Bank of Montreal (Symbol-BMO)

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brad911
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Post by brad911 »

scomac wrote:Something is up here....I know that if I still owned it, I would be concerned. This seems desperate to me.
SIV's?
What?
Madoff?
Who said 40 year 5% down mortgages...?

Better get the RAID ready.......
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Post by Peculiar_Investor »

scomac wrote:
Locke wrote:at that offering implies a yield of 9.33%. As juicy as that sounds, it's scary to me.

Though their dividend history is impressive, there's always a first for everything especially in this unprecendented market.
Something is up here. The cost of capital on this equity issue is way higher than the competition and based on their recently released numbers, not even really necessary...supposedly. I know that if I still owned it, I would be concerned. This seems desperate to me. Why would you raise equity at book value when you have very little in the way of goodwill and intangibles on the balance sheet?
Could it be this? Canadian banks told to bulk up reserves
National Post article wrote:The country's top financial watchdog "has advised Canadian banks" to expect new rules next year on the minimum level of capital they should hold to absorb unexpected blows, according to a person in the industry.
The interesting question may become, who is the last one to announce a sale and how much discount will be required to get it all sold?
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Post by skepticus »

patriot1 wrote:The insider cannot be the company itself, because the company is the shareholders.
I meant the management--also part of the company, I would think.
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Post by Shifty »

TDW gives this message when I put in a stink bid on BMO;

'Trading of this security has been halted on the exchange. Your order may not be executed if the halt remains in effect until the end of the trading session'

Is this something normal when there is a new issue? Or maybe an error?
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Post by scomac »

Peculiar_Investor wrote:Could it be this? Canadian banks told to bulk up reserves
I don't think so. $450M would have covered their regulatory needs to get them up to 10% Tier 1. They had that threshold more than covered with the preferred issue and the unsecured debenture. Something big is coming to require building the balance sheet to this extent at this cost.
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Post by Subby »

Thanks for posting the link.
"How much can the market take?" said one analyst.
I question the same thing myself. Is there a market out there for continued absorption of these share offerings? TD and Scotia still have some selling to do before they hit the 'magic' 10% level.
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Post by Locke »

Well the trend continues, there's no point in taking part of the share offering when the market pricing offers immediate delivery at a lower price point, my last quote is for $29.84.

I think Sunlife and BNS are next from what I'm hearing
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Post by Shifty »

I was surprised by BMO today, not only did the issue sell out fast, but the stock barely moved below the offer price, and close above it. RY is still not even back at its new issue price, hasn't been above it since the offering.
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Post by kcowan »

scomac wrote:Something big is coming to require building the balance sheet to this extent at this cost.
Something that the Insiders already know about and the Sheeple will discover when their shares drop in price?
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BMO buying AIG Life of Canada for $375M

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BMO buying AIG Life of Canada for $375M

http://www.cbc.ca/money/story/2009/01/13/bmoaig.html
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Post by 2 yen »

What does this purchase of AIG mean? Is BMO irresponsible? Does this mean the dividend is actually safer than we thought?
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Post by kcowan »

2 yen wrote:What does this purchase of AIG mean? Is BMO irresponsible? Does this mean the dividend is actually safer than we thought?
The insurance lines were good at AIG. BMO is being opportunistic capitalizing on a business in need of cash to pick up performing assets.

The deeper question is do we think BMO should be expanding in the insurance business?
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Post by scomac »

kcowan wrote:
The deeper question is do we think BMO should be expanding in the insurance business?
What's more interesting to me is the question of why BMO would purchase life insurance assets when from a regulatory perspective, banks aren't allowed to sell P&C. Is this foreshadowing a removal of the final cross-pillar barrier that would potentially allow the merger of money centered banks with life insurance companies? Manufacturers Imperial Bank of Life and Commerce? :wink:
"On what principle is it, that when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?"
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Post by Shakespeare »

Is this foreshadowing a removal of the final cross-pillar barrier that would potentially allow the merger of money centered banks with life insurance companies?
I don't think Citigroup has been a model of success since the merger with Travelers. :roll:
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Post by scomac »

Shakespeare wrote:
Is this foreshadowing a removal of the final cross-pillar barrier that would potentially allow the merger of money centered banks with life insurance companies?
I don't think Citigroup has been a model of success since the merger with Travelers. :roll:
Agreed, but if banks are being restricted by newer more onerous regulatory capital requirements (either explicit or perceived), there needs to be a way for them to continue to grow. The deleveraging process is going to permanently reduce ROE on their existing capital base. Perhaps the cross-pillar merger is a more palatable way of addressing the competitiveness issue globally without opening the black box of bank mergers domestically. I really believe that this needs to be seriously investigated as it would appear that despite the plethora of plum financial assets available in the US at present, it seems as though Canadian institutions are being shut-out; perhaps intentionally.
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Post by Alpha Dog »

I'm not sure if this deal is material over the long term, their willingness to spend some cash makes me feel that the dividend is safe (or at least safer than I thought it may have been).
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Post by JaydoubleU »

I agree with that view.

The losers in this market are the ones that are selling assets at low(er) prices to raise cash.

The better companies are the ones doing the buying.

It might be argued that the banks are also raising capital at reduced prices, but what the Canadian banks are up to and where they stand is miles above most US and UK banks. At least we haven't been nationalized.
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Post by banker »

scomac wrote:
kcowan wrote:
The deeper question is do we think BMO should be expanding in the insurance business?
What's more interesting to me is the question of why BMO would purchase life insurance assets when from a regulatory perspective, banks aren't allowed to sell P&C. Is this foreshadowing a removal of the final cross-pillar barrier that would potentially allow the merger of money centered banks with life insurance companies? Manufacturers Imperial Bank of Life and Commerce? :wink:
I have NO idea whether this is a good thing or a bad thing but let me say this..where are Canadian Banks looking for revenue over the next year? Insurance Insurance Insurance! The race has already started and the cross-pillar barrier's have SLOWLY been falling for a long time. What are the executives looking for ??? Insurance penetration!
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Post by bubbalouie »

banker wrote:where are Canadian Banks looking for revenue over the next year? Insurance Insurance Insurance!
i wonder why they would delve into insurance at this point in time; considering the biggest asset of insurance companies is bonds, this could be disastrous in a hyperinflation environment
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Post by sweedy »

bubbalouie wrote:
banker wrote:where are Canadian Banks looking for revenue over the next year? Insurance Insurance Insurance!
i wonder why they would delve into insurance at this point in time; considering the biggest asset of insurance companies is bonds, this could be disastrous in a hyperinflation environment
Not necessarily. Hyperinflation also diminishes the value of their insurance liabilities.
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Post by bubbalouie »

sweedy wrote:Hyperinflation also diminishes the value of their insurance liabilities.
Possibly. Wouldn't they initially decrease in real value but when they get re-set they'll reflect the higher inflation rate? (That could be why buying US real estate with bank borrowings can be dangerous)
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Post by Bylo Selhi »

In these times simply maintaining a dividend that many argue is unsustainable is newsworthy. BMO profit falls on loan provisions
It also bolstered its financial cushion, bringing its Tier 1 capital ratio to 10.7 per cent, well above the minimum level required by regulators.

The bank left its dividend unchanged at 70 cents per share.
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Post by NormR »

Bylo Selhi wrote:In these times simply maintaining a dividend that many argue is unsustainable is newsworthy. BMO profit falls on loan provisions
It also bolstered its financial cushion, bringing its Tier 1 capital ratio to 10.7 per cent, well above the minimum level required by regulators.

The bank left its dividend unchanged at 70 cents per share.
Tis the 2nd quarter where DPS > EPS.

Code: Select all

         Q2    Q1    Q4    Q3    Q2    TTM    
EPS:   0.61  0.39  1.06  1.00  1.25    3.06
DPS:   0.70  0.70  0.70  0.70  0.70    2.80
Better than last quarter, but not entirely reassuring news.
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Post by Michael D »

Dangerous. I believe they state a payout ratio not to exceed 60-70%. How many quarters of +100% can they take until the cash runs out?
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Post by bpither »

I jumped in and bought a 6 figure sum of bank stock in February only to see it drop by 10%. BMO was my last purchase at $26 ... so now I understand what market sentiment means from "sh.t" to "I should have bought more!!!" :wink:
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