachusetts, Rhode Island, and the Lower Hudson Valley of New York State, is headquartered in Boston, Massachusetts and operates as the holding company for Brookline Bank, Bank Rhode Island, and PCSB Bank (the "banks"). The Company provides commercial and retail banking services, cash management and investment services to customers throughout Central New England and the Lower Hudson Valley of New York State."

Cost: $31.16

BRKL SEC Filings

Website: Brookline Bancorp, Inc.-Corporate Profile

Investment category:   Regional Bank Basket Strategy

Last Discussed: Item # 1.G. Added 5 BRKL at $10.49 A(4/15/23 Post)  

Average cost per share: $9.15 (30 shares) 

Dividend: Quarterly at $.135 per share ($.54  annually), last raised from $.13 effective for the 2022 4th quarter payment.  

Brookline Bancorp, Inc. (BRKL) Dividend History | Seeking Alpha

Yield at New AC =  5.9%

Last Ex Dividend: 5/11/23

Last Earnings Report (Q/E 3/31/23): 

SEC Filed Press Release and Supplemental 

Comparisons are to the 2022 first quarter.  

GAAP E.P.S. = $.09, down from $.32

Non-GAAP E.P.S. = $.27

GAAP to Non-GAAP: Removes expenses related to the acquisition of PCSB Financial which closed on 1/1/23. 

NIM: 3.36%, down from 3.49%

There was a steep decline from the 3.81% NIM reported for the 2022 4th quarter which probably contributed to the negative reaction to this report. 

NPL Ratio: .31%

Charge off Ratio: .02%, down from .11%

Tangible book value per share: $10.08

Deposits: $8.4564+B, up $1.9343+B from $6.5221+B as of 12/31/22 but $1.6B in deposits was acquired as a result of the acquisition on 1/1/23. 

10-Q for the Q/E 3/30/23 

Investment Securities (page 63): AFS amortized cost at $1.134+B with the fair value at $1.067+B. Cash and cash equivalents of $486.32+M represented 13.5% of total assets as of 3/31/23. 

I do not see a problem here. 

Deposit Information (pages 64-65): 

70% Insured or Collateralized   

22.5% noninterest bearing

D. Added 5 JQC at $4.99: 

Quote: Nuveen Credit Strategies Income Fund Overview - CEF 

Leveraged: Yes and substantial. 

As with other leveraged CEFs that owns securities senior to common stock in the capital structure, the rise in borrowing costs and lower prices for owned securities caused a significant drop in net asset value per share and a narrowing spread between the cost of borrowed funds and the yields on securities purchased with that debt. On 12/31/21, the net asset value per share was $6.87 and had fallen to $5.78 as of 5/9/23.

Sponsor's website: JQC -Nuveen

Number of Holdings as of 3/31/23: 399 

Most of the holdings are variable senior loans that are rated in junk territory: 

Nuveen Credit Strategies Income Fund - Last SEC Filed Shareholder report for the semiannual period ending 1/31/23.

As of 1/31/23

Similar unleveraged ETFs are SPDR Blackstone Senior Loan ETF (SRLN) and  Invesco Senior Loan ETF (BKLN) 

Investment Category: Monthly Income Generation

Average cost per share: $5.15 (90 shares)

Dividend: Monthly at $.0475 per share ($.57 annually)

ROC supported. 

Nuveen Credit Strategies Income Fund (JQC) Dividend History | Seeking Alpha

I am not reinvesting the dividend. 

Yield at AC = 11.07%

Last Ex Dividend:  5/12/23 (owned all as of) 

Data Date of 5/9/23 Trade: 

Closing Net Asset Value per share: $5.78

Closing Market Price: $5

Discount: -13.49%

Average 3 year Discount: 9.93%

Sourced: JQC-CEF Connect  

E. Added 5 OLP at $19.4: 

Cost: $97

Quote:  One Liberty Properties Inc.  (OLP)

Management: Internal  

Investment Category: Equity REIT Common and Preferred Stock Basket Strategy

OLP SEC Filings

2022 Annual Report

Website: One Liberty Properties, Inc.

Properties | One Liberty Properties | REIT

Last Discussed: Item # 3.N. Added 5 OLP at $21.15 (5/6/23 Post) I discussed the 2023 first quarter report in that post. SEC Filing

Average cost per share: $21.06 (20 shares)

Dividend: Quarterly at $.45 per share ($1.8 annually). 

One Liberty Properties, Inc. (OLP) Dividend History | Seeking Alpha

Yield at AC per share = 8.55%

Last Ex Dividend: 3/24/23

F.  Added 5 BBDC at $7.21: 

Quote: Barings BDC Inc.  (BBDC)

Cost: $36.05 

Management: External

BBDC SEC Filings

2022 Annual Report (risk factor summary starts at page 36 and ends at page 70)

Last Discussed: Item # 2.K. Added 5 BBDC at $7.65 (3/19/23 Post) 

New Average cost per share: $9.07 (60 shares)

Dividend: Quarterly at $.25, last raised from $.24 effective for the 2023 first quarter payment. 

Barings BDC Inc (BBDC) Dividend History | Seeking Alpha

Yield at New AC = 11.02%

Next Ex Dividend: 6/6/23

Last Earnings Report (Q/E 3/31/23): SEC Filing 

NII per share $.25

Net Asset value per share: $11.17, up from $11.05 as of 12/31/22

Weighted average yield on performing debt investments based on principal amount: 10.2%

As of 3/31/23, BBDC had nine investments on nonaccrual "which comprised 1.1% of the total fair value of our portfolio, and the cost of which was $102.3 million, which comprised 3.8% of the total cost of our portfolio."  (p. 116, 10-Q)

10-Q for the Q/E 3/31/23 (summary of investments starts at page 8)

G. Added 4 VLY at $6.98; 1 at $6.7: 

Quote:  Valley National Bancorp  (VLY)

Cost: $34.62

VLY | Valley National Bancorp Analyst Estimates

VLY SEC Filings

10-Q for the Q/E 3/31/23 (investment security information can be found starting at page 18)

2022 Annual Report (as of 12/31/22, VLY had "231 retail banking centers locations in northern and central New Jersey, the New York City boroughs of Manhattan, Brooklyn and Queens, Long Island, Westchester County, New York, Florida, Alabama, California and Illinois." VLY owned 96 of its banking center facilities as well as  several non-branch operating facilities, at page 31). 

Investment Category: Regional Bank Basket Strategy

I eliminated my duplicate positions earlier this year. Item # 2.M. Eliminated VLY in Fidelity Account - Sold 15+ at $11.76 and Item # 2.N. Eliminated VLY in Vanguard Account - Sold 15 at $11.75 (2/5/23 Post)(profit snapshots = $134.03). I discussed the 2022 4th quarter report in that post. SEC Filed Press Release 

Average cost per share: $7.3 (31+ shares) 

Dividend: Quarterly at $.11 per share.  

Valley National Bancorp (VLY) Dividend History | Seeking Alpha

I am reinvesting the dividend. 

Dividend History: Poor. The last change was to cut from $.1625 effective for the 2014 first quarter payment.

Yield at AC = 6.03%

Last Ex Dividend: 3/14/23

Last Earnings Report (Q/E 3/31/23): SEC Filing 

E.P.S. $.28, up from $.27 in the 2022 first quarter but down from $.34 in the 2022 4th quarter. 

Non-GAAP E.P.S. = $.30, down from $.35 in the 2022 4th quarter and up from $.28 in the 2022 first quarter. 

GAAP to Non-GAAP Reconciliation: 

I do not accept the $5M adjustment for the provision for AFS security losses, since that is too related to normal bank operations. 

NIM: 3.15%, unchanged from the 2022 first quarter but down from 3.56% in the 2022 4th quarter. 

Efficiency Ratio: 53.79%

NPL Ratio: .5%, down from .65% in the 2022 first quarter

Charge off ratio: .25%

Coverage ratio:  180.54%

Tangible Book value per share: $8.36

ROA: 1.03%

Non-GAAP ROTE: 14.12%

"Total deposits were $47.6 billion at March 31, 2023 and remained relatively unchanged as compared to December 31, 2022."

Last Buy Discussions: Item # 1.K. Added to VLY - Bought 5 $6.79 (7/25/2020 Post); Item # 1.I. Restarted VLY-Bought 10 at $7.66 (6/6/20 Post)

Other Sell Discussions: Item # 1.A. Eliminated VLY-Sold 102+ at $10.51 (9/11/2019 Post)(profit snapshot = $33.13); Item # 2.A. Eliminated VLY Sold 51+ VLY at $12.76 (7/25/18 Post)(profit snapshot = $61.76); Item # 2.B. Sold 60 VLY at $12.52 (1/28/18 Post)(profit snapshot = $35.86)

The largest gain came from 213+ shares sold in 2016: +$197.85

I did not publish posts here in September through December 2016. 

VLY Realized Gains to Date: $555.55

Trading Strategy: My VLY trading strategy is similar to other banks that have horrible dividend histories. I will buy and sell mostly in narrow ranges. The sell range for VLY has mostly been between $10 to $12. The buy range is generally less than $8. I will keep those ranges until I see a longer term positive uptrend in E.P.S. that is accompanied by dividend increases. 

H. Started ZION - Bought 5 at $22.8; 1 at $22.18: 

Quote: Zions Bancorp  (ZION) 

Zions Bancorporation | Corporate Profile

"Zions Bancorporation, N.A. is one of the nation's premier financial services companies with approximately $90 billion of total assets at December 31, 2022, and annual net revenue of $3.2 billion in 2022. Zions operates under local management teams and distinct brands in 11 western states: Arizona, California, Colorado, Idaho, Nevada, New Mexico, Oregon, Texas, Utah, Washington, and Wyoming."

This is my first ever purchase of the common stock. I have recently purchased some CDs and have owned in the past some securities that were higher up in the capital structure than common stock. 

Cost: $136.18 

ZION SEC Filings

ZION Analyst Estimates | MarketWatch

Average cost per share: $22.7 (6 shares)

Dividend: Quarterly at $.41 per share ($1.64 annually), last raised from $.38 effective for the 2022 third quarter. 

Zions Bancorporation, National Association (ZION) Dividend History | Seeking Alpha

Yield at AC = 7.22%

Last Ex Dividend: 5/17/23 (owned all as of)

Last Earnings Report (Q/E 3/31/23) SEC Filings and SEC Filed Slide Presentation 

E.P.S. = $1.33, up from $1.27 in 2022 first quarter but down from $1.84 reported for the 2022 4th quarter. 

NIM: 3.33%, up from 2.6% in the 2022 first quarter. 

Efficiency Ratio: 59.9%

NPA Ratio: .31%, down from .49%

Charge off ratio: zero

Tangible book value per share: $44.57

Deposits: Uninsured deposit flight is a major concern and makes investing in this stock a bit scary. 

"Total deposits decreased $13.1 billion, or 16% to $69.2 billion at March 31, 2023. More than two-thirds of the decrease related to accounts with balances greater than $10 million. Our loan-to-deposit ratio was 81%, compared with 62% in the prior year quarter."

Deposits at $69.208B, down from $82.351M as of 3/31/22 and $71.652B as of 12/31/22.

10-Q for the Q/E 3/31/23 (investment security information starts at page 48):

Average yield: 2.07% (poor, IMO)

Estimated duration: 4.1 years 

If one could ignore the deposit flight, and just focus on the valuation, dividend yield, operating metrics and discount to tangible book value per share, which I can not do given what caused the collapse of 3 mid-sized banks this year, the investment case for this stock is compelling at my AC per share.  

I. Bought 5 ZIONL at $22.17: 

Quote:  Zions Bancorp 6.95% Fixed-to-Floating Rate Subordinated Notes due September 15, 2028 (ZIONL) 

Issuer: See Item # 2.H. above. 

ZIONL Prospectus 

Placement in the Capital Structure: Junior Bond

Par Value: $25

Fixed Rate: 6.95% to but excluding 9/15/23

Floating Rate: if not redeemed, then at a 3.89% spread to the 3 month Libor rate. 

Alternative Rate: Page S-28

Maturity: 9/15/28 at $25 principal amount. 

Next Ex Interest Date: 5/31/23 

Interest paid quarterly. 

While this security is a junior bond senior to both common and preferred stock, the downside risk is a zero price when and if the FDIC seizes the operating bank. Generally, bank holding company senior debt will be greater than the value of remaining assets.  

Yield at Fixed Coupon Rate =  7.84%

Yield at Variable Rate Starting on 9/15/23: It is not possible to compute a yield since the interest payments will be variable. Initially, if the security is not called, the yield will increase compared to the 6.95% fixed coupon rate. For example, at a 5% 3 month Libor rate or the alternative rate, the coupon would be 8.89% which results in a 10.02% yield at a total cost of $22.17. 

It is possible that ZION's will call the note on 9/15/23 at its par value. 

J. Started FHN.PRE - Bought 5 at $18.09: 

Quote: FHN-PE 

Cost: $90.45

Equity preferred stock issued by the bank holding company First Horizon Corp.   (FHN) 

I discussed recent FHN developments, including the last earnings report, in my last post. Item # 3.F. Added to FHN - Bought 5 at $9.51 (5/13/23 Post) 

This preferred stock has a significantly higher dividend yield than the common. As with other bank holding preferred stocks, the downside risk is a zero stock price when and if the FDIC seizes the operating bank.  

FHN Analyst Estimates | MarketWatch

10-Q for the Q/E 3/31/23 

FHN SEC Filings 

FHNPRE Prospectus 

Par Value: $25 

Coupon: 6.5%

Annual Dividend: $1.625 per share

Yield at $18.09 = 8.98%

Dividends: Paid quarterly, qualified and non-cumulative.

Stopper Clause: Standard (p. S-16)

Maturity: Potentially perpetual 

Issuer Optional Call: On or after 10/10/25

K. Added to HBNC - Bought 3 at $7.76: 

Quote: Horizon Bancorp Inc.  (HBNC)

Cost: $23.28 

HBNC Analyst Estimates

HBNC SEC Filings

2022 Annual Report 

Investment Category: Regional Bank Basket Strategy

I eliminated my duplicate positions earlier this year. Item # 2.C. Eliminated HBNC in Fidelity Account - Sold 15+ at $15.02 and Item # 1.D. Eliminated HSBC in Vanguard Account-Sold 20 at $15.05 (2/5/23 Post)(profit snapshot = $169.85)  

Last Buy Discussion: Item # 1.K Added HBNC Fidelity Taxable Account-Bought 5 at $10.3; 2 at $9.9; 3 at $9.57 (10/10/20 Post)

Average cost per share: $9.75 (20 shares)

Dividend: Quarterly at $.16 per share ($.64 annually), last raised from $.15 effective for the 2022 third quarter payment. 

Horizon Bancorp, Inc. (HBNC) Dividend History | Seeking Alpha

Yield at AC per share: 6.56%

Last Ex Dividend: 4/5/23

Last Earnings Report (Q/E 3/31/23) SEC Filed Press Release 

Comparisons are to the 2022 first quarter. 

E.P.S. $.42, down from $.54

Efficiency ratio: 62.93%

Adjusted NIM: 2.65%, down from 2.85% 

NPL Ratio: .47%, down from .54%

Charge off ratio: .01%

Tangible Book value per share = $12.17, up from $11.54

Total Capital Ratio: 13.15%

Total Loans: $4.249+B, up 2.1 compared to the 2022 4th quarter

Deposits: 

10-Q for the Q/E 3/31/23 

AFS Investment Securities: 

Page 14

My grade on interest rate risk management is a "C". 

Split History: 2012 Sales Price Unadjusted for 

Other Sell Discussions: Item # 1.C. Pared HBNC in Fidelity Account - Sold 5 at $17.02 (2/20/21 Post)(profit snapshot = $31.09)

Item # 2 Sold 60 HBNC at $24.96 (4/30/12 Post)(profit snapshot = $429.68)

Item # 3.C. Sold Highest Cost HBNC Lots-10 at $14.25; 5 at $14.8 (12/5/20 Post)(profit snapshot = $46.53)

HBNC Realized Gains to Date: $676.15

L. Added 1 FHB at $15.86; 1 at $15.48- Schwab Taxable: 

Recent History this Account: 

Quote: First Hawaiian Inc. (FHB)

Cost: $31.34

FHB SEC Filings

FHB Analyst Estimates | MarketWatch

I reduced my position earlier this year. Item # 5.D. Pared FHB in Schwab Account - Sold 10 at $27.14 (1/16/23 Post)(profit snapshot = $46.05). I also eliminated my position in my Vanguard Taxable account. Item # 2.F. Eliminated FHB in Vanguard Account - Sold 8 at $26.99 (2/5/23 Post)(profit snapshot = $26.9) 

Last Buy Discussion: Item # 6.E. Added 3 FHB at $22.74 (7/6/22 Post)

Investment Category: Regional Bank Basket Strategy

Average cost per share: $16.78 (32+ shares)

Dividend: Quarterly at $.26 per share ($1.04 annually)

I am reinvesting the dividend. 

Yield at AC per share: 6.2%

Last Ex Dividend: 5/19/23 (owned all as of)

Last Earnings Report (Q/E 3/31/23): SEC Filing 

Net Income of $66.8M or $.52 per share 

Consensus at $.54 per Schwab

NIM = 3.11%

Efficiency Ratio: 54.46%

NPL Ratio: .1%

NPA Ratio: .9%

Charge off ratio: .09%

ROTE: 20.78%

Tangible book value per share: $10.45

"Gross loans and leases were $14.2 billion as of March 31, 2023, an increase of $129.3 million, or 0.9%, from $14.1 billion as of December 31, 2022."

"Total deposits were $21.3 billion as of March 31, 2023, a decrease of $407.5 million, or 1.9%, from $21.7 billion as of December 31, 2022"

10-Q For the Q/E 3/31/23 

Investment Securities: 

"At March 31, 2023, pledged securities totaled $3.0 billion, of which $2.8 billion was pledged to secure public deposits and $194.4 million was pledged to secure other financial transactions." 

Other Sell Discussions: Item # 4.C. Pared FHB in Fidelity Taxable Account - Sold 5+ at $26.355 (1/10/23 Post)(profit snapshot = $18.33); Item # 3.B Pared FHB in Fidelity Taxable Account - Sold Highest Cost 11 Shares at $29.21 (3/17/22 Post)(profit snapshot = $78.07); Item # 2.D. Sold 5 FHB in Fidelity Account at $29.86 and Item # 2.E. Pared FHB in Schwab Account-Sold 5 at $29.86 (11/5/21 Post)(profit snapshots = $31.19 and $30.76); Item # 3.H. Pared FHB in Fidelity Account- Sold 12.468 at $29.06 (7/9/21 Post)(profit snapshot = $51.22); Item # 1.P. Pared FHB in Fidelity Taxable-Sold 5.891 at $30.47 (3/20/21 Post) (profit snapshot = $26.28); Item #1.B. Continued Paring FHB in my Fidelity Taxable Account- Sold 5 at $28.61 and Item # 1.C. Pared FHB in Schwab Account - Sold 55 at $28.62, 6 at $29.9 (3/13/21 Post)(profit snapshots = $79.88); Item 1.A. Pared FHB in Schwab Account: Sold 40 at $29.65;  5 at $30.81 and Item #1.B. Pared 10 FHB in Fidelity Account at $29.65 and 10 at $30.02 (2/12/20 Post)(profit snapshots = $61.04); Item # 1.A. Sold 10 FHB at $30.76 (6/21/18 Post)(profit snapshot = $17.55, includes another profit snapshot of $40.11, for a 100 share lot held for 6 days). 

FHB Realized Gains to Date: $616.88

M. Added to MBWM - Bought 2 at $23.95: 

Quote: Mercantile Bank Corp.

Cost: $47.9 

MBWM Analyst Estimates | MarketWatch

MBWM SEC Filings

Last Discussed: Item # 3.M. Added to MBWM - Bought 2 at $26.25; 3 at $24.5 (5/6/23 Post) 

Last Substantive Discussion: Item # 2.H. Added 2 MBWM at $28.75; 5 at $28.6  (4/22/23 Post). I discussed the 2023 first quarter earnings report in that post, which I viewed favorably. SEC Filing

Average cost per share: $28.11 (27 shares)

Dividend: Quarterly at $.33 per share ($1.32 annually), last raised $.32 effective for the 2023 first quarter payment. 

Mercantile Bank Corporation (MBWM) Dividend History | Seeking Alpha

I am currently reinvesting the dividend based on valuation. 

Yield at New AC per share: 4.7%

Next Ex Dividend: 6/1/23

N. Added 1 OGN at $21.24; 2 at $20.8; 1 at $20.58-Fidelity Taxable Account: 

Quote: Organon & Co. (OGN)

Cost $62.62

OGN was spun out of Merck in 2021. Merck Announces Completion of Organon & Co. Spinoff (6/3/21). As part of that spinoff, Merck received $9B funded by new Merck debt that was assumed by OGN. Page 9, and see page 25 SEC Filing This debt assumption is a major negative.  

OGN Analyst Estimates | MarketWatch

OGN SEC Filings

Organon | Products list

Last Discussed: Item # 5.A. Eliminated OGN in Vanguard Taxable Account - Sold 12 at $30.67 (1/23/23 Post) 

Average cost per share: $26.04 

Dividend: Quarterly at $.28 ($1.12 annually)

Yield at AC per share: 4.3%

Last Ex Dividend: 5/12/23 (owned 42+ as of) 

Last Earnings Report (Q/E 3/31/23): SEC Filing 

GAAP E.P.S. = $.69

Non-GAAP E.P.S. = $1.08, down from $1.65 in the 2022 1st quarter. 

"The year over year decline in net income was a result of lower Adjusted EBITDA as well as increased interest expense (related to higher interest rates and interest expense for accelerated amortization of debt fees and discounts as part of the $250 million voluntary prepayment on the U.S. dollar-denominated term loan), a higher effective tax rate and the impact of exchange losses driven by the fluctuations in foreign currency."

USD strength will have a major negative impact on OGN's accounting results since most of its revenues are generated outside the U.S. Of the $1.538B in first quarter revenue, $1.212B was sourced from international operations. 

Consensus at $1.16

GAAP to Non-GAAP Reconciliation: 

Paid down debt by $250M. 

Non-GAAP E.P.S. in the 2022 first quarter was $1.65. 

E.P.S. has been drifting down, and that is a major cause for the stock price decline. 

The P/E valuation is low using the 12 month trailing non-GAAP E.P.S. 

10-Q for the Q/E 3/31/23 

Product Revenues: In Millions

P.11 10-Q

The main product is Nexplanon which is a prescription birth control implant. NEXPLANON® (etonogestrel implant) 68 mg Radiopaque ǀ Official Site

O. Added to TSLX - Bought 1 at $17.58: 

Cost: $17.58

Quote: Sixth Street Specialty Lending Inc. (TSLX)

Management: External

TSLX SEC Filings

2022 Annual Report

Last Discussed: Item # 1.G. Added to TSLX - Bought 1 at $17.87 (4/29/23 Post) I discussed the 2022 4th quarter report in that post. 

Average cost per share: $18.38 (23+ shares)

Dividend: Quarterly at $.46 per share (regular only)

This BDC has paid several special dividends including a $.04 and $.09 per share payments so far this year. 

Sixth Street Specialty Lending, Inc. (TSLX) Dividend History | Seeking Alpha

I am reinvesting the dividend. 

Yield at AC = 10.01% (regular dividend only)

Last Earnings Report (Q/E 3/31/23): SEC Filing 

NII per share: $.53

Adjusted NII per share: $.55 

Net asset value per share: $16.59

First Lien Debt Investments at FV = 90.8%

99.2% at Floating Rates

Weighted Average Yield Debt Investments: 13.9%

.68% of portfolio on nonaccrual status

P. Added 1 CFG at $24.65: 

Quote: Citizens Financial Group Inc.  (CFG)

Cost = $24.65

CFG Analyst Estimates | MarketWatch

CFG SEC Filings

Investor Relations – Citizens Bank

Last Discussed: Item # 1.G. Added to CFG - Bought 1 at $30.23; 2 at $29.7; 5 at $28.9;2 at $28.54 (4/8/23 Post) In that post, I noted that the 2023 consensus E.P.S. was then at $4.84. As of 5/19/23, the consensus was at $4.40. 

Average cost per share: $32.68 (28 shares)

Dividend: Quarterly at $.42 per share ($1.68 annually), last raised from 

I am reinvesting the dividend. 

Yield at AC = 5.14%

Yield at $24.65: 6.82%

Last Ex Dividend: 5/2/23 (owned 27 shares as of)

Last Earnings Report (Q/E 3/31/23): 

Net income of $511M or $1. per share

Non-GAAP E.P.S. = $1.10 (excludes integration expenses related to 3 acquisitions)

Consensus at $1.13

NIM: 3.29%, up from 2.75% in the 2022 first quarter. 

Non-GAAP Efficiency Ratio: 57.8%

NPL Ratio: .64%

Coverage Ratio: 229%

Charge off ratio: .34%

ROTE: 15.8%

Deposits: $172.194B, down from $180.724B in the 2022 4th quarter

Loan-to-deposit ratio: 89.8%

Tangible Book value per share: $29.44

10-Q for the Q/E 3/31/23 

2. Treasury Bills Purchased at Auction: $5,000

A. Bought 2 Treasury Bills at 5/15/23 Auction: 

91 Day Bill

Maturity: 8/17/23

Interest: $25.58

Investment Rate: 5.211%

B. Bought 1 Treasury Bill at 5/17/23 Auction:

I do not recall a 5 month T Bill auction before this one. 

154 Day Bill

Maturity: 10/19/23

Interest: $21.71

Investment Rate: 5.274%

C. Bought 2 Treasury Bills at 5/17/23 Auction: 

Matures on 9/19/23

119 Day Bill 

Interest: $33.72

Investment Rate: 5.274%

 

3. Corporate Bonds: $7,000 in principal amount

All of the corporate bonds discussed in this section are issued by bank holding companies. Needless to say, the risk is currently elevated.  YTMs are inconsistent with the credit ratings. 

Janet Yellen's comment yesterday that more acquisitions may be necessary nicked the bank holding company bonds.  US regional bank stocks fall after Yellen says more bank mergers may be necessary | Reuters

While the FDIC has so far covered uninsured deposits in the 3 mid-sized bank failures this year, it has clearly made the point that equity and bond owners will suffer the consequences of a bank seizure.  

A. Bought 2 Associated Banc 4.25% Junior Bonds Maturing on 1/15/25 at a Total Cost of 92.1: 

Issuer: Associated Banc-Corp. (ASB) 

ASB Analyst Estimates | MarketWatch

SEC Filed Earnings Press Release for the Q/E 3/31/23 (net income of $106M or $.70 per share; deposits increased by $696M to $30.3B; NPL ratio = .4%; Charge off ratio = .05%; coverage ratio = 311.48%)

10-Q for the Q/E 3/31/23 (investment security information starts at page 14; my grade for interest rate management is a "C".)

Finra Page: Since FINRA has made it difficult and time consuming to find the relevant FINRA page. Going forward, my links to the FINRA data will be spotty. The CUSIP information is available in my trade snapshots. 

This is the new FINRA link for this this junior bond. Bond Page 

Credit Ratings: Baa2/BBB-

YTM at Total Cost: 9.513%

Current Yield at TC: 4.6145%

I currently have no rational concerns about a default. The YTM has something like a 10%-15% probability of a default, which is too high IMO. The current yield does not reflect a default probability and is consistent with a Baa2 rated bond credit spread to a treasury maturing at about the same time. So I view the YTM as being inconsistent with the current yield. That inconsistency does not say which yield is the rational one or the best future prediction regarding a default. 

B. Bought 1 Fulton Financial 4.5% Junior Bond Maturing on 11/15/24 at a Total Cost of 96.075: 

Issuer: Fulton Financial Corp. (FULT) 

FULT Analyst Estimates | MarketWatch

SEC Filed Earnings Press Release for the Q/E 3/31/23 

New Finra Page: Bond Page | FINRA.org

The Finra page refers to this bond as "subordinated" which is just another way of saying the bond is junior to senior unsecured debt. 

Credit Rating: Baa1

The YTM is more consistent with a junk rating. 

YTM at Total Cost: 7.315%

Current Yield at TC =  4.68%

This bond was trading at over 110 in 2020 summer. 

This bond is senior in the capital structure to FULT common shares and FULTP, an equity preferred stock. I have small ball positions in both FULT and FULTP. 

C. Bought 2 Webster Financial 4.375% SU Maturing on 2/15/24 at a Total Cost of 97.717 (filled at 97.617, not at 97.618): 

Issuer: Webster Financial Corp. (WBS) 

New Finra Page: Bond Page | FINRA.org

Credit Rating: Baa1/BBB

YTM at Total Cost: 7.584%

The YTM is more consistent with a junk rating. 

Current Yield at Total Cost: 4.48% 

D. Bought 2 Fifth Third 4.3% Junior Bond Maturing on 1/16/24 at a Total Cost of 98.249:  

Issuer: Fifth Third Bancorp (FITB) 

FITB Analyst Estimates | MarketWatch

FITB SEC Filings 

This bond is subordinated to senior unsecured debt in the capital structure. It is senior only to common and preferred stock. 

SEC Filed Earnings Press Release For the Q/E 3/31/23 (net income of $535M, up from $474M in the 2022 first quarter). 

Credit ratings: Baa1/BBB

YTM at Total Cost: 7.044%

The YTM is more consistent with a junk rating. 

Current Yield at TC = 4.38%

I now own 4 bonds. 

Fifth Third has a 3.65% senior unsecured bond that matures on 1/25/24. That SU bond has the same Moody's rating but a one notch higher S&P rating of BBB+ compared to the junior bond. In my opinion, the senior unsecured bond might receive something in a BK whereas the junior bond would likely become worthless or almost so. An inability to pay the interest on the junior bond would mean that a BK filing would have likely already been filed by the bank holding company after an FDIC seizure of the operating bank. 

4. CDs - FDIC Insured: $8,000

I have been placing more emphasis on CD purchases, rather than treasuries, given the uncertainty about a possible U.S. debt default caused by the republicans.  

A. Bought 2 Nicolet National Bank 4.95% CDs Maturning on 5/30/25: 

When I placed this order, the 2 year treasury note was trading at a 4% yield

Issuer: Operating bank of the bank holding company Nicolet Bankshares Inc.  (NIC) 

Interest paid monthly.  

B. Bought 2 Southern First 5.15% CDs Maturing 11/27/23:

Operating subsidiary for the bank holding company Southern First Bancshares Inc.  (SFST) 

Interest paid monthly. 

C. Bought 2 Old National Bank 5.15% CDs Maturing on 5/23/24:

Operating bank for the bank holding company Old National Bancorp (ONB) 

Interest paid monthly. 

D. Bought 2 Zions 5.2% CDs Maturing on 8/24/23: 

Interest paid at maturity.

Disclaimer: I 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 sale 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 my family members.