Friday, April 24, 2009

Is Your Credit Card Issued By A Publicly-Traded Company? (American Express Transcript Now Available)


In the past, I have mentioned that I try to catch all of the earnings conference calls for the companies that issue my credit cards. It's not unusual, on the question-and-answer portion of the calls, to hear discussions about charge-off rates, FICO scores, etc. Listening to these calls seems like a no brainer -- especially if I want to stay abreast of the latest information from my card issuers. These days, I often read the transcripts instead of listening to the calls, though. It's a heck of a lot faster, too.

I think my readers would benefit from reading the transcripts, so I've decided to link my site to all of the transcripts that are currently available.

Seeking Alpha is great for transcripts. And they're free. What follows is a list of transcripts from the banks that do a substantial amount of credit-card business (the list is not exhaustive, though).

As companies report their earnings, and complete their conference calls, I will update this post by bumping it to the top of the site.

American Express (call on April 23, 2009): Transcript here.

Wells Fargo (call on April 22, 2009). Transcript here.

Capital One (call on April 21, 2009): Transcript here.

U.S. Bancorp. (call on April 21, 2009): Transcript here.

Bank of America (call on April 20, 2009): Transcript here.

Citigroup (call on April 17, 2009): Transcript here.

JPMorgan Chase (call on April 16, 2009): Transcript here.

Discover Financial Services (call on March 19, 2009): Transcript here.

HSBC (call on March 2, 2009): Transcript here.

If you're not familiar with conference calls, here's how they work. The first part of the call contains prepared remarks made by the company. The company will talk about its most recent quarter -- the good and the bad (though companies emphasize the high points more than the low points).

The most valuable part of the call takes place in the Q&A. That's when analysts and investors (some times) get a chance to ask questions about the quarter (and the future). This is where I often find the best material.

I try to read the transcripts from the companies I've listed. I like to stay informed. I find that going through these transcripts allows me to stay current on the industry. I'm hoping that you'll read through at least one or two -- even if you don't read all of them.

34 comments:

  1. Earnings Preview: Credit costs in focus in AmEx 4Q

    http://www.forbes.com/feeds/ap/2009/01/23/ap5957691.html

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  2. Credit card industry faces tough 2009

    http://www.marketwatch.com/news/story/capital-one-results-suggest-gloomy/story.aspx?guid={D3CEEB6C-B7B4-47CF-B55B-2422A39E56F4}&dist=msr_1

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  3. How about a post where you show all the highlights or points of interest? Much appreciated...

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  4. Crlf, wish I could. These days I am too busy with other things (like law school). If I was doing this full time (the blog), I would absolutely not mind going through all of the conference calls and doing a recap.

    But just don't have enough time.

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  5. I'm curious to know what information you look for in the transcripts? Are you looking for increasing defaults as a probable predictor of rate jacking to make up the losses? Something else?

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  6. Clyde, I am ALWAYS curious about charge off rates, default rates, FICO trends. Also curious about trends that the companies are seeing. You really never know what you're going to hear. But I usually pick up something from each call.

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  7. I never expected to do a double take on something as dry and dull as an annual report, but there it was in HSBC: The Bank You Love To Hate's annual report, page 9:

    "Madoff related charge (in equities business)"

    The little mofo actually got his own line item in a major bank's annual report. How many named individuals IN HISTORY can make that claim?

    Speaking of HSBC: The Bank You Love To Hate, I've never trusted them or liked them, and it was time to get rid of them. I thought the easiest way to do that was to ask them to double my credit limit.

    The part of both reps has to be spoken in the bippity-boppity-boo singsong of an Indian speaking American English.

    CSK (customer-service knucklehead): So, Mr. Spooky, it's important to you to get a credit-limit increase. You understand that I'll have to do what's called a "hard pull" on your credit report? May I explain that to you, sir?

    Me: No, I'm good. Go ahead and do a "hard pull." [And if you throw any more sexual innuendo my way, I'll have you arrested right where you sit, you little twerp]

    CSK: Yes, sir, that'll be just a minute. ["Jeopardy" theme plays in my head] Oh, I'm so sorry, Mr. Spooky, we can't approve that increase at this time. We'll mail a determ ...

    Me: Okay, I'd like to go ahead and cancel both of my accounts with you.

    CSK: [pregnant pause] Because we won't increase your credit limit ... ?

    Me: Yes, that's right.

    CSK: Can you hold on for just a moment, sir?

    As you might guess, I was transferred to a CRK (customer-retention knucklehead). She made no reference whatsoever to my prior conversation.

    CRK: So, Mr. Spooky, I've doubled your credit limit, effective immediately. This will start appearing on your statements in a month or two. Is there anything else I can do for you today?

    A few days later, I received a letter "confirming" the denial of additional credit, even though my credit limit was and is actually doubled. It's already reflected in my credit report, too.

    HSBC: The Bank That's Probably Nuts

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  8. Spooky, maybe you need to start doing some guest blogs here at CreditMattersBlog.com. Ha!

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  9. Spooky, take Marcus up on that one. You're good.

    --Don

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  10. I bank at BB&T and have a credit card through them as well. They just had their earnings call a few days ago. Link: http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=60854&eventID=2140703

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  11. Well, I posted that link from the future, evidently, the call isn't until tomorrow. Strange.

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  12. Jwolf, that's why my readers come here. They like to get their information as soon as possible. If you are posting from the future, you're all right in my book!

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  13. An exchange from the Q&A (for JPMorgan Chase):

    Guy Moszkowski - BAS-ML

    A question for you, first of all, just on TARP. Now that Goldman Sachs has raised capital and signaled that they very much want to repay the TARP capital if permitted, maybe you could update us on your thinking along the same lines.

    James L. "Jamie" Dimon

    I think we've been fairly consistent on TARP, which is we'd like to repay it as soon as possible. We're waiting for guidance from the government of the United States. We want to do what's in the interest of the United States in addition to what's in the interest of JPMorgan.

    And obviously we have the wherewithal. Mike mentioned we have 7.2% tangible common equity to risk-weighted assets. That's a higher number than a lot of people have Tier 1 capital to risk-weighted assets, which is now over 9%, not including TARP. So that 9% and the 7% wouldn't change if TARP were repaid, and so obviously we're in a pretty strong position with that. And we don't think we need more capital.

    But we obviously will await the results of the stress test and guidance from the government and see what happens.

    Guy Moszkowski - BAS-ML

    So again, just to clarify, you don't believe that in order to repay it you would need to do an equity issuance.

    James L. "Jamie" Dimon

    I don't know what we need to do because it may not be solely up to us. I don't think we need it. I don't see why a company with that kind of capital would have to raise capital. We could raise it. And what Goldman did is what Goldman did; it has nothing to do with us.

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  14. Regarding WaMu card charge offs -- relative to Chase card charge offs:

    John McDonald - Sanford C. Bernstein & Co., LLC

    And what is it about the WaMu card book that is so much worse?

    James L. "Jamie" Dimon

    Well, it's subprime and it's part of the cost of getting the WaMu deal. And that's our expectations for it.

    John McDonald - Sanford C. Bernstein & Co., LLC

    Are there any concerns in Card about master trust excess spreads hitting either cash trapping or early [inaudible] triggers in either your trust or if there's any remaining WaMu trust?

    Michael Cavanagh

    We're not immediately concerned about that stuff, John - paying attention to it, but not an immediate concern.

    James L. "Jamie" Dimon

    And fixable, if we want to.

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  15. More from the JPMorgan call:

    Mike Mayo - CLSA

    And then the Credit Card losses - I asked this at the Investor Day - is it going more nonlinear relative to the increase in unemployment in certain markets, like in California, and how nonlinear is it getting?

    James L. "Jamie" Dimon

    Well, I don't know about nonlinear, but in any market where unemployment is up - and actually we had charts at the analysts meeting for this, just take them out; I think it's approximately the same today that it was then - that wherever unemployment goes up, chargeoffs are going up, wherever home prices go down, chargeoffs are going up; and where both are happening, chargeoffs are going up even more. So if you do a correlation, they would be directly correlated to unemployment and home prices, too, so it's hard to tease them out.

    But chargeoffs in Card are clearly higher than you expect just based upon unemployment and that's because of housing.

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  16. If you want to read the rest of the transcript, just follow the links I've provided to Seeking Alpha.

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  17. Wells Fargo’s Profit Looks Too Good to Be True

    http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a6sv0hG.nW7g

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  18. I saw speaking with a friend in Michigan last night and both of us agreed: "Two and two just doesn't add up. It pays to be wary."

    There has to be something shady behind companies reporting record profits while the rest of the industry is crying.

    For example, that friend told me that according to the WSJ editorials, there's some kind of conspiracy involving Goldman Sachs, AIG and the Federal Government. No wonder they're in a hurry to get rid themselves of TARP funds. As farfetched as the entire conspiracy sounds, it sounds perfectly plausible at the same time.

    Figured that Wells Fargo was playing some kind of gambit as well, even if they were supposedly in a better position than other banks.

    Of course, the converse could all be true too. The companies crying broke can all be cooking their books even if they're actually in a good position, with nobody around to discover the slight of hand until years after the fact. My aunt and my former math teacher (also my academic mentor), both of them former accountants tell me that it's perfectly plausible.

    Despite Murdoch touching his hands on WSJ, I still might go for a subscription yet. It sucks to live in a world where you really can't trust a good bulk of people anymore.

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  19. azntg, there are plenty of discounted offers out there for WSJ. I pay $49 a year for my online WSJ account. I get that price because I also subscribe to the paper edition, too.

    Regarding WFC (wells fargo), that was a preannouncement of strong earnings. We still need to see the numbers.

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  20. Wells Fargo and I are parting company in a few months-$1160.00 in fees and charges in 60 days is enough to cause me nightmares! The have screwed up on the accounts and are charging for what should be "free". Enough!

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  21. I left WF about a decade ago. WF=We Fee.

    No thanks.

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  22. Citigroup pays price for return to profits

    http://www.ft.com/cms/s/0/253e288c-2b78-11de-b806-00144feabdc0.html?ftcamp=rss

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  23. Bank of America's quarterly profit soars; shares skid

    http://tinyurl.com/c7qrnu

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  24. From today's Bank of America call:

    "Now pressure on consumers to moderate spending has driven a drop in retail purchase volume, a 9% seasonal drop from fourth quarter activity and a 10% drop from the first quarter a year ago. Even though the economy is contracted, we continue to add new accounts, 800 thousand new domestic, retail and small business credit card accounts in the quarter with credit lines of approximately $5.5 billion."

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  25. U.S. Bancorp posts higher-than-expected profit

    http://www.guardian.co.uk/business/feedarticle/8466565

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  26. Discover under pressure from charge-offs, government

    http://www.chicagobusiness.com/cgi-bin/news.pl?id=33775&seenIt=1

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  27. Wells Fargo posts 1Q results in line with forecast

    http://www.google.com/hostednews/ap/article/ALeqM5iQUZFnxmKEW6gDu87AB5nZEFLEbAD97NJ3OO0

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  28. Amex reports 56% drop in quarterly net income

    Credit card giant tops earnings estimates, wants to repay TARP

    http://www.marketwatch.com/news/story/amex-tops-estimates-wants-repay/story.aspx?guid={92E2F028-039F-4102-AB33-D5E3A6D66ACF}&dist=msr_1

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  29. AmEx's Customers Leave Cards at Home

    http://www.theaustralian.news.com.au/business/story/0,28124,25379028-643,00.html

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  30. "I ****think**** charge card is a product that’s pay in full. You know we have the ability at any time to stop a customer at points of sale. We have a tremendous history of experience here and we have the ability to tightly control this. As you’ve seen our experience has been very good, the provision is only up modestly and we would anticipate the ability to continue to control charge card in a similar way to the way we have in the past."

    He just thinks charge card is PIF?!

    Otherwise, just confirms what we already know.

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  31. Now you see why I read this stuff. You get nuggets like that. Ha!

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  32. If you plan on keeping your American Express card open, you better keep using it. From the conference call:

    "Now cards in force in this segment are down 1% and that reflects the impact of lower investment levels and the credit and collection actions that we’ve taken. And to the extent we cancel inactive cards in the future, you know, this level of decrease may pick up a little bit in the coming quarters."

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  33. From Daniel Henry:

    "However, at this juncture I really think that unemployment has taken over as the primary driver of delinquency and write-off rates. So I think that’s what we’ll need to see for a real turn. I think stabilization in the housing market will be important. I think consumer confidence will be critically important. People will have to start comfortable that they’re going to retain their job. And when those things start to happen I think is when we’ll really start to see some notable improvements."

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  34. Remember that rate hike that American Express implemented in January? Apparently it affected 55% of its customers.

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