BANK PROFITS: POST-CRISIS RECORD

[Pages:2]Monday, August 28, 2017

BANK PROFITS: POST-CRISIS RECORD



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QUARTERLY REPORT FROM FDIC There are a number of major advertiser categories that

have had profitability problems recently, but the banking industry is not one of them--in fact, according to the quarterly report issued by the Federal Deposit Insurance Corporation, the industry's earning were up 10.7% in the second quarter to $48.3 billion, and that's the best quarter since the housing bubble burst a decade ago.

A good part of the gain came from a rise in net interest margin, the difference between what a bank pays in interest to borrow money and what it can get back from lending out that money. That metric rose to 3.22%, up from 3.08%, while non-interest income rose by a percentage point to $66.8 billion. Banks' noninterest expenses rose by 3.3% to $108.6 billion.

American Banker reports that almost two-thirds of the industry saw growth in second quarter net income while only 4% reported smaller profits than in the prior year. The industry was confident enough that it posted a small decrease in reserves set aside for loans that go bad, down $197 million in the quarter as large banks cut back reserves for commercial loan losses.

Smaller community banks as a whole had a good quarter with $5.7 billion in profits, an 8.5% increase over last year's second quarter, as net interest income rose by 8.9% and net interest margin rose 3 basis points to 3.61%. There were, however, some disturbing indications about the smaller banks. James Chessen, Chief Economist for the American Bankers Association, noted that compliance costs helped push 62 smaller banks to merge or sell in just a three-month period and added, "Not a single new bank started this past quarter, which is shocking in a growing economy and drives home the need for Congress to enact common-sense reforms to ease the burden on banks." But FDIC Chairman Martin Gruenberg, while noting his agency has approved six deposit applications in the past ten months, had a different take on the question of new bank formation, saying "The core issue around de novo formation is low interest rates. This post-crisis period has been the longest period of zero or near-zero interest rates in the FDIC's history."

Another sign of concern was an increase in charge-offs, up 11.2% year-to-year, particularly coming from credit card chargeoffs, which rose by 24.5% ($1.4 billion). That was the seventh consecutive quarter of larger losses, with the net chargeoff rate up to 0.48% from 0.45% in the first quarter. Chessen of the Bankers Association however was not worried, saying "Delinquencies in this area have remained near historical lows as consumers have succeeded at keeping debt at manageable levels."

ADVERTISER NEWS The closing of the deal for Amazon to take over Whole Foods Market has been moved up to today, and customers will see an immediate difference - via lower prices. Among the synergistic plans for the two are Whole Foods introducing an Amazon Prime-based loyalty program that will give special deals in stores to Amazon shoppers. A survey recently found 62% of Whole Foods shoppers are

members of Amazon Prime......Ford Motor Credit will change its approval process to make it easier for buyers to get loans from the captive if they have limited credit histories and low credit scores that are a result. As we have reported, losses have been rising causing some lenders such as Wells Fargo to pull back on auto loans, but Ford Credit says it doesn't expect the new system will lead to more losses because it will review more data than it currently looks at......Ulta Beauty has been the superstar of retailing for the last several quarters, and while its most recent quarter wasn't quite up to the incredible numbers it had posted for the last year, other retailers would love to do just half as well. Same-store sales rose 11.6% (down from 14% a year ago), but including stores opened in the past year, total sales were up 21%. Twenty new stores were opened during the quarter; the goal is to open approximately 100 for the full year......Staples is reporting its results on a total company basis which includes its profitable arm that sells directly to major companies. On that basis, eliminating the impact of divestitures and store closings, business was down 1.1%......Big Lots, with 1,428 stores in 47 states, had comps up 1.8%, reporting strength in "ownable categories" such as furniture, seasonal, and "soft home." Its new format stores are being designed to better showcase those categories......West Elm continued as the best-performing banner for Williams-Sonoma, which reported positive comparable brand revenue for all banners except Pottery Barn Kids......GameStop reported strong business coming from the Nintendo Switch and also from its Collectibles operations (up 36% and now up to 99 stores). In its Technology Brands stores sales were up 7% mostly due to having added additional AT&T authorized stores, and the company is expecting a strong upcoming quarter due to the introduction of "innovative new mobile handsets, including Apple's next generation iPhone".......Bruegger's Bagels is being sold to Caribou Coffee, which is owned by JAB Holdings, the company that acquired Panera Bread and Krispy Kreme earlier this year. JAB also owns other brands including Peet's Coffee and Tea and Einstein Noah. Closing is expected by the end of September.



CABLENET CHATTER

A UNIQUE "PI" DEAL FOR COMCAST

ESPN has announced plans to televise five NBA preseason

Comcast is making a marketing and investment deal

games in October, including back-to-back doubleheaders. with solar installer company Sunrun, in which the cable

The schedule starts on Sunday, October 8th from the company will market Sunrun's solar systems to its

T-Mobile Arena in Las Vegas as the Los Angeles Lakers customers. Sunrun will pay a fee to Comcast for each new

take on the Sacramento Kings. The game tips off at 9 PM customer and has offered Comcast an option that could

(ET). The Cleveland Cavaliers will host the Chicago Bulls earn it up to a 10% stake in the company. The CEO of

in the first game of a doubleheader on Tuesday, October 10th Sunrun says Comcast's marketing reach could add tens of

at 8 PM (ET), followed by the Lakers hosting the Utah Jazz thousands of new customers. Comcast services almost 29

at 10:30 PM (ET). On Wednesday, October 11th at 7 PM million customers along with broadcast and cable properties

(ET) the Boston Celtics will host the Charlotte Hornets, that could be called upon to expand the marketing effort.

followed by the Houston Rockets taking on the Memphis According to a 2017 Bloomberg New Energy Finance

Grizzlies at 10:30 PM (ET)......A third

report, rooftop solar is projected to be

season of Hollywood Medium with

one of the fastest growing sectors in the

Tyler Henry has been ordered by the E! network. Henry is one of Hollywood's go-to mediums and the series centers on Henry as he connects celebrities with

Infomercial: "Have you been trying to stay fit, but simply

can't get any results?"

energy industry, nearly tripling in size in the U.S. by 2025.

BUSINESS BYTES

their deceased loved ones in hopes of coming to terms with their passing......

Me: *mouthful of fries* YASS!!!

As if Sears hasn't had enough problems lately, here's more bad news: Reuters

The second season of The Shannara

is reporting some vendors are reluctant

Chronicles will premiere on Spike

to ship more goods to the chain, fearing

Wednesday, October 11th at 10 PM (ET).



they will not get paid if the company

The new season of the series will take

goes bankrupt. There is insurance that's

place one year after the events of the

usually available for vendors (it's called

first season. The Shannara Chronicles' first season aired on `accounts receivable puts'), but that insurance has become

MTV and was renewed for a second season on that network expensive and scarce to vendors who wish to insure their

in 2016. Viacom decided to move the series to Spike shipments to Sears. The owner of Lori Michaels Apparel

earlier this year......Regional sports networks Comcast told Reuters he stopped shipping to Sears several months

Sports Network and TCN will be renamed to NBC Sports, ago after his insurance company stopped providing

effective October 2nd. The Comcast NBCUniversal unit coverage, and two other vendors told Reuters they also

has been pushing the name change to make the networks have stopped selling to Sears after the company warned

more associated with the NBC Sports brand. "We're excited there was "substantial doubt" it could continue as a going

to complete the brand evolution of our remaining RSNs, concern. For insurance that is still available to Sears

which will now include the iconic NBC Sports name on all vendors, Reuters reports current quotes are more than 4

our networks," said David Preschlack, president, NBC percent of the value of the shipment per month, which is

Regional Networks and NBC Sports Group Platform and uneconomical for many suppliers whose margins are in the

Content Strategy. "This development is a reaffirmation of our single digits.

continued commitment to provide the best, most compelling

local sports coverage to our fans across the country." As CONSUMER CONFIDENCE HIGH, SAYS NIELSEN

an example of the name change, CSN Chicago becomes Low gas prices, a soaring stock market and inflation rates

NBC Sports Chicago and TCN Philadelphia becomes that remain in check are all adding up to rising consumer

NBC Sports Philadelphia. The renaming of NBC Sports confidence rates as fears of a U.S. recession decline.

Bay Area and NBC Sports California began last April. "U.S. consumer confidence remained on solid footing

Other network name changes included CSN Mid-Atlantic in the second quarter," Nielsen says in its just-released

becoming NBC Sports Washington, TCN Mid-Atlantic is quarterly look inside the minds of consumers around the

renamed to NBC Sports Washington +, and CSN New globe. The research firm says 72% of Americans believe

England becomes NBC Sports Boston......Bravo will their personal finances would be "good" or "excellent"

premiere the much-anticipated reality series Real Estate during the next 12 months. That was an increase of 2%

Wars on Thursday, October 5th at 10 PM (ET). The series from the fourth quarter of 2016.

is set in the Orange County, California real estate market Confidence leads to spending and Nielsen's report says

and features a powerful cast of industry icons......Hamish a majority of consumers have no leeriness about opening

Linklater has signed on to star opposite Amy Brenneman their wallet, with 63% stating it's a good time to buy what

in TNT's drama pilot Deadlier Than the Male. Linklater's they need.

character is a former serial predator who has done his prison

time and is desperate to turn his life around. Brenneman's NIELSEN UPDATES UNIVERSE ESTIMATES

character is a grieving mother searching for her missing Nielsen's universe estimates for the 2017-18 TV season

daughter, and thinks his expertise might be useful. Linklater have been updated and will be based on 119.6 million TV

has appeared on FX's Fargo, Legion, The Crazy Ones, The households in the country. It estimates a Persons 2+ total

Newsroom and The New Adventures of Old Christine. of 304.5 million, a 0.9% increase over the 16-17 season,

He's also in the cast of the TV Land pilot, Shudder.

and the estimates also note increases in Hispanic, Black

and Asian households. The percentage of total U.S.

PAGE 2

households with televisions receiving traditional TV signals

via broadcast, cable, DBS or telco, or via a broadband



Monday, August 28, 2017

internet connection connected to a TV set is set at 96.5%, an increase of 0.5 percentage points from the prior year.

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