The financials sector is never short on news, but if you're short on time, let me do the leg work for you. I've dug through the Fool's financial sector coverage over the past week to highlight five stories you don't want to overlook.
Read on for this week's big news.
1. Here's What to Look For in Bank Earnings
It's earnings season! Banks have begun reporting their fourth-quarter earnings, with Wells Fargo helping lead the charge last week. This week saw Bank of America, Citigroup, and JPMorgan Chase report, and many more are on deck for the weeks to come. In this video, Matt Koppenheffer talks about some of the most important metrics to look at as banks continue to report earnings through the next few weeks.
2. One Critical Lesson From Wells Fargo and US Bancorp's Earnings
Speaking of important metrics, net interest margin is on the list of numbers to note, and while that number has been falling for pretty much every bank so far (except Citigroup), some banks are still managing to report record earnings -- specifically, M&T Bank and Wells Fargo. What's the secret? Fees. John Maxfield points out that fees "matter for at least one reason: They serve as a hedge against declining interest rates." He goes on:
As borrowers refinanced into lower yielding loans, the fees they paid to do so offset the deficit. There's revenue either way, in other words. The only difference is where it shows up on the income statement -- up top, as net interest income, or down below, as noninterest income.
The lesson, then, is to pay attention to a bank's revenue sources: As a customer, fees may be no friend of yours, but as an investor, they hold a great deal of importance in terms of keeping revenue evenly distributed, and thus more reliable.
3. Chimera Lives to Fight Another Day
Chimera Investment has had an... interesting year. John Maxfield runs through the fishiest and most questionable moves made (or more often, not made) by the mortgage REIT in 2012 and bring us up to speed in this latest piece.
Back in September, the NYSE gave Chimera until January 15th to file its 2011 annual report, or else it would be delisted from the exchange. Tuesday was the big day, and all we heard from Chimera was that the NYSE had granted it a reprieve. Now the stumbling REIT has an additional 30 days -- until February 15 -- to file the missing documents. As Maxfield points out, though, the extension doesn't really change anything. Chimera is still in pretty hot water, and if you're an investor, you're no doubt holding your breath. Just how risky is this investment getting?
4. JPMorgan Chase's Dimon Gets Docked
Word just came out that JPMorgan's golden boy, Jamie Dimon, is losing out on roughly half of a year's pay -- $10 million, to be exact. The decision doesn't have anything to do with JPMorgan's earnings, which were pretty darn good, and everything to do with the continuing fall-out from the London Whale debacle. Do you still have love for Dimon and his bank?
5. Three Banks That Should Thank Regulators for Revised Basel III Rules
As Jessica Alling puts it, "The revisions that global regulators made to the Basel III rules are kind of a big deal." Alling walks us through the changes and discusses a few banks that are set to benefit from them. (Hint: One of them rhymes with Smells Cargo.)
There are two major changes. Banks got a break as regulators revised (read: watered down) the Basel III rules -- lengthening the amount of time they have to comply and allowing lower quality assets to count toward their regulatory capital. Alling warns the impact of the changes on stock prices may vary, of course, based on a bank's size. Click through to the article to read the entire discussion.
What a week! Come back next week for more analysis as fourth-quarter earnings continue to roll in for banks, REITs, and insurance companies across the sector.
