Bought TEX at $14.43-LT Category/Reddy Ice/Earnings: LSI, HMA, FFBC, CBU, MBVT, FMER, STL/Redemption Proceeds Received BAC Trust Preferred Securities

The U.K.'s second quarter GDP declined .7% compared to the first quarter. This is a preliminary estimate. Gross Domestic Product: Preliminary Estimate, Q2 2012  WSJ.com That decline, consistent with recessionary conditions, was higher than the .2% estimate.

New home sales in the U.S. declined by 8.4% in June to an annual rate of just 350,000. The median price of new homes fell 1.9% to $232,600. Commerc Department.pdf

Investors seem heartened by the steady flood of negative news, believing that such a steady drumbeat will spur the Federal Reserve into another round of quantitative easing. The WSJ published a story that claimed the Fed was "closer" to taking further steps. The stock market has reacted positively to the initiation of the first two rounds of quantitative easing.

While QE3 could spur a market rally in stocks, bonds, gold, other commodities, it could easily make the basic problems worse. A key negative factor involves the impact of lower interest rates on spending by the Saving Class, who have lost any meaningful income generation from their savings parked in bank CDs, treasury bills, and money market funds. As a result, those folks, many of whom are retired, have cut back on their spending. I would just highlight that the U.S. economy is already sluggish with the average 30 year mortgage rate now at 3.53%. Primary Mortgage Market Survey (PMMS) - Freddie Mac The ten year treasury note is currently hovering near 1.4%, Chart, and the five year note is around .55%, Chart.

The extended period of abnormally low rates will have a long term beneficial impact on debtors. Corporations have refinanced long term debt at much lower rates, and those savings will flow to their bottom lines for years to come. The same is true for individuals that have been able to refinance mortgages. I would submit that most of that long term benefit to debtors has already been captured, while the abnormally low rates will continue to cause a GDP drag through lower spending by the large Saving Class. The Real Cost of The Federal Reserve's Jihad against the Saver Class In addition, the abnormally low rates have had and will continue to have major adverse impacts on pension plans and their funding.

As a result of the Reddy Ice (RI) bankruptcy, I received 43 shares of newly issued common stock in exchange for 1 second lien bond. RI has emerged from bankruptcy.  Item # 3 Reddy Ice Emerges from Bankruptcy I noticed earlier this week that my broker had place a symbol, RDDC, next to those shares rather than a number. I have individual bookmarks for SEC filings, grouped into folders by topic. This allows me to access quickly SEC filings for each company. I clicked the link for RI and did not see an IPO Prospectus. I did not expect to see one. I then surmised that the common shares had been picked up for trading in the Grey Market, which was the case. RDDC Reddy Ice Holdings

A SmartMoney columnist, Jack Hough, wrote an article recommending REITs, which was published in the WSJ last October. He updated that column in a recent article, WSJ, arguing that REIT investors need to be more cautious now. Since his 10/11 article, the MSCI U.S. REIT index has increased by 30%, excluding dividends, compared to S & P's 22% gain. He points to a higher yielding REIT, KBW Premium Yield Equity REIT Portfolio (KBWY), an offering from Powershares that currently has over a 5% dividend yield. He also mentions a much broader REIT ETF that is currently yielding close to 3.3%. Vanguard - REIT ETF - Overview I do not currently own a REIT ETF. I would prefer buying one before the index rises 30%.

Of the individual issues mentioned by him, I have bought and sold Duke Realty (DRE), and I may reestablish that position in an IRA at some point after selling out at $15.3 (May 2011). I will buy individual REITS and currently own small positions in CWH, GOV, BDN, MPW, SIR and a new REIT added yesterday in the Roth IRA which I hope to discuss in next Monday's post.

Health Management (own as LT) reported second quarter GAAP net income of 14 cents per share, adjusted to 21 cents excluding items, one cent better than the consensus estimate.

I was surprised to see the Lottery Ticket Frozen Food Express Industries report a profit for the second quarter. The common rose over 25% yesterday, almost bringing me back to even. Bought 100 FFEX at $1.4-Lottery Ticket

The Lottery Ticket LSI reported non-GAAP E.P.S. of 21 cents per share and predicted third quarter non-GAAP in the range of $.14 to $.2. Revenues were $659+M. The consensus estimates were for 17 cents in the second quarter and 18 cents in the current quarter. LSI Analyst Estimates The company ended the second quarter with $601.1M in cash and cash equivalents.

Zions Bancorporation (own preferred stock) reported adjusted net income of 40 cents per share, six cents better than the consensus estimate.

1. FFBC (own: Regional Bank Basket Strategy): First Financial Bancorp reported second quarter net income of $17.8 million or 30 cents per share, up from 27 cents per share in the 2011 second quarter. As noted in the press release, this bank has been paying its net income per share in dividends. The next dividend payment will be 30 cents per share ($.15 fixed and $.15 variable). I am reinvesting the dividend. 

The consensus estimate was for 30 cents.

The capital ratios are good:

Return on average assets for the quarter was 1.13%. Net interest margin was good, comparatively speaking, at 4.49%. The coverage ratio for NPLs was 59.82% (prefer over 100%) and NPLs to total loans were high for stocks in this basket at 2.76%.

2. CBU (own: Regional Bank Basket Strategy): Community Bank System reported second quarter net income of $21.1 million or 53 cents per share, up from 49 cents a share in the 2011 second quarter.

The consensus estimate was for 50 cents.

As of 6/30/12, the net interest margin was 3.96%; the efficiency ratio was at 56.1%; the tangible equity to tangible assets ratio was 8.09%; the Tier 1 leverage ratio was 8.98%; NPAs to total assets were excellent at .4%; the coverage ratio was 161%; and the return on average assets for the quarter was 1.2%. I liked this report considering the challenges faced by banks in the current low interest rate environment and increased federal regulations.

Bought 50 CBU @ 23.18. I sold my highest cost shares at $26.82 (December 2011)

Community Bank System rose 32 cents in trading yesterday to close at $26.86.

3. MBVT (own: Regional Bank Basket Strategy): Merchants Bancshares reported second quarter net income of $3.74 million or 60 cents per share, up from 58 cents in the year ago quarter.
The estimate, made by one analyst, was for 57 cents per share

I wanted to highlight one aspect of this report, the extremely low non-performing loans and non-performing assets ratios:

As of 6/30/12, the net interest margin was 3.27%; the efficiency ratio was at 61.02%; the total risk-based capital ratio was 15.85%; the tangible capital ratio was 7.12%; and the return on average assets during the quarter was at .91% (prefer over 1%)

The Board declared the regular 28 cent per share quarterly dividend, with a 7/31/12 ex dividend date.

Merchants Bancshares closed at $27.14. I have bought and sold MBVT and have recently repurchased a 50 share lot. Bought 50 MBVT at $22.9-SOLD 50 MBVT at $26.5; Bought 50 MBVT at $26.25

4. FMER (own: Regional Bank Basket Strategy): FirstMerit reported second quarter net income of $30.6 million or 28 cents per share, up from 27 cents in the 2011 second quarter. 

The consensus estimate was for 28 cents.

As of 6/30/2012, the net interest margin was 3.77%; the efficiency ratio was at 67.21%; tangible equity to tangible assets was 8.01%; NPAs to total assets were .76%; the coverage ratio for non-covered NPLs was at 222.24%; and the return on average assets for the quarter was .84%

I recently pared my position in FMER by selling my highest cost shares. Sold 50 FMER at $17.3 I currently own 80 shares bought in the open market, plus reinvested dividends. Added 50 FMER at 16.18; Bought 30 FMER at 11.35

FirstMerit closed yesterday at $16.17, unchanged for the day. The dividend yield at that price is slightly under 4% according to Marketwatch.

5. STL (own: Regional Bank Basket Strategy & own 200 of the TP STLPRA): Sterling Bancorp reported second quarter net income of $4.9 million or 16 cents per share, up from 8 cents in the year ago quarter. 

The consensus estimate was for 15 cents per share.

The capital ratios were good:

As of 6/30/12, the net interest margin was 4.04%; and NPAs to total assets were excellent at .28%, the coverage ratio was 377%.

Currently, my only significant concern about STLPRA is the possibility that Sterling will elect to redeem it. Par value is $10.

I have bought and sold STL Bought 50 STL at 6.58-Sold STL at 10.5 I repurchased a small lot recently. BOUGHT 88 STL AT $8.98

I have bought and sold the TP on many occasions and currently own 200 shares in the ROTH IRA.

STL Quote: Sterling Bancorp
STLPRA Quote: Sterling Bancorp Trust I 8.375% Cum. Trust Pfd. Secs., STL.PA (CALLABLE NOW AT $10 PLUS ACCRUED INTEREST)

6. Redemption Proceeds Received Yesterday for Three BAC Trust Preferred Securities: Three separate Bank of America Trust Preferred securities were redeemed from my accounts yesterday. Two were 50 share lots in the $25 par value exchange traded TPs KRBPRD and KRBPRE.  The KRBPRD shares were purchased in October 2010. I also lost one $1,000 par value TP that was purchased last October. All of the foregoing were originally issued by MBNA Capital and became BAC obligations it acquired MBNA. I made a small profit on the $1,000 par value bond, and was close to broke-even on the exchange traded bonds. The problem with these redemption is the lack of income alternatives for reinvestment. All of the foregoing securities were yielding over 8% at my cost.

This is a snapshot taken from my main taxable account showing 2 of the 3 redemptions:

As shown in this snapshot, the MBNA Capital Series A $1000 par value TP was redeemed at a slight premium (102.07) to its par value (100) in accordance with the prospectus. Bought 1 MBNA Capital Series A 8.278% TP at 94.5 Maturing 12/1/2026

I will add the snapshot showing the redemption of KRBPRE out of the ROTH IRA later today. Vanguard is a day behind Fidelity in making those kind of entries.

7. Bought Back Terex at $14.425 Yesterday (Lottery Ticket Basket Strategy)(see Disclaimer): I knew that Terex was going to report earnings after the close yesterday. The consensus estimate was for $.49 on $2.05 billion in revenues. Before the release of this report, the consensus estimate for 2012 was at $1.76 and $2.71 in 2013. The stock seemed cheap to me at about 5.32 times estimated 2013 earnings. Another reason for buying it was the positive report issued earlier this week by Caterpillar. The shares continued to slide after my purchase yesterday and closed at $14.11.

I was able to spend more than $300 due to prior realized gains on this stock, consisting of two 30 share trades:

2011 TEX 30 Shares +$116.38

2012 TEX 30 Shares +$176.98

Total Realized Gains TEX Shares: $293.36 What do you expect with 30 share flips? It looks good to the OG who never frets about such purchases. 

The prior gains allow me to buy up to $593.36 of Terex stock. It would be a understatement to say that our LB is a stickler about its rules. I sold the LT Dole to make room for Terex. Another rule now applicable to LT buys is the total amount invested can not exceed the total realized gains for this strategy.

Most of those rules deal with risk management. One way to control risk is by the amount of the investment. Another way, among many, is to avoid buying an entire position all at once when the market is in an Unstable Vix Pattern, as now.

Confirmation of Terex buy showing the amount was within the LT limit:

I also own 1 Terex 2017 senior subordinated bond. Bought: 1 Terex 8% Senior Subordinated Bond Maturing on 11/15/2017 at 96.947 (August 2011). I discuss Terex in that post and in the posts discussing my prior 30 share purchases:

Bought 30 TEX at $13.59-Sold 30 TEX at $18
Bought 30 of TEX at $12.68-LT-Sold LT TEX at $19.11

Profile | Reuters.com

Terex announced after the close yesterday better than expected results.  Income from continuing operations was reported at $83.6 million or $.75 per share on net sales of $2,011.5 billion. The company ended the quarter with $841.5 million in cash and cash equivalents. The company raised guidance for 2012 to $1.95 to $2.05.

Before the Near Depression, Terex common shares hit $90 in 2007: TEX Interactive Chart 

Apple/Preferred "Stock" Funds/Junk Bond Ladder Table/Sold 100 BAM-A:CA at 34.06 CADs/Sold 30 DOLE at $10-LT Category/ Earnings: GE, FNB, WASH, FIBK, TRST

Reuters reported yesterday that EU officials have come to the conclusion that Greece will need more debt "restructuring", a euphemism for debt default. Is this surprising to anyone?

The Apple miss last night might cause more angst today than Greece and Spain. Apple reported net income of $9.32 per share, well below the consensus estimate of $10.35.   Bloomberg Reuters The company also issued downside guidance for the current quarter, estimating diluted earnings per share of "about $7.65". Press release The fiscal 4th quarter consensus estimate was for $10.22.

Maybe it is time to be more than a little bit worried.

Off hand, I do not recall John Sununu making an accurate statement. I am confident that he must have done so at some point in his life. Perhaps, his name is John Sununu and he is telling the truth about that claim.

Sununu is just one of those politicians who finds it far easier to create their own reality rather than to discover it through learning. The reality that Sununu creates is one that confirms or advances his ideology, a standard personality quirt for True Believers. It is hard to be factual when "the cause" is far more important than accuracy.

Recently, Sununu claimed that Obama had outsourced the major portion of the U.S. space program to the Russians. FactCheck.org did more than label that statement as false, referring to it as other worldly. It was the Bush Administration that made the decision to retire the shuttle in 2010 and purchase crew transport from the Russians. NASA - Statement of NASA Administrator Michael Griffin on Aug. 18

Sununu recently said that he wished Obama "would learn how to be an American" StarTribune.com To be a real Amerian, we must learn to be like Rush Limbaugh or Sarah Palin.

Afinitor, a cancer drug from Novartis, received FDA approval. Bloomberg The drug traces its origin to bacteria found in Easter Island's soil, the place of the strange and inexplicable stone monoliths. RB wants to travel to the Easter Islands and eat some of the dirt.

Preferred Stock ETFs:

Two new preferred stock ETFs have been launched. One new one is an offering from Global X Funds. This fund will own global preferred shares. The symbol is SPFF.  The other is an offering from Market Vectors that includes preferred stocks excluding financials. PFXF (gross expense ratio .52% with .12% waived through 9/1/13) Both of these ETFs are discussed in a recent Morningstar article.

I recently bought back shares in PGX, which is owns U.S. preferred stocks. Bought in ROTH IRA: 100 PGX at $14.68 and 50 IYLD at $26.06 (expense ratio .5%, 141 holdings)

The largest preferred stock fund is the offering from iShares, with over $9 billion in assets. iShares S&P U.S. Preferred Stock Index Fund (PFF) (expense ratio .48%, 282 holdings) I do not own that one directly. PFF does have close to a 15% weighting in a fund of funds that I do own, iShares Morningstar Multi-Asset Income Index Fund (IYLD).

A discussion of preferred stock closed end funds can be found at Morningstar.

Most articles written about preferred stock funds fail to distinguish equity preferred stocks from trust preferred securities. This indicates to me a lack of understanding about the topic.

One downside to the preferred stock funds is that many trust preferred securities are being redeemed by large banking institutions due to financial reform which phases out their use as Tier 1 equity capital starting on 1/1/13. Banks with less than $15 billion in assets as of 12/31/09 can continue to count those securities as part of Tier 1 capital.

Other financial journalists also do not apparently recognize, or do not mention  that these funds contain exchange traded senior bonds and European hybrids (IND, INZ, AEV, IGK, AEF, etc.) which are in effect junior bonds (though most pay qualified dividends under U.S. tax laws).

By way of example, the preferred "stock" CEFs will generally contain several of the following senior exchange traded bonds (the electric utilities bonds which are referenced below are First Mortgage Bonds). The links provided below are to a SEC filed prospectus.

GSF:  Goldman Sachs 6.125% senior bond maturing in 2050
GEJ: General Electric Capital 6 % senior bond maturing in 2047
GEG: General Electric Capital  6.05% senior bond maturing in 2047
GER: General Electric Capital  6.45% senior bond maturing in 2046
CTQ: Qwest Corp.  7.375% senior bond maturing in 2051
CTX: Qwest Corp. 7% senior bond maturing 2052
CTW: Qwest Corp. 7.5% senior bond maturing 2051
GSJ: Goldman Sachs  6.5% senior bond maturing 2061
GMA: GMAC 7.3% senior bond maturing in 2031
RJD: Raymond James 6.9% senior bond maturing in 2042
UZA: United States Cellular 6.95% senior bonds maturing in 2060
KFH: KKR Financial 8.75% senior notes maturing in 2041
EAA: Entergy Arkansas 5.75% senior mortgage bond maturing in 2040
EDT: Entergy Texas 7.85% senior mortgage bond maturing in 2039
EMZ: Entergy Mississippi  6% senior mortgage bond maturing in 2051
ELB: Entergy Louisiana 6% senior mortgage bond maturing in 2040
PFX: Phoenix Insurance 7.45% senior bond maturing in 2032
AFC: Allied Capital 6.875% senior bond maturing in 2047
ARN: Ares Capital 7% senior bond maturing in 2022
ARY: Ares Capital 7.75% senior notes maturing in 2040
OSM: SLM Corp. CPI Floater maturing in 2018-Prospectus
TDE: Telephone and Data 6.88% senior note maturing in 2059
TDJ: Telephone and Data 7% senior note maturing in 2060
CCS: Comcast 6.625% senior note maturing in 2056
CWHN: Commonwealth REIT 7.5% senior note maturing in 2019
SFB: Stifel Financial 6.7% senior note maturing in 2022
MLG: Met Life  5.875% senior note maturing in 2033

The foregoing is not meant to be a compressive list. The selection will vary among the funds. I would emphasize the long maturities of most of those notes. I own none of them individually. I have owned in the past OSM, ARY and CWHN.

CommonWealth REIT priced $175 million of 2042 senior maturing at a 5.75% yield. I own the common shares which yield over 10%. CommonWealth REIT

UPS cut its 2012 earnings estimate to $4.5 to $4.7 per share, down from April's guidance of $4.75 to $5. I thought that was significant and consistent with other data indicating a worldwide economic slowdown.

1. SOLD 100 BAM A:CA at 34.06 CADs Last Friday (see Disclaimer): I did not realize much of a profit on those shares.

2012 BAM 100 Shares +$171.7

This brings my Canadian Dollar stash to over 6 thousand.

I wanted to redeploy the proceeds into a higher yielding security, possibly adding to my existing 500 share position in Diversified Monthly Income ETF Overview - iShares Canada. It is an ETF that owns other ETFs with an approximate 60% weighting in bonds and 40% in stocks. That security is traded on the Toronto exchange. iShares Diversified Monthly Income Fund, XTR- (TOR)

XTR HOLDINGS

XTR was ex dividend yesterday for its monthly distribution.

Another possibility would be to add to my existing 500 share position in iShares 1-5 Year Laddered Canadian Government Bond ETF or the 300 share position in  iShares 1-5 Year Laddered Canadian Corporate Bond ETF. So I am moving this sector strategy to more defensive investments.

For all three of the foregoing referenced Canadian ETFs, dividends are paid monthly to me in Canadian dollars after the 15% withholding tax deduction.

Brookfield Asset Management Inc. Cl A, BAM.A (TOR) closed at 33.17 CADs yesterday.

2. General Electric (own over 500 shares): General Electric reported second quarter earnings of 38 cents per share, excluding items, on a 2.5% increase in revenues to $36.6 billion. The consensus was for 37 cents on $36.8 billion in revenues. Earnings were adversely impacted by currency exchange. The industrial segment reported revenues of $25 billion, up 9%, with 10% organic growth. Cash generated from operations was $6.8 billion. GE Capital paid a $3 billion dividend to GE during the quarter. After that payment, GE Capital's Tier 1 common equity ratio was 10.1%. The company said that it was confident in its previous projection of double digit 2012 E.P.S. growth. GE raised its operating cash expectations to $17-$19 billion based on the resumption of GE Capital's dividend.

General Electric fell 12 cents in trading yesterday to close at $19.98. The quarterly dividend is paid today, and I am continuing to reinvest it. 

3. FNB (own: Regional Bank Basket Strategy): F.N.B. Corporation reported second quarter net income of $29.1 million or 21 cents per share, up from $22.4 million or 18 cents per share in the year ago quarter.

As of 6/30/12, the net interest margin was 3.8%; the efficiency ratio was 57.74%; NPLs to total loans stood at 1.22%; the coverage ratio was at 104.89%; and the return on average assets for the quarter was 1% and 1.12% on average tangible assets.

The consensus estimate was for 20 cents per share

After buying and selling shares, I am left with my lowest cost shares purchased at $7.8. Added 50 FNB at $7.8 That is a typical trading pattern.

F.N.B. closed at $10.85 yesterday. At that price, the dividend yield is about 4.42% according to Marketwatch. I have never reinvested the dividend.  

4. WASH (own: Regional Bank Basket Strategy): Washington Trust reported second quarter net income of $8.7 million or 53 cents per share, up from 46 cents earned in the year ago quarter.  

The consensus estimate was for 51 cents per share.

As of 6/30/12,  net interest margin was at 3.3% (up from 3.21% in the 2011 2nd quarter); NPAs stood at .62% of total assets; the Tier 1 risk-based capital ratio was 11.9%; the tangible equity to tangible assets ratio was 7.66%; and the return on average assets for the quarter was 1.16%

I have sold 50 of the 100 shares originally bought at $15.26. Bought 100 WASH at $15.26-Sold 50 of 100 WASH @ 22.44 WASH is currently paying a quarterly dividend of 23 cents per share. At a total cost of $15.26, the dividend yield at that rate would be about 6% annualized. I am keeping the remaining 50 shares primarily for the dividend yield and the dividend growth. I booked a profit of $347.03 in 2011 (see snapshot at Stocks, Bonds & Politics: REGIONAL BANK BASKET STRATEGY GATEWAY POST)

I have examined the historic dividend rates since 1986, available at The Washington Trust Company - Dividends/Stock Splits. There have been no dividend reductions since 1991, when the quarterly rate was slashed from $.0652 to $.0395. That was during a recession and a banking crisis. The bank started to raise the dividend again in 1993 and has continued to raise it every year with the exception of 2010 and 2011, when the quarterly rate was kept at 21 cents. In 1993, the annual rate was at 15.8 cents per share and had grown to 84 cents per share in 2010. 

Washington Trust Bancorp closed at $24.47 in trading yesterday.

5. FIBK (own: Regional Bank Basket Strategy): First Interstate BancSystem reported second quarter net income of $12.2 million or 28 cents per share, up from $9 million or 21 cents in the year ago quarter. 

The consensus estimate was for 28 cents per share.

As of 6/30/12, the net interest margin was 3.74% (down from 3.68% in the year ago quarter); NPLs to total loans were high at 4.13% (though down from 6.15% in the 2011 2nd quarter); the coverage ratio was 59.65%; tangible book value per share was at $12.63 (net tangible at $14.03); tangible common equity to tangible assets was at 7.67%; the Tier 1 common capital to total risk weighted assets was 11.51%; and the return on average assets annualized during the quarter was .71%.

First Interstate BancSystem Inc. Cl A rose 33 cents in trading yesterday to close at $13.87.

6. TRST (own: Regional Bank Basket Strategy): TrustCo reported second quarter net income of $9.1 million or $.097 per share, up from $7.8 million in the 2011 second quarter.

The consensus estimate, made by two analysts, was for 10 cents per share.

As of 6/30/12, the net interest margin was 3.19% (down from 3.42% in the 2011 2nd quarter); the efficiency ratio was at 52.24%; the NPLs to total loans stood at 2.01%; the coverage ratio was at 93.3%; tangible equity to tangible assets was 7.9%; and return on average assets for the quarter was at .83% (prefer over 1%).   

I have ceased reinvesting the TRST dividend. I am near break-even on my TRST shares.

Trustco Bank fell one cent to close at $5.51 yesterday.

7. Sold 30 of Dole at $10 Last Friday (Lottery Ticket Basket Strategy)(see Disclaimer)

Dole announced in its earnings release that it was considering the sale or spin-off of its packaged foods business. The shares rose $1.32 on the news to close at $10.1 last Friday, and I took that pop as an opportunity to sell my 30 shares.

2012 DOLE 30 Shares +$33.89

I am also building up my "capacity" to buy other LTs. The total amount devoted to lottery tickets can not exceed the total of my realized gains. By selling the 30 DOLE shears, I increase my realized gain number to $10,785.38 and decreases my exposure number to  $10,426.47, thereby giving me $358.91 in capacity for a new purchase. Lottery Ticket Strategy: New Gateway Post

For the second quarter, the company reported GAAP income from continuing operations of $66 million or 74 cents per share.

Bought 30 DOLE at $8.34-Lottery Ticket (January 2012)

Dole Food fell 20 cents yesterday to close at $9.71.

8. Junk Bond Ladder Table (Junk Bond Ladder Basket Strategy): I will periodically post a table showing the income, appreciation potential and maturity schedules of bonds included in my very high risk junk bond ladder strategy. I have not included the three bonds currently in default. One of those, a senior AMR bond, has been rising in value over the past few weeks, narrowing my loss on that one bond position to around $300. The other two bonds in default are probably hopeless, the EK 2013 senior unsecured bonds. Of the ones not yet in default, I am most concerned about my Travelport (3), Edison Mission (1), Colt Defense (1) and  AGY (1) bonds.

While this is a high risk strategy, I do have a well diversified basket of junk bonds. The goal is to break-even on the bonds while harvesting their high yields without suffering a net loss. That will be difficult to do. I have been actively trading them, and have realized a significant number of gains that offset my losses so far at least. Realized Gains Junk Bond Ladder Strategy

The last table was published in March 2012: Junk Bond Ladder Table (3/14/12 Post)

When Does a Capital Treatment Event Occur?/NXY/SOLD 50 SYBT at 24.31/ Bought 50 VFH at $31.16/Earnings: SYBT PBCT CCNE

China seems to have the same objective as our RB when it comes to Canada. CNOOC will acquire the Canadian energy company Nexen (NXY) for $27.5 (USDs) per share in cash, a 66% premium to NXY 20 trading day volume-weighted average share price. I do not own the common shares. For a time, I owned NXYPRB, an exchange traded junior bond issued by NEXEN. Bought 50 NXYPRB @ 25.15-Sold 50 NXYPRB at $25.5. This one has a 7.375% coupon on a $25 par value, with a maturity in 2043. It can be called now. Prospectus Supplement Those shares declined 28 cents to close at $25.3. Nexen Inc. 7.35% Sub Notes 2043 I suspect that the decline was due to some investors pricing the greater potential of an early call.

Normally, I would not buy a bond with a maturity after 2039, sort of an arbitrary cut-off date on the interest risk issue. For the OG, the option of holding a bond maturing after 2039 to maturity is not a realistic one. On many occasions, an exchange traded bond will be delisted when the issuer is acquired by another company. Another possibility is that CNOOC will call the bond after the merger. CNOOC has a higher credit rating than NEXEN and would have no difficulty in refinancing this bond at a lower rate.  CNOOC sold some ten and thirty year bonds back in April that were rated Aa3 by Moody's. The Nexen 2043 junior is rated junk at Ba1 by Moody's.

Nexen's common stock is owned by a Canadian energy ETF that I own. I am familiar with two Canadian energy ETFs. The Guggenheim Canadian Energy Income ETF had a 1.33% weighting in NXY. I own shares in XEG, an offering by IShares Canada that had a 3.43% weighting in NXY. I own 200 shares of that ETF, bought on the Toronto exchange, primarily for diversification and potential long term gains for this sub-sector of energy stocks. I have a positive view of Canada's energy stocks over the long term, meaning the next ten or more years. I have some ENY in family member accounts and in a testamentary trust for the same reason.

I thought that Penn State football was extremely fortunate to avoid a death penalty, lasting for at least one year. I remember that SMU football was given the death penalty after recruiting violations. The Tulane University President shut down the Tulane basketball program after a 1985 point shaving scandal.

Basically, at my core, I am a conservative, admittedly an old-fashioned one who actually believes in the Bill of Rights.

Are the values expressed in the First Amendment hard core, immutable conservative values?

The First Amendment is not a grant of rights but is instead a restraint on the government interfering with the free exercise of those rights that the founding fathers believed naturally belong to human beings (natural rights, John Locke and Thomas Hobbes)

The United States Constitution - The U.S. Constitution Online - USConstitution.net

You would think that would have some appeal to conservatives, a point to keep in mind when I later discuss a recent incident in Tennessee.

I am not the kind of conservative who would be welcomed in the modern day GOP. The vast majority of republican politicians, particularly those inhabiting the House of Representatives, are not conservatives, not even close, but something else entirely. The reactionary forces, including racists, have always called themselves conservatives. Every racist that I have known referred to themselves as conservatives.

Many republicans would probably be best characterized as reactionaries with rigid ideological beliefs formed without much effort, if any, to learn accurate information. Due to rigidity of their beliefs and a complete lack of interest in challenging them, they are incapable of learning anything worthwhile from experience. Any information inconsistent with the belief is rejected as false simply because it is inconsistent. Why learn anything, when truth is embodied in about ten cliches, probably less than that? "Government is the problem", just by way of example. That sounds like it might contain a germ of a thought, more like a single cell organism struggling to form a thought. 

In the last gubernatorial election in Tennessee, I voted for the republican Bill Haslam, viewing him to be closer to a traditional republican than other republicans politicians normally viewed as unenlightened and ignorant extremists. Senator Corker, who is up for re-election this November, is viewed as a non-crazy traditional republican, and I will vote for him. I also voted for Lamar Alexander, the other Republican senator from Tennessee. Michele Bachmann: Sarah's Soul Sister (October 2008). I will not vote for Mitt, viewing him as a pathological liar with no core principles, other than a desire to say whatever was necessary to secure the GOP nomination and to become President.   Obama is the default choice-again. At least the republicans are not likely to nominate a Know-Nothing Sarah clone, someone like Michael Bachmann or my representative, as their V-P. 

Now, in my usual roundabout way, I am now going to discuss the reason for bringing up the Bill of Rights today.

Recently, the TBs in Tennessee have gone into apoplexy after the Republican Governor's administration hired a well qualified attorney, who happens to be a Muslim, to be the International Director for the Tennessee Department of Economic and Community Development. The lady in question, who was born in Waverly, Tennessee (hardly a hot bed for liberalism), graduated from Vanderbilt and also received a J.D. from Vanderbilt. She clerked for a judge on the U.S. Sixth Circuit Court of Appeals. She was a White House fellow and worked for many years with a prestigious international law firm.  Republicans were appalled and took out an ad in the Nashville, Tennessean claiming that Haslam had abandoned conservative republican principals, which apparently does not include freedom of religion, one of the core conservative values embodied in the Bill of Rights. Haslam right to hire Muslim | timesfreepress.com

{Really, only the Second Amendment, as properly interpreted by the current Court, is needed to preserve our liberty anyway. Might as well forget about those other liberal rights such as freedom of religion except for Southern Baptists and other proper Christian denominations of course, maybe even the Methodists too. Everybody needs to just arm themselves with as many automatic weapons as they can afford to buy, yeah man, carry two or three concealed weapons, mount a machine gun on the top of our homes, possibly even a grenade launcher, flamethrower and mortar in the garage will be necessary to protect our liberty from Obamacare-with all of those weapons purchased by mail order, of course}

The republican chapter most up in arms about the Haslam administration hiring a gay person and a Muslim is of course the one from Williamson County Tennessee. Hardly surprising to anyone in the know. HQ is located in the most republican part of that county, the SUV Capital of the World.

While I have not conducted a poll of all republicans in Williamson, I believe that most of them are birthers based on my large sampling on that issue. Their state representative, Glen Casada, joined a lawsuit seeking to challenge Obama's constitutional right to be President, being a foreign born Muslim and all that other bad stuff too. 

Many voters realize that Gore lost the election to George Jr. in 2000 due to a narrow loss in Florida after the Supreme Court stopped the recount. It may not be generally known that Gore really lost the election because he failed to carry Tennessee, his home state and where he had been elected as a U.S. Senator and Congressman before becoming Vice President under Clinton. New York Times The Tennessee loss was a narrow one. There has never been any serious question about the accuracy.

If Gore had carried Tennessee, he would not have needed Florida to win. He would have been President, and there would have been no Iraq War in my opinion. In the 2000 election, Bush received 38,901 votes in Williamson County and Gore received 18,745 votes. I voted for Gore since I did not believe George Jr. was capable of exercising good judgment based on securing the best and most reliable information, a common affliction among TBs who form opinions easily based on misinformation consistent with their preconceptions.

TBs can be anyone, including liberals and Democrats. It is more of a tag that defines an unwillingness to sift through information from a variety of sources, particularly original source material, and to distinguish the reliable from the unreliable and the material from the immaterial. It is immaterial for non-TBs whether the information fits into previously fabricated belief systems, including those held over an extended period of time. The first inquiry is whether the evidence is material, relevant and reliable.  Phrases applicable to non-TBs would include inquisitive, thoughtful, analytical, discerning, and open-minded.

1. Capital Treatment Events and TP Redemptions: When Does a Capital Treatment Event Occur Within the Meaning of the Prospectus: Apparently, the banks believe that a recent notice of proposed rulemaking, published by the Federal Reserve on June 7, 2012, is sufficient to trigger a "Capital Treatment Event" within the meaning of a prospectus. An example of that belief is expressed by TCF Financial when it announced the redemption of its trust preferred. A similar statement was made by Citigroup and in a June 8th press release issued by SunTrust. Their legal beagles seem to be on the same page, but would a court agree when confronted with that argument being used to avoid a make whole payment?

I would be interested to see the legal authority supporting that position, when the rule does not start the phase out of TPs as Tier 1 equity until 1/1/13. The issue is "when" does a Capital Treatment Event occur within the meaning of a given Prospectus. That could become an important issue when a bank redeems a TP with a make whole provision in July 2012, as JPM did, and attempts to avoid the make whole provision by invoking the Capital Treatment Event exception. 

I am not questioning that avoidance when the redemption occurs after 1/1/13, provided the TP would no longer qualify under the phase out rule. Some TPs could be considered Tier 1 equity capital through the remainder of 2013, all of 2014 and even into 2015. Is the opinion of the bank's attorney binding on the court when that attorney is making a mixed law and fact judgment that inures to the benefit of his client and harms other parties?

I am just posing a few questions, rather than providing an answer on this one. I have posited the need for legal research on this timing issue in connection with the GJN redemption. If the redemption of that security is going to be litigated,  then the plaintiffs might as well question everything touching that redemption, including the amount of JPM's payment to the trust. The Egregious Swap Termination Fee Paid to the GJN Swap Counterparty

Added 8/4/2012: I discuss this issue in more detail at the end of a 8/3/12 post: GJN-Wells Fargo. The definition of a "capital treatment event" can be found at page A-6 of the GJN Prospectus. JPM only has a 90 day window to redeem after a capital treatment event and avoid the make whole payment. That window starts when JPM makes a "reasonable determination" that there is more than an insubstantial risk that it will no longer be able to treat the liquidation amount of the TP as Tier 1 equity capital. 

2. Sold 50 SYBT at $24.31 Last Thursday (Regional Bank Basket Strategy)(see Disclaimer): I was not impressed with the earnings report. S.Y. Bancorp Reports The bank reported an E.P.S. of 44 cents per share, up from 43 cents in the year ago quarter.

Since I had a good percentage profit over a relatively short time span, I decided to harvest the gain. I will also receive one quarterly dividend:

2012 SYBT 50 Shares +$107.58

After this report, Raymond James downgraded the stock to market perform from outperform, apparently based on valuation. That report had no impact on my sell decision.

3. Bought  50 of the ETF VFH at $31.16 Last Thursday (see Disclaimer): After selling some small positions in my regional bank basket, including the one discussed above, I decided to buy back the Vanguard Financial ETF (VFH) as a parking place for the proceeds. By buying this ETF in my Vanguard brokerage account, I do not pay a brokerage commission.

Sponsor's webpage: Vanguard - Financials ETF - Overview The expense ratios is listed at .23%.

VFH has over 500 securities compared to 80 stocks owned by the SPDR Financial ETF (XLF) The later ETF is limited to financial stocks included in the S & P 500, whereas VFH will include mid and small cap companies in this sector. Both ETFs would include banks, insurance companies, REITs, and investment management companies (e.g. TROW). Both ETFs include Berkshire Hathaway.

I thought that it would be useful just to compare the weighting for the top 10 holdings of each ETF:

VFH Top 10 Holdings as of 6/30/12

XLF TOP 10 as of 7/18/11

I have previously bought and sold VFH twice:

2011 VFH 100 Shares +$403.28

Sold 100 of the ETF VFH at 34.88 (February 2011). I subsequently became less brave, buying just 50 shares, and disposing of them shortly thereafter for a smaller gain:

2012 VFH 50 Shares +$92.47

Sold 50 VFH at $31.05 (February 2012)

Vanguard Financials ETF declined 27 cents in trading yesterday to close at $30.35.

4. PBCT (own: Regional Bank Basket Strategy): People's United Financial reported second quarter net income of $64.8 million or 19 cents per share, up from $51.1 million or 15 cents in the year ago quarter. During the second quarter, PBCT repurchased 4.5 million shares at a total cost of $54 ($12 per share). Operating earnings were reported at 20 cents per share.

The consensus estimate was for 19 cents.

PBCT has a network of 416 branches in Connecticut, New York, Massachusetts, Vermont, New Hampshire and Maine.

As of 6/30/12, the net interest margin 3.95% (down from 4.15% a year ago); the efficiency ratio was at 61.5% on a consolidate basis (62.4 for bank); originated NPLs were 1.67% of total originated loans; he tangible equity to tangible asset ratio was 11.5%; the total risk-based capital ratio was 15.6%; tangible book value was $8.76 per share; operating return on average assets was .97%; and the return on average tangible assets was 1.01%.

PBCT was a recent add to the regional bank basket strategy: Bought 100 PBCT at $11.47

People's United Financial closed at $11.37 yesterday, down 14 cents. According to Marketwatch, the dividend yield at that price is 5.63% with the next ex date on 7/30/12.

5. CCNE (own: Regional Bank Basket Strategy): CNB Financial Corporation reported net income of $4.3 million or $.35 per share, up from .32 in the year ago quarter. For the quarter, the return on average assets was 1.01%.

The consensus estimate was for 34 cents, with only two analysts contributing to that number.

As of 6/30/12, the total risk based capital ratio was 14.96%; the Tier 1 based ratio was 13.7%; the tangible equity to tangible assets ratio was 7.53%; NPAs stood at 1.08% to total assets; and the net interest margin was 3.47%.

Bought 50 CCNE at $11.06 (June 2010)

CNB Financial closed at $16.44 yesterday. 

EK/Greece/Rebate Received on 2011 Health Insurance Premiums due to Obamacare/Sold 50 FCBC at 15.54/Sold 105+FTE/MS/SVU Debt Downgrade/Intel RNST TXI

I published a post over the weekend, a rare Saturday morning special, to highlight the importance of re-examining synthetic floater positions in light of the recent GJN redemption, just the latest example of Wall Street assholes behaving badly. Sold 50 JBK at $22.75/Reassessment of Current Synthetic Floater Positions

Needless to day, the daily readers of this blog, about 25 dedicated souls (occasionally losing one or two on a comment about republicans), already know that I do not hold Wall Street's pathological greed mongers in high regard. Using the phrase "pathological greed mongers" may have unintentionally given away my true opinion of them.

When paying them a complement, or as much of a complement as I can muster, I will simply call them Masters of Disaster, so they are acknowledged to be masters of something, whose main preoccupation in life is to transfer as much wealth to themselves regardless of the consequences to the rest of the world. Sometimes, they are able to accomplish their objective with clever obfuscations that no one understands, until it is too late, but more frequently their actions reflect a lack of common sense and good judgment probably enhanced by their insatiable greed and personality pathologies.

I do not think that the public or the press have given the Wall Street Masters of Disaster as much credit as they deserve for engineering the Near Depression and the ongoing debt crisis, likely to have negative repercussions for several more years. We have a long way to go before exiting this dark tunnel.

Without their tireless efforts at self enrichment, and their "inventions" of satanic instruments like CDO's squared (Recipe for Disaster), the housing bubble would not have been possible. You have to admire their cunning in being able to line their own pockets with billions and then emerging unscathed and considerably richer after causing so much misery to others.

And, it is totally untrue that the OG has ever recommended rounding them up, tattooing some cartoons about the prophet on most of their body, and then dropping them buck naked into the tribal region of Pakistan, letting the Lord make the appropriate decision about their fate. Possibly, the RB made such a suggestion once, though who can take seriously anyone who ruminates about its plans to acquire Canada and renaming it Northern Tennessee.

At least there will be some criminal prosecutions connected with the LIBOR price fixing scandal. Reuters I guess that conduct crossed some kind of line for the authorities, too analogous to simple bank robbery to ignore.

The market jitters last Friday had a usual source. Spain's ten bond yield rose to well over 7% as the Valencia province was reported in need of a rescue from Spain. Bloomberg

Based on a story appearing in a German magazine, several news organizations were reporting last night that the IMF will not be providing additional financing to Greece.  Bloomberg  Reuters MarketWatch If this happens, Greece may be headed soon toward another default on its debt, unless the EU countries want to plough more dough into this lost cause. Greece's bloated public sector was financed for decades, not with taxes or wealth generated by the Greeks themselves, but by borrowing funds from foreigners, using the government as a funnel for the delivery of foreign capital to the citizens.

The EUR/USD conversion rate is moving closer to 1.2, marking a five year low in the Euros value against the dollar. At this level, I will start examining potential purchases of European stocks using my USDs. To the extent the shares are lower in the host market, I receive even more potential value for my money. The currency exchange is going to have the same impact whether I buy the ADRs or the ordinary shares, except I would include a currency conversion charge to convert by USDs into Euros to buy in the host market and would also pay a higher brokerage commission. While I have a stash of Canadian dollars already available, I do not own any Euros. Consequently, I would want to limit my search to European companies that trade on U.S. stock exchanges. International Trading and Currency Risks; Item # 6  Swiss Franc & Roche ADR; Item # 2  Bought 50 of the ADR NABZY at $24.55; Strong U.S. Dollar + Weak Market=Time to Start Looking Overseas. Without dwelling on the obvious, Europe presents both risks and long term opportunities.

The general idea in investing is to buy low and sell high, no doubt easier said than done. It is important to keep in mind that currency exchange is one reason for a security to decline in price, thereby making it more attractive. For a U.S. investor, the best time to look overseas is when the USD has risen significantly in value against a foreign currency such as the EURO. The risk is that the USD will continue to rise in value.

On the EUR/USD conversion rate, I ask myself this question. Is Europe or the U.S. moving toward more fiscally responsible spending and taxation policies? Has the U.S. even made a baby step to bringing its out of control budget deficits into a range of fiscal sanity?  I thought that Stephanie Pomboy had some interesting comments about the USD and America's fiscal and monetary policies. Barron's Interview

However, with negative news flow from Europe continuing virtually on a daily basis, I am just looking at some options now.

My cash stash in the main taxable account, earning nothing in a money market fund,  is larger now than at anytime in my life.

I received a 3.4% rebate on my 2011 health insurance premiums paid to BlueCross due to Obamacare. As part of the Affordable Care Act, the insurance company had to pay out at least 80% of the premiums received by it for health care services. If the amount is less than that number, the percentage difference has to be refunded.

S & P cuts its rating on SuperValue bonds, which would include those originally issued by Albertsons, to B- from B, TEXT-S&P. I recently increased my risk ratings for SVU bonds: SuperValu's Earnings and Debt Problems-Raising Risk Ratings for SVU Bonds

Morgan Stanley reported second quarter earnings of $564 million or 29 cents per share, but those results included positive revenues of $350M related to changes in MS's debt-related credit spreads and other credit factors (Debt Valuation Adjustment). Tangible book value per share was reported at $31.02. As of 6/30/12, the Tier 1 capital ratio was approximately 13.5%. Due to the firm's credit downgrades, it had to post $2.9 billion in additional collateral. This report is discussed in a  Bloomberg article.

I do not own the common shares, but I do own 250 shares of the equity preferred floating rate preferred stock MSPRA.

CommonWealth REIT is ex dividend tomorrow for its quarterly distribution. I own 130 shares. Goldman Sachs' floating rate equity preferred stocks are also ex dividend tomorrow. I own 50 shares of both GSPRA and GSPRD. (Note: I corrected the dividend date in the original post from 7/23 to the correct one which is tomorrow, 7/24)

Eastman Kodak lost its patent case against Apple and RIMM at the ITC.  WSJ NYT This will call into question whether EK can even secure enough funds from its upcoming patent sale to emerge from bankruptcy. The ITC held that a key EK patent was invalid. The RB was responsible for buying two 2013 senior unsecured EK bonds. Most likely, I will take a tax loss on one of them before the end of this year. I may keep the other just to see what, if anything, I get out of the current bankruptcy proceeding. The prospects for any recovery by the unsecured bond owners is dimming.

1. Sold 50 FCBC at $15.54 Last Tuesday (Regional Bank Basket Strategy)(see Disclaimer): I have sold some minor positions in this basket into pops. I harvested a profit in  my 50 share position in First Community Bancshares because the move was almost 25% in a relatively short period of time (12.5 to 15.54= .2432%)

2012 FCBC 50 Shares +$136.08

Bought 50 FCBC at $12.5 (February 2012). I have snapshots of my trades at the end of the Regional Bank Basket Gateway Post linked above.

First Community Bancshares fell 20 cents in trading last Friday to close at $14.87.

2. Sold 105+ out of 205 FTE at $13.4 Last Tuesday (see Disclaimer): I recently discovered that a broker could reduce France's dividend withholding tax from 30% to 15% by applying for "relief at source". Vanguard and Fidelity secured that relief for their customers. It cost $.004 per share or 40 cents for 100 shares to do so. The brokers then collected that minuscule fee from their customers. So, I paid Fidelity 40 cents to secure a 50% reduction in my tax rate. I am more than happy to do so. 

Other brokers will not make that filling. Schwab, for example, told me to go do it myself, if I wanted the lower rate, and it would cost more than the tax for me to do so. See Snapshot  Item # 3 Schwab Response on FTE Withholding Tax. 

I would have cost Schwab $.004 per share which they could have recouped from their customers. dtcc.com.pdf

Ameritrade and Sharebuilder also withheld 30%. I would not fool with making an inquiry to Ameritrade.

I did request information about Sharebuilder's policy on such matters and received the following reply:  

Shareholder Response 

Shareholder does not make  relief at source filings, and advised me that I had the option of claiming a credit for the extra tax.

Staff had to tie LB down from giving the Sharebuilder representative a thirty minute lecture about the difficulties in claiming more than $300 in foreign taxes as a tax credit ($600 for married filing jointly), and Headknocker is over that threshold number.  TaxAlmanac  - Foreign Tax Credit; Form 1116 Instructions for 2011; Publication 514 (2011), Foreign Tax Credit for Individuals;  Seeking Alpha article; Lesson 26 - The Foreign Tax Credit.  

LB already spends laborious hours already filling out Uncle Sam's tax forms every year, and would much prefer keeping the foreign tax payments below the threshold to avoid filling out Form 1116. It is not easy. To accomplish that objective, brokers need to perform a simple service of securing tax relief at the source, where available, which will have the desirable result of lowering the amount needed to be claimed as a foreign tax credit. I would add that the additional tax withheld was not used to buy shares which could make a difference to those who buy in 1000 or more share lots. 

Therefore, since Sharebuilder will not apply for "relief at the source", I sold my position in FTE held at that firm. I will only buy those securities only at Vanguard and Fidelity from this point forward. That would include all companies based in France. 

Since the testamentary trust has an accountant already, who may even like filling out IRS forms, I will keep the FTE shares at Schwab.

I am also keeping my 100 FTE shares owned in a taxable account at Fidelity where only 15% was withheld.  

This sell has nothing to do with FTE, but solely resulted from the broker's refusal to file a document on behalf of its customers to secure tax relief at the source. I sort of understand why Sharebuilder is not set up to do it, but there is no excuse whatsoever for Schwab and Ameritrade.

I bought the shares at $13.17 (April 2012). I was credited with a $100 dividend, of which only $68.01 was used to purchase 5.1445 shares at $13.22, a higher reinvestment price than the one secured by Vanguard. Theoretically, I have a $30 tax credit too. So, I was able to exit the position at Sharebuilder by making a profit on the original and reinvested shares (thus capturing back slightly more in cash than the dividend amount used to purchase those 5+ shares)

I have a target price for possible re-purchase at $12.5 or below. However, the repurchase can only be taxable accounts at Fidelity or Vanguard, both of whom secured the 15% withholding rate.

France Telecom ADS fell 51 cents in trading last Friday to close at $13.11.

3. Intel (own common): Intel reported second quarter GAAP net income of 54 cents per share on revenues of $13.5 billion. The non-GAAP number was 57 cents. The current quarter's forecast was lower than many analysts were expecting. During this last quarter, Intel generated approximately $4.7 billion in cash from operations, paid dividends of $1.1 billion and bought back $1.1 billion in stock.

The shares reacted positively to the earnings release, rising 3.27% on 7/18 to close at $26.21. Since the stock has drifted down since closing at $28.97, adjusted for a dividend, on 5/2/12, INTC Historical Prices. Perhaps some investors were willing to buy some shares after the earnings report and the price decline. My average total cost per share is $17.82 for 273+ shares, see snapshot at Item # 2 Intel. I am no longer reinvesting the dividend. Intel has increased its quarterly dividend from 2 cents per share in 2003 to the current rate of 21 cents. Intel Corporation - Dividend Summary; Item # 6 Common Stock Dividend Growth Strategy

This report is discussed at Bloomberg.

Intel fell 55 cents in trading last Friday to close at $25.51.

4. Renasant (own 155+ Shares: Regional Bank Basket Strategy): Renasant reported net income for the second quarter of $6.345 million or 25 cents per share, one cent better than the consensus, and up from 23 cents in the year ago quarter.

On the day of the earnings release (7/18), the shares rose 26 cents or 1.61% to close at $16.41.

As of 6/30/12, net interest margin was 3.98% (up from 3.76% in the 2011 2nd Q);the return on average assets was just .62% during the quarter (much prefer over 1%); the efficiency ratio was 71.76% (prefer less than 60%); NPLs to total loans was good at 1.25%; the coverage ratio was 149.25%; and the capital ratios were good:

I have traded RNST shares some and currently own 150 shares bought in open market transaction plus reinvested dividends. I have ceased reinvesting dividends.

I sold the 50 share lot bought at $14.91, which was then my highest cost lot using FIFO accounting. I kept the lower cost shares at $13.70 (September 2010). That is a fairly typical trading pattern for this basket strategy. I decided to buy back the shares sold at a higher price for the reasons discussed in Item # 3, Added 50 RNST at $15.85 (March 2011). This was in retrospect a slight mistake since the shares have been trading below that number most of the time thereafter. I thereafter bought another 50 shares at $13.85 on 9/1/11 (total cost of $14.049 with commission). I can not find a blog reference to that add:

I have kept the shares for its dividend, the overall quality of the bank, and its growth through FDIC acquisitions.

After the earnings report, Raymond James upgraded its recommendation to Strong Buy from outperform.

Renasant rose 25 cents in trading last Friday to close at $16.82. The SPDR S&P Regional Banking ETF (KRE) declined by 38 cents to close at $27.

5. Texas Industries (own 1 senior 2020 Bond-Junk Bond Ladder Basket Strategy): TXI reported net income for the Q/E May 2012 of $60.2 million, but "$60.1 million was from asset sales and a joint venture agreement".  The company did break a 10 quarter streak of losses by reporting pre-tax net income of $2.4 after adjusting for the gains.

The company sold some assets during the quarter:

TXI Sells Missouri City Aggregate Terminal 

TXI Sells Package Products Operations

Since I only own 1 bond, I am not going to discuss this report any future. As previously noted, the company eliminated its common stock dividend in October 2011.

The debt is discussed starting at page 51 of the Annual Report for the F/Y ending 5/31/12. Form 10-K At that time, there was $650 million in principal amount outstanding of the 2020 senior note, with total long term debt at $656.949 million.  No amount was drawn at that time on the senior secured credit facility.

Bought 1 Senior Texas Industries 9.25% Bond Maturing 8/15/2020 at 97.5 (July 2011)