Category: Earnings

Well we have been getting earnings reports from the big banks, but I am most interested in the small bank reports. While I exited most of my small bank holdings (too early of course) I still have a couple holdings left and thus have an interest.

I’ll be looking for new allowances for loan losses and commentary on the commercial real estate segment from these banks–this would include any issues with multi family lending which seems to be a favorite of the small community and regional bankers.

It is likely we will see some commentary on the special assessments from the FDIC since all bankers are paying these because of previous bank failures and no doubt we will find out how their net interest income margins are holding up. I have some concerns that these banks have been kicking the can down the road on some bad loans–renegotiating etc ‘hoping’ for a miracle. We’ll see.

Most of the small banks will be reporting on the 23rd, 24th and 25th.

Large business development company (BDC) Prospect Capital (PSEC) is on deck to announce earnings for the quarter ending 6/30/2022 on Monday.

PSEC is an unloved BDC, but is large, with $7.5 billion in assets and had rescheduled their report release from the 24th to the 29th.

I am watching the company balance sheet for changes in net assets as I have noted some weakness in some other BDC’s in recent earnings releases primarily because of ‘unrealized’ and ‘realized’ losses which have contributed to reductions in net asset values. PSEC has marked up assets substantially in recent quarters and it will be interesting to see what they have done last quarter–BDC Buzz believes that PSEC uses pretty aggressive valuations when assigning values to Level 3 assets (values of assets which can not be directly observed–I like to call them ‘trust us’ assets).

PSEC has a 5.35% perpetual preferred outstanding (PSEC-A) as well as a 5.50% non exchange traded preferred.

BDC Buzz has an article on Prospect which was posted on 8/21/2022 which outlines the good, the bad and the ugly of this unloved BDC.

Giant agriculture cooperative CHS Inc. announced earnings today.

Earnings were way above last years quarter with net income of $219 million compared to last years quarter of a $38 million dollar loss. Finally (after years of marginal earnings in a business they had invested billions in) the investment in nitrogen production paid off with pretax income of $154 million from that business. 6 month net income was over $600 million compared to $31 million last year.

Of course CHS has 5 high yield preferred outstanding–all of which remain at high prices–they can be seen here.

The earnings release can be read here.

The 10Q is here.

mREIT Arbor Realty Trust (ABR) just released earnings are they are quite stellar.

The article is here.

Business Development Company (BDC) Gladstone Investment (GAIN) announced earnings which can be read here. With shifting economics there is a strong need to keep up on financial results of your investments. The company has 2 issues of baby bonds with short dated maturity dates which can be seen here.

AMERCO (UHAL) announced their most recent earnings and the company continues to ‘coin’ money with revenues of $1.4 billion with net income of $281 million for the quarter. AMERCO has no preferreds or baby bonds outstanding, but does have notes available for purchase in the UHAUL Investors Club. While interest rates on their notes have fallen to a range of 1.5% for 2 year notes up to 2.75% 7 year notes I would anticipate they will begin to raise interest paid on newer notes as interest rates rise. Earnings can be found here.

Utility DTE Energy (DTE) has released very nice earnings. DTE is a Detroit based utility providing electricity and natural gas to parts of Michigan.

Now when I say ‘very nice’ I mean, very nice for the times we live in.

While earnings were down around 15% from the year ago quarter they remained very respectable.

I was quite surprised that the company ‘reaffirmed’ their operating earnings outlook for the full year–seems pretty optimistic to me.

The company has 4 baby bonds outstanding which can be seen here. Disclosure–I own 3 of the 4 issues which I bought at much lower prices. All issues are now at or above $25.

Their press release is here.