By Joe Chase of IndexBeating.com
Ten banks have been approved to repay their TARP money. Do investors think these companies are ready to pay the money back? We can measure investor confidence in these companies through their stock prices, and this is exactly what I have done. This is how the Treasury’s TARP investments would have performed, had invested in common stock.
I used the Treasury’s FinancialStability.gov website to get the info on the date and amount of these ten institutions’ capital injections, which totaled $68.3B. Of these ten stocks, five have had a positive return and the other five have lower stock prices now than they did when they received TARP funds. The return of the $68.3B would have been $13.1B, or 19.2%. Besides capital gains, the Treasury received $1.8B in dividend payments, making the total return 21.8%. The picture was not always as rosy: at the low point for each of these stocks, the $68.3B would have declined to just $28.8B, a 57.8% decline.
Compared with the S&P 500, the Treasury has done very well. The S&P is essentially flat since the Treasury started the TARP program; it has risen by 0.2%. The S&P declined by 29.1% after the TARP program started before it began to rise again after March 9th.
| Company | Investment | G/L ($) | G/L (%) |
| Morgan Stanley | $ 10B | $ 10.4B | 103.8% |
| Goldman Sachs | $ 10B | $ 5.6B | 59.6% |
| American Express | $ 3.4B | $ 1.4B | 40.0% |
| Northern Trust | $ 1.6B | $ .4B | 25.5% |
| State Street | $ 2B | $ .3B | 15.4% |
| BNY Mellon | $ 3B | $ (.3B) | -9.5% |
| BB&T | $ 3.1B | $ (.6B) | -20.0% |
| Capital One | $ 3.6B | $ (.8B) | -22.9% |
| JPMorgan Chase | $ 25B | $ (1.6B) | -6.2% |
| US Bancorp | $ 6,6B | $ (2.0B) | -30.9% |
| Total | $ 68.3B | $ 13.1B | 19.2% |
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1 response so far ↓
kevin from nashville // July 10, 2009 at 7:41 am |
Good analysis except you haven’t taken into account that the Treasury is buying back the the TARP money at a discount.