Bank of America (BAC)

10% of all deposits in the US are with them. Stock has not done much at all this year, but you should see improvements in the company next year. They have a great retail and commercial franchise, great investment banking business and a great wealth management business. They will continue to generate lots of capital and then buy back shares and increase the dividend with it.

This has gone through the mill in the last few years. The US banks did a great job in recapitalizing their balance sheets. Has worked its way through all its lawsuits and the US economy is steadily getting better. This bank is getting slowly and steadily better along with it. There is, and continues to be, outsized opportunity for dividend growth.

Every company, sector and industry has valuation metrics that they respond best to. The banks, because they tend to be quite cyclical, don’t respond well to earnings. The thing to look for in banks is Book Value, or more specifically tangible BV. Because of what happened in 2008 with the regulation that came out and having to raise an incredible amount of capital to satisfy the regulators, the banks have struggled a little. Stock price has fallen to where they are trading at a discount to Book Value. This one is probably around tangible book. His favourite is Citigroup (C-N), which he feels has a good runway ahead of it.

Bought a few years ago. His target price is about double where it is now. He is glad the dividend is up. If it goes up further, the stock price should go up further. As the economy does well, banks should do well.

Took a $400 Million write-down due to legal charges. It is not such a terrible thing. They are one turn of a multiple less than the peer group. There are a number of tail winds lining up. Increase in rates, increased loan growth and an economic recovery lead by the US. He sticks to Canadian names, however.

They have to go to the federal reserve to ask if they can bump the dividend. They have to worry about capital ratios. They have to go through stress tests. They are selling assets and becoming a smaller, more profitable bank. They are primed for dividend increases now.

Has always maintained that no bull market persists without the leadership or participation of financials. The trend is up and this probably works higher.

Has been a big bull on this. Feels this is one of the cheapest areas in the whole US stock market. This bank has a lot of positive things. They have a great business on the investment banking side, which will continue to do well, a great wealth management business and a great retail banking business. A lot of the issues that were facing them from a regulatory and legal point of view are all off the table now. BV is $21 and it is trading well below this.

Bank of Nova Scotia (BNS-T) or Bank of America (BAC-N)? By owning a Canadian bank you can take advantage of the Canadian dividend tax credit, which basically means a lot. Secondly, if you are going to buy something in the US, you are paying up for it, and that implies a potential exchange risk down the way.

Thinks you are past the worse with this one. With the $70 billion settlement they have had now, they have taken the hit on the Countrywide Financial. Feels the US bank valuations are still relatively attractive. There is a lot of earnings leverage, and he expects another move out of the housing sector.

Pretty good earnings and strong quarter. Prefers JPM-N and GS-N in preference to this one as there are skeletons in this closet.

He likes the US financials in general and he likes this bank. Has been focusing more closely on some of the US regional banks such as Wells Fargo (WFC-N). He doesn’t know if he has a favourite, but you might want to start watching out for some of the multinational names because of the US$ advancing so much.

This is probably a play on the US economy. Thinks there are better large-cap names to own. They have somewhat recovered from the financial mess of 2008-2009. Dividend yield is quite low at just over 1%. There are other banks with better quality and better credit culture that will give you a better dividend yield.

One of the better positioned banks. Has more of a retail focus which is really the conservative way to play the banking sector. If interest rates go up, the banks that are focused on retail should do better than others. A few months ago, they were capital constrained and restrained on what they could do in turning money over to shareholders. They have just recently been able to provide that. Doesn’t think there will be huge dividend increases out of the stock, but it is encouraging that they have actually started.

Thinks we are closer to the fed getting back into a rising rate environment and this will be very constructive for the banks. This is an indicator that the economy is strong and so loan growth should improve at some point and banks will get out of the penalty box with the government. He has not made a move yet, but has talked about it for while.