'Sitting Ducks' by John Hussman

An interesting feature of randomness is that as you accumulate a larger number of random outcomes, the combination often becomes more predictable. For example, if you flip a coin 10 times, you can expect to observe 5 heads on average, and two-thirds of the time, you'll flip somewhere between 4 and 6 heads (that is, about 20% from your expected average one way or another).

If you flip a coin 100 times, you can expect to observe 50 heads on average, and two-thirds of the time you'll flip somewhere between 45 and 55 heads (about 10% from your expected average one way or another). Flip a coin 1000 times, and two-thirds of the time the outcome will be within 16 heads of the expected 500 (about 3% from your expected average one way or another).

In finance, this feature is what drives the benefits from diversifying across multiple stocks and multiple security types (stocks, bonds, commodities, and the like). Even though the holdings may not actually be completely independent, each has a random component to its return, and the more those random components average out or offset, the greater the reduction in volatility. Essentially, diversification means accepting the randomness inherent in any segment of the portfolio, on the expectation that the randomness will tend to "average out" more often than not. A well-structured portfolio is one where each component is expected to achieve a desirable long-term return, but where the various holdings are also relatively uncorrelated.

This same feature of randomness shows up when we think about the market's return in each period of time as having a random component. Even when the market is very undervalued or overvalued, the return in any given quarter or year is likely to be much different than the "expected return" we might estimate. What creates greater predictability from this sea of randomness is the constant discipline of aligning one's position with the expected return at each point in time, and allowing "time diversification�! �� to average out the random effects (see Aligning Market Exposure with the Expected Return/Risk Profile for an overview of how we generally approach this discipline).

Interestingly, when we examine the relationship between fundamental valuation measures and subsequent market returns (especially using reliable measures that don't swing in lock-step with unstable profit margins), we also find greater predictability as the number of years in the investment horizon increases. This is particularly true when we examine market returns over horizons anywhere in the range of 7-14 years (see Investment, Speculation, Valuation, and Tinker Bell for a number of straightforward approaches that have a near-90% correlation with subsequent 10-year market returns). As one shortens the horizon, the range of error widens. Once you drop the horizon to less than about 3 years, the relationship between valuations and subsequent market returns becomes particularly noisy – still strong from a statistical point of view, but with enough variation that one has to start talking about "tendencies" instead of "expectations." On shorter horizons, factors such as market internals, sentiment, and trend-following measures become important. But because the long-term is made up of a series of short-terms, valuations remain a relevant feature of that broader context.

Sitting Ducks

The present market context is this: from a valuation standpoint, virtually every reliablemeasure of market valuation we observe is now within the highest 1% of historical observations prior to the late-1990's bubble. "Reliable" in this context refers to valuation measures that are well-correlated with actual subsequent market returns. These measures include price/revenue, price/book, various cyclically-adjusted price/earnings multiples, and market capitalization/GDP, among others. We'll discuss valuations first, with the caveat that in practice, the most reliable effect of valuations is on long-term returns. The effect of valua! tions on ! shorter-horizon returns cannot be separated from other important factors; particularly the quality of market internals and the presence (or absence) of an overvalued, overbought, overbullish syndrome of conditions. Those factors can either mute or amplify the effect of valuations on subsequent market returns, but only for a while.

At its recent high of 24.6, the Shiller P/E (the S&P 500 divided by the 10-year average of inflation-adjusted earnings) matched the level that was observed in September 1929, exceeded the peak of 23 reached in March 1937 (the S&P 500 lost half of its value over the following year), matched the extreme of May 1965, which ushered in a 17-year secular bear market, and significantly exceeded the level of 19.8 seen at the August 1987 peak.

What draws complacency, however, is that valuations are significantly lower here than they were at the 2000 market peak. It doesn't seem to matter that from the 2000 market peak to the present, the S&P 500 has achieved a nominal total return of just 2.7% annually, and even then only by re-establishing the present strenuous valuation extremes. It also doesn't seem to matter that 2000 ushered in a decade that included two 50% market declines; one in 2000-2002 that wiped out the entire total return of the S&P 500, in excess of Treasury bills, all the way back to May 1996, and one in 2007-2009 that wiped out the entire total return of the S&P 500, in excess of Treasury bills, all the way back to June 1995.

A second feature that draws complacency is that the Shiller P/E broke above 27 at the late-2007 market peak, just before the market lost 55%, making present valuations seem not-so-high by comparison ("a Shiller P/E of just 24.6? We spit at your Shiller P/E of 24.6!")

A third feature that draws complacency is that profit margins are about 70% above their historical norms, making raw P/E ratios (particularly those based on "forward operating earnings") seem fairly reasonable. Understand that the use of raw forward ! operating! P/E ratios implicitly assumes that these profit margins will remain at the most extreme levels in history forever. That's the essential problem with using a single year of earnings as the basis for stock valuations. Stocks are a claim on a very long-term stream of future cash flows that will be distributed to shareholders over time, and P/E ratios are simply a shorthand. P/E ratios are useful only to the extent that the earnings measure being used is reasonably representative and informative about the long-term stream of cash flows – what might be called a "sufficient statistic." I made the same observation (to no avail) at the 2007 peak (see Long-Term Evidence on the Fed Model and Forward Operating P/E Ratios). Investors who passively accept Wall Street's never-ending pitch that "stocks are cheap on forward earnings" without attention to embedded profit margins are the sitting ducks of the investment world.

A final feature that draws complacency is that stocks were already overvalued three years ago, when the market was at lower levels, so to see stocks advance in the face of overvaluation (albeit only because of extraordinary monetary policy) seems to negate the entire basis for concern. I doubt that any of these gains will actually be retained by investors over the completion of the present market cycle. It isn't difficult to see how badly this sort of complacency has injured investors in previous cycles, but there's no denying that stocks were overvalued some time ago, and stocks have advanced to even greater valuation extremes. The market could not have reached the level of valuation it set in 1929 if the same thing did not happen then. But, here we are. It's worth remembering how brutally those prior overvaluations punished speculators who held out for the last sip of punch.

Beyond Valuations

As I've often noted, two features help to distinguish overvalued markets that subsequently move higher from those that subsequently drop like a rock. The main feature is ! the quali! ty of market action across a broad range of internals (as measured by breadth, leadership, industry groups and security types). In my view, the importance of market internals is that they provide a robust signal about the willingness of investors to accept or avoid risk, and uniform strength across a very broad set of securities and asset types is a signal of risk-seeking preferences. But on average, even favorable market action has historically not been helpful once the other feature emerges – an overvalued, overbought, overbullish syndrome of conditions. The most unusual and frustrating aspect of the period between late-2011 and June 2013 (when our measures of market action finally shifted negative) was the tendency of the market to advance despite persistently overvalued, overbought, overbullish conditions that normally dominate even favorable market internals (see The Road to Easy Street to review how stocks have typically performed during these periods, compared with the past few years).

The best way to understand present market conditions is to clearly understand the tension and interplay between all of these factors: valuations, market internals, Federal Reserve policy, and what we call an "overvalued, overbought, overbullish" syndrome of conditions.

By mid-2013, the market had established extreme valuations that were among the richest 1% of historical observations prior to the late-1990's market bubble. Following a period of strenuously overvalued, overbought, overbullish conditions, our core measures of market action shifted negative in June and have not yet recovered, creating a condition best described as a broken speculative peak. The initial selloff from that peak was enough to draw bullish sentiment down to less extreme levels. So our defensiveness lately has not been due to a continued overvalued, overbought, overbullish syndrome but instead due to the combination of unfavorable valuations and unfavorable market internals.

Less than two weeks ago, however, the de! cision by! the Federal Reserve to defer any tapering of quantitative easing provoked a spike in the major indices. This spike was unconfirmed by broader measures of market action, but brought those measures closer to a positive turn. That created the potential that a favorable shift in market internals might occur in the absence of extremely bullish sentiment. As I've noted in prior weekly comments and should be clear from the foregoing discussion, the combination of rich valuation andfavorable market action, in the absence of an overvalued, overbought, overbullish syndrome, is typically associated with a moderately positive expected return/risk profile, at least over the short-run.

The bottom line is simple and not at all contradictory. First, we view market valuations as obscene, and likely to result in a market loss on the order of 40-50% over the next few years. Second, we view the recent inaction by the Federal Reserve as creating a risk – not an expectation by any stretch of the imagination – but a risk, of resumed speculation that might create a speculative blowoff over a period of weeks. In my view, given the present level of implied option volatility, very little seems needed to insure against that risk with "contingent assets" such as index call options, and given the low probability of such a blowoff, very little seems warranted to insure against that risk. Present conditions are what they are. The dominant risk is that of deep and extended market losses. A possible speculative blowoff would simply make the market's subsequent losses that much worse. So the essential concern remains that of severe market losses. The secondary risk of a short-run blowoff is simply a source of potential frustration that is easy enough to mitigate.

In the end, we don't really need to make any forecasts at all. Our discipline is straightforward – to take a greater exposure to risk, on average, in periods where we estimate a favorable market return/risk profile, and to take a smaller exposure to! risk, on! average, in periods where it is unfavorable. That discipline, repeated period-by-period, can help to elevate the average return/risk profile that is captured over the complete market cycle. We estimate that this would have been true in market cycles across history. Despite what has been a frustrating, extraordinary, and distorted period since the credit crisis, requiring an early period of stress-testing against Depression-era outcomes and a few lateradaptations to the relentless and misguided policy of quantitative easing, this is also – most importantly – an entirely unfinished cycle. I doubt that the S&P 500 will be materially higher a decade from now than it is today, and estimate that even a 40% market loss would only bring prospective 10-year total returns to historically average levels.

Notably, there is far less correlation between prospective stock market returns and 10-year Treasury yields than investors seem to imagine. Between the two, we view bonds as significantly more attractive, even though we estimate their prospective 10-year total returns to be nearly equal. In part, that's because equities have always tended toward a significant risk-premium regardless of the level of bond yields, while bond yields themselves have been more closely tied to the level of short-term yields; the present yield spread between 10-year bonds and Treasury bills is about double the historical norm. A slowing in the pace of QE, or even a $500 billion reduction in the Fed's balance sheet, would not provoke any meaningful increase in short-term interest rates by our estimates, particularly in a continuing tepid economic environment. While yield spreads already create a reasonable buffer for longer-term bonds, the same event would likely be devastating for stocks.

Meanwhile, remember how bond pricing works. The current 2.5% coupon, 10-year benchmark Treasury bond presently yields about 2.63%. A one-year holding period changes that security to a 9-year bond, and accrues one year of interest inc! ome. As a! result, a 50 basis point increase in yield, over a period of a year, would result in a total return of about -1.3%, while a 50 basis point decrease in yield, over a period of a year, would result in a total return of about 6.7%. This is not a prediction or projection of one outcome or another, but it may be helpful in understanding how these securities work mathematically. We see much more fear about bonds at present than we do about stocks, and I believe that this is a profound mis-ordering of concerns. Our own strategy, as usual, is to align our outlook with the expected return/risk profile that we estimate at each point in time. While the secular decline in bond yields may be over, it doesn't follow that bond yields will advance diagonally from here, and my impression is that the normal range of fluctuation in yields will be perfectly adequate to create good opportunities for approaches that can increase or decrease their exposure over time.

[Geek's Note: In general, the price of a T-year bond with yield i, coupon C, and face value 100 is (C/i)*[1-1/(1+i)^T] + 100/(1+i)^T where i is expressed as a decimal (e.g. 0.0263). For semi-annual compounding, you simply double T, and halve C and i].

Finally, a few reminders regarding how market cycles are typically completed: First, the "catalysts" for a market decline typically become well-recognized only after a bear market decline is well underway, not as the market is peaking. Second, new unemployment claims typically reach their lowest level just as a bull market is peaking. Third, the presumed "support" that easy money provides for the stock market only exists provided that investors have no desire to hold defensive cash balances. That's why aggressively easy monetary policy was of no use in preventing stocks from losing half their value in 2000-2002 and again in 2007-2009.

A significant number of voices within the Fed have openly described their recent inaction as a close call, a borderline decision, a missed opportunity ! because �! ��costly steps had been taken to prepare markets," and a choice that increased uncertainty and called the Fed'scredibility into question. But even if one believes that quantitative easing will continue indefinitely, it's critical at least to understand the unreliable mechanism behind its effects. Quantitative easing exerts its only meaningful effect by creating so much revulsion and discomfort with short-term, zero-interest assets that investors feel forced to take risks that they would normally shun, accept dismal prospective returns that they would normally reject, and buy at prices that would normally provoke them to sell with a vengeance. Any event that increases the willingness of investors to hold defensive cash balances is identically an event that could provoke a market collapse.

All of these are lessons best learned from an examination of past data, and not from future experience.

http://www.hussmanfunds.com/wmc/wmc130930.htm

Market Minute: Apple Tops Coke as Biggest Brand

There's a new king in a closely watched brand marketing survey, and the Gulf oil spill is back in the spotlight. These stories and more are in Monday's Market Minute. The Dow Industrials (^DJI) and the S&P 500 (^GPSC) both fell by more than one percent last week, but the Nasdaq (^IXIC) edged slightly higher. The major averages are set to sell-off this morning as the market braces for a government shutdown. AP Photo/Kin Cheung Apple (AAPL) has toppled Coca-Cola (KO) as the world's most valuable brand. This is the first time in the Interbrand survey's 13-year history that Coke has not been number one. It fell to third, with Google (GOOG) sliding into the second spot. BP is back in court today for the start of the second phase of a three-part trial to determine responsibility for the gigantic Gulf of Mexico oil spill three years ago. The company is trying to limit the amount of damages it might have to pay. Fines could total as much as 18-billion dollars. BP has already paid out more than 42-billion in clean-up, compensation and fines. Meanwhile, Royal Dutch Shell plans to sell its stake in a major oil project in Texas. It says the Texas project has not live up to expectations. IBM (IBM) agreed late Friday to settle federal charges that it discriminated against Americans in some of its hiring practices. The company's online job listings expressed a preference for software developers who had student visas or H-1B visas. IBM will pay a small fine and revise its hiring process. We continue to watch shares of J.C. Penney (JCP), which plunged 30 percent last week. The retailer issued 84-million shares, diluting the value of its current stock, and analysts warned that sales growth remains sluggish. And King.com, the online entertainment company best known for its Candy Crush game, has filed to go public in the U.S. The British company says it has 30-billion games played globally each month. The filing reportedly values King at about 5-billion dollars.

Summers' Exit Will Give Mortgage REITs Some Breathing Room

The Federal Reserve was poised to be front and center this week, as it prepares for its Federal Open Market Committee meeting Tuesday and Wednesday. Then, out of the blue, former Bill Clinton Treasury Secretary Larry Summers withdrew his name from the short list of those under consideration to be the next Chair of the Federal Reserve.

The sometimes-brusque politician felt that hearings surrounding his "possible confirmation" would cause too much turmoil, considering concerns regarding his part in deregulating the financial industry under Clinton, as well as some ill-conceived comments regarding women's math aptitude during his Harvard presidency.

Is this bit of news a good thing for mortgage REITs? You bet it is.

More liquidity?
Janet Yellen, the current Vice-Chair of the Fed, now looks to be holding the brass ring. One of the stewards of quantitative easing, Yellen is considered much more dovish than Summers, and more apt to support a slow, well-considered tapering of Federal Reserve monetary easing policies. She has experience in this realm that Summers lacked, and is credited with being aware of the advent of the financial crisis while others seemed oblivious.

This development will likely give battered mREITs like Annaly Capital (NYSE: NLY  ) , Armour Residential (NYSE: ARR  ) , and American Capital Agency (NASDAQ: AGNC  )  a huge boost as investors begin to feel less panic regarding a tapering of the current QE3 program. Markets have responded to the Summers announcement by soaring skyward, apparently feeling relief and confidence about the fate of the taper.

For the heavily agency-weighted trusts above, the news should give them some much-needed respite from falling book values and share prices. Annaly has lost 10% of its value in the past three months, while American Capital Agency has lost almost 5%. Armour has been stung badly, with a nearly 15% drop in share price during that time period. The idea that the Fed will maintain its monthly purchases of mortgage-backed securities backed by agencies Fannie Mae and Freddie Mac -- the type they invest in as well -- will surely be music to their investors' ears.

Not all sewn up yet
There is a chance, however, that Yellen won't be appointed. President Barack Obama was fond of Summers, and may not like the fact that he was effectively forced to withdraw. In that scenario, appointing Yellen may be considered giving the complainers their way. Also, there could be another candidate waiting in the wings: Former Fed Vice Chair Donald Kohn, currently of the Brookings Institution, has reportedly also been interviewed for the slot.

Then again, current chair Ben Bernanke won't be leaving his post until January, and the brouhaha about Summers might have no real effect on this week's FOMC meeting at all.

Right now, however, the market is riding high. The most important thing to remember is that QE3 was never meant to last forever, and the program will, at some point, cease to exist. Before that time, mortgage REITs will experience more pain, but it won't be fatal. Watchful investors planning for the long haul may find themselves able to pick up some of their favorite mREITs at bargain prices.

Income Investors Alert!
Dividend stocks can make you rich. It's as simple as that. While they don't garner the notoriety of high-flying growth stocks, they're also less likely to crash and burn. And over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.

Will IBM See a Higher Bid?

With shares of International Business Machines (NYSE:IBM) trading around $186, is IBM an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

IBM is an information technology company. The company operates in five segments: Global Technology Services, Global Business Services, Software, Systems and Technology, and Global Financing. Technology products and services are in high demand worldwide as consumers want to be up-to-speed, and companies always need the latest and greatest to stay ahead of the competition. Cloud computing has been hot in recent times, which has not been good news for IBM. Should the company want to hold on to its market share, it needs to make moves quickly, and provide the technology products and services that worldwide consumers and companies demand.

Recently, IBM reported earnings that topped analyst expectations. Also, the company announced it is furloughing the majority of its U.S. hardware employees, forcing them to work one week with reduced pay as the company tries to shed costs amidst slumping demand. Sales in the second quarter dropped 12 percent from last year while the company cut around 3,300 employees across North America.

T = Technicals on the Stock Chart Are Mixed

IBM stock has not been moving much in the last several quarters. The stock is now trading near lows for the year. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, IBM is trading below its key averages which signal neutral to bearish price action in the near-term.

(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of IBM options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
IBM Options	20.21%	76%	75%

What does this mean? This means that investors or traders are buying a very significant amount of call and put options contracts as compared to the last 30 and 90 trading days.

	Put IV Skew	Call IV Skew
October Options	Steep	Average
November Options	Steep	Average

As of today, there is an average demand from call buyers or sellers and high demand by put buyers or low demand by put sellers, all neutral to bearish over the next two months. To summarize, investors are buying a very significant amount of call and put option contracts and are leaning neutral to bearish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Mixed Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on IBM’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for IBM look like and more importantly, how did the markets like these numbers?

	2013 Q2	2013 Q1	2012 Q4	2012 Q3
Earnings Growth (Y-O-Y)	11.40%	3.45%	11.15%	4.39%
Revenue Growth (Y-O-Y)	-3.33%	-5.11%	-0.64%	-5.39%
Earnings Reaction	1.76%	-8.27%	4.40%	-4.91%

IBM has seen rising earnings and declining revenue figures over the last four quarters. From these numbers, the markets have had mixed feelings with IBM’s recent earnings announcements.

P = Weak Relative Performance Versus Peers and Sector

How has IBM stock done relative to its peers HP (NYSE:HPQ), Dell (NASDAQ:DELL), Microsoft (NASDAQ:MSFT), and sector?

	IBM	HP	Dell	Microsoft	Sector
Year-to-Date Return	-2.39%	56.07%	36.54%	20.74%	23.39%

IBM has been a poor relative performer, year-to-date.

Conclusion

IBM is a global technology company that provides essential products and services to companies and consumers worldwide. The company is currently undergoing some measures in order to improve the company. The stock has not done well in recent quarters and is now trading near lows for the year. Over the last four quarters, earnings have been rising while revenues have been declining which has not really pleased investors in the company. Relative to its peers and sector, IBM has been a weak year-to-date performer. WAIT AND SEE what IBM does in coming quarters.

Oracle Corporation (ORCL) - Stock Analysis

Oracle Corporation (ORCL) provides computer hardware, products, and services, as well as enterprise software. The company is actively working to shift the complexity of Information Technology out of the enterprise environment by engineering and distributing hardware and software that are able to work together in harmony. Oracle has obtained over 400,000 customers across more than 145 countries around the world by simplifying IT. The company's main focus is to enable other enterprises to continue to grow and innovate without having to worry about the complexity of their hardware and software, with their slogan being, "Hardware and Software, Engineered to Work Together". Oracle Corporation is organized into three different businesses: Software, Hardware Systems, and Services.

The Software business itself is actually separated into two segments itself: New Software Licenses, and Software License Updates and Product Support. The New Software Licenses segment, as the name implies, focuses primarily on the licensing (selling) of their various software products that are designed to perform a multitude of different functions. The Software License Updates and Product Support segment deals with updating client's software with patches and upgrades, and offering product support.

Oracle's Hardware Systems operation consists of two segments as well: Hardware Systems Products, and Hardware Systems Support. Similar to the organization of the Software operation of Oracle's business, the Hardware Systems Products distributes its products, which include storage products, networking components, operating systems, and others. The hardware that Oracle creates is designed to work in customer environments that include either other Oracle, or non-Oracle hardware or software components. Similar to the support available for the corporation's software side of things, the Hardware Systems Support segment is re! sponsible for providing customers with any updates necessary for software components that are necessary for the operations of the company's hardware. This segment also includes repairs, maintenance, and technical support.

The Services business is broken down into three different segments: Consulting, Cloud Services, and Education. While the Consulting segment deals with initial product implementation and ongoing product enhancements and integration, the Education segment provides training to customers and even offers a certification program that enables individuals to become certified database administrators, consultants, implementers, and others. The Cloud Services Segment provides software and hardware management and maintenance services for customers in regards to the company's cloud products.

Oracle has so much to offer to all types of enterprises. From business and financial management products, to industry specific applications software, Oracle has you covered. The company is so driven to provide your company with the total technical experience that they even have their own operating system, Oracle Solaris, which is known for its scalability and originating many innovative features.

Company History

Oracle Corporation was founded in 1977 by Larry Ellison, Bob Miner, and Ed Oates.

The company has a pretty massive history list with an abundance of acquisitions, just as most major corporations do, but here is some of the recent history:

2010: Oracle launched its "Oracle Enterprise Manager Ops Center," which is a data center automation tool that simplifies discovery and management of physical and virtualized assets. This same year, Oracle's Mexico Development Center begins operations in Mexico. Also in 2010, Oracle was indicted by the U.S. Justice Department for fraud, stating that the company failed to provide the U.S. Government with the same discounts on its software that it offered to its commercial customers (Oracle was required to do so). The lawsuit ! stated th! at Oracle overcharged the government on a contract that ran from 1998 to 2006. This issue was settled in 2012 for almost $200 million. On the other hand, near the end of 2010 Oracle Corporation won a nearly $1.3 billion lawsuit against a European software company named SAP. SAP was accused, and eventually admitted to the acts, of massive illegal downloads of Oracle's software in attempts to take customers away from Oracle.

2013: Oracle Corporation announced an agreement that it has made with Paradox Engineering to work on solutions in the smart city market. Oracle also announced recently that new in-memory applications for Oracle JD Edwards EnterpriseOne, Oracle PeopleSoft, Oracle Siebel, Oracle E-Business Suite, and Oracle Hyperion. They claim that their critical applications are now running 10-20x faster than before.

Oracle has acquired an average of more than 9 companies a year over the last eight years (including 2013). They have been busy. Here are some of the more notable acquisitions that Oracle has made over the last few years:

Acme Packet, a company in the business of providing networking hardware for telecommunications service providers, in February of 2013 for $2.1 billion.

Taleo, a company focused on talent management software, for $1.9 billion in February of 2012.

Sun Microsystems, which focuses on computer servers, storage, networks, Java, MySQL, database, software, and services, in January of 2010 for $7.4 billion.

Financial Strength

Oracle is the third largest software maker by revenue, behind only Microsoft (MSFT) and IBM (IBM). Oracle also has a higher Gross Margin percentage (81.35%) than IBM and MSFT, and a higher Operating Margin (39.28%). The company also has a higher Price to Sales ratio (4.11x) than its two largest competitors.

Over the past year Oracle has also been pushing its software offerings more towards SaaS (Software as a Service) solutions, which is being driven by customer demand. Oracle has been consuming smaller compan! ies left ! and right. With recent acquisitions of RightNow, Taleo, and Eloqua, Oracle's SaaS products should expand greatly.

Oracle also currently has a Return on Equity of 25.52%, which implies that the company is able to reinvest its earnings better than roughly 92% of its industry competitors. This is nothing new either, Oracle has had a ROE of over 20% since at least 2004 (except for 2010, which was 19.9%).

Recent growth in sales has been hampered by the hardware segment's revenue declining. The hardware segment also puts pressure on the operating margins of the company as well. This doesn't concern me much because the software segment of the company contributes to a much larger portion of sales than the hardware segment, and is also growing at a much faster rate. This should help revenue growth rates and operating margin rates increase over time.

Oracle has been doing quite a bit of stock repurchases as well. From May of 2004 to May of 2013 the company has averaged roughly $2.5 billion in share repurchases annually. In fiscal year 2012 Oracle spent $5.1 billion on stock repurchases, and almost $9.5 billion for fiscal year 2013. In June of 2013, Oracle's Board of Directors approved an expansion of the company's stock repurchase program by an additional $12.0 billion. The repurchase program does not have an expiration date, and the company stated that the pace of their stock repurchases will depend on various factors such as the company's working capital needs, cash needs for dividend payments and acquisitions, debt repayment obligations, and economic and market conditions. Oracle currently has almost enough money in cash ($39 billion) to pay off all of their short and long term liabilities ($42.8 billion).

Management

Oracle's management gets paid a lot. And when I mean a lot, I mean that the company's CEO, Larry Ellison (who also founded the company), is one of the highest paid CEO's in the country, raking in over $96 million in 2012. The fact that Mr. Ellison no! t only fo! unded the company in 1977, but is also still the corporation's Chief Executive Officer means a lot to me. Here is the summary of executive compensation:

[ Enlarge Image ]

Valuation

Oracle powers the top 10 SaaS (Software as a Service - a software delivery model in which software and data are centrally located on the cloud) providers, thousands of SaaS applications, and many of the world's private clouds. Cloud computing has seen some pretty serious growth in recent years - even the Department of Defense is hopping on board. It seems like Oracle is in the news almost daily with some sort of new announcement of enhancements or innovation to their product line. For instance, the company recently announced that it is expanding the Oracle Cloud with new services giving customers access to the world's leading database and Java application server in the cloud. These services will give customers full administrative control and managed service options.

451 Research released a study that contained several key facts concerning cloud computing growth. According to them, 69% of enterprises who have separate budgets for cloud computing are predicting to spend more this year, and in 2014, for this service. They also projected that the worldwide cloud computing market will grow at a 36% compound annual growth rate (CAGR) through 2016. This would make the market reach $19.5 billion by 2016.

Using the conventional P/E method, if we subtract the $39 billion in cash that Oracle has from the $155 billion market cap, we see that the company's operations can be purchased for $116 billion. Because Oracle has a net income of $11 billion (TTM), the company is actually trading at a P/E of 10.54 as opposed to the current 14.46. Oracle also has an estimated Forward P/E (1 year) of 10.65.

Let's take a look at using a version of the Discounted Cash Flow m! ethod (DC! F) to valuate the share price. I will use the most recent Earnings Per Share of 2.32, an 18.9% growth rate over the next 10 years (which is the average EPS growth rate of the past 10 years), a Terminal Growth Rate of 2% (average inflation rate for 2013 so far), with 10 years of Terminal Growth at a Discount Rate of 12% to be safe. That leaves us with a Fair Value of $58.85 and a 42% Margin of Safety. That's a healthy margin.

We can also look at the Peter Lynch value, which is currently at $38.81, and view the corresponding chart:

End Notes

Disclosure: No current position held at the time of writing.

Disclaimer: The opinions and ideas in this article are for informational and educational purposes only. They are not a recommendation to buy or sell any stock at any given time. As always, it is imperative for each individual investor to do their own due diligence and perform their own research on any and all stocks before making an investment decision.

Fast-food munchies go wild at Jack in the Box

Late night snacking is about to get ugly.

Nutritionally speaking, that is. A gut-stuffing line-up of four late-night meals -- including one that actually stacks a grilled cheese sandwich atop an already gloppy cheeseburger -- is rolling out at Jack in the Box restaurants nationwide.

The nighttime meal offerings – which also come packed with two tacos, a mixed order of French fries and seasoned curly fries and a 20 oz. beverage – almost make Hardee's once-heckled Monster Burger look, well, tame. They're called Jack's Munchie Meals – only sold between 9 p.m. and 5 a.m. Price-tag: $6.

"They are a disaster," says registered dietitian Robyn Flipse. "They must have hired some very stoned Millennials to dream this stuff up."

Not at all, says Keith Guilbault, vice president of menu innovation at Jack in the Box, which has 2,250 locations in 21 states. "This is targeted at folks looking for indulgent treats," he says. Among them: late-night shift workers and Millennials who get the munchies at odd hours.

Even then, most of the meals are crammed with roughly the total number of calories many folks should consume in an entire day, notes Beth Vallen, a marketing professor at Fordham University who specializes in food issues. Forget the growing national movement towards better-for-you eating. This, she says, is a very clear case of "negative nutritents" increasingly being marketed as acceptable late night eats.

The Jack's Munchie Meal offerings:

Stacked Grilled Cheeseburger. A sour dough grilled-cheese sandwich placed on top of a cheeseburger. Total Meal: 1,679 calories and 3,538 milligrams of sodium.

Exploding Cheesy Chicken Sandwich. A chicken sandwich with mozzarella cheese sticks and gooey, white sauce. Total Meal: 1594 calories and 3,139 milligrams of sodium.

Loaded Nuggets. Nuggets drowning in two kinds of cheese and ranch dressing and bacon. Total meal: 1,592 calories and 3,593 milligrams of sodium.

Brunch Burger. A cheeseburge! r with a fried egg and hashed-browns patty on top. Total meal: 1,708 calories and 2,993 milligrams of sodium.

This is Jack in the Box's bid to ramp-up late-night business, one of the few growth categories in fast-food. Witness Taco Bell's Fourth Meal and later hours at McDonald's, Burger King and Wendy's. Jack-in-the-Box will promote the new offerings with "a twisted version" of its spokescharacter, Jack, dubbed Late Night Jack -- who'll be seen playing video games, says Guilbault.

But Flipse, the nutritionist, is unimpressed. "The only reason I can see for this line is that they are only available after 9:00 p.m.," she says. "That's when, as they say, you don't know if you're eating supper or breakfast because you are in an altered state of mind."

Twitter hopes to avoid Facebook's IPO stumble with its own debut

Twitter Inc.'s market debut will be the most anticipated initial public offering since Facebook Inc. listed last year, and the microblogging service is making sure to avoid some of its rival's pitfalls.

Twitter disclosed it had filed to go public in one of its 140-character postings yesterday, giving no other financial figures or details on when it will actually list.

The San Francisco-based company filed confidentially with the U.S. Securities and Exchange Commission through a process that will keep sales and profit data under wraps until shortly before a road show to market to investors. Twitter may be seeking to avoid the hype that led to Facebook pricing its offering at 107 times trailing 12-month earnings, more expensive than 99 percent of all companies in the Standard & Poor's 500 Index at the time. Facebook lost half its value following the $16 billion IPO.

“Twitter will do everything they can to avoid anything that looks like the Facebook IPO, both on the expectations front and the execution front,” David Pakman, a New York-based partner at Venrock Inc., an early-stage venture-capital firm, said by phone. “By the confidential filing, it will hopefully be able to keep expectations down a bit, and hopefully use a different pricing strategy than Facebook.”

Goldman Sachs Group Inc. will be the lead underwriter for the IPO, according to people with knowledge of the matter, who asked not to be identified because the information isn't public. The investment bank's top rival, Morgan Stanley, led Facebook's public debut.'Extremely Turbulent'

Twitter's filing used the Jumpstart Our Business Startups, or JOBS, Act, which lets companies that qualify as emerging growth companies submit a filing for confidential review. Jim Prosser, a spokesman for Twitter, declined to comment on the company's IPO strategy.

The microblogging service was valued last month at about $10.5 billion by GSV Capital Corp., one of its investors, up 5 percent from a May estimate. Facebook, whose shares reached a record this week after recovering from a decline of as much as 53 percent last year, currently is valued at about $109 billion.

Facebook Chief Executive Officer Mark Zuckerberg described the first year as a public company as “extremely turbulent” in an interview Sept. 11 at an event run by technology blog TechCrunch. Still, he's learned from the process and said he shouldn't have worried as much about the challenges of going public, he said when asked about a potential Twitter IPO.

“I actually don't think it's that bad,” Zuckerberg, 29, said. “I was really worried that people would leave the company and that people would get really demoralized when the stock was down. I actually think that it's made our company a lot stronger.”Close Scrutiny

Facebook, after increasing the price and number of shares, debuted in May 2012 in the biggest IPO for a technology company. The stock slipped below its IPO price on the second day of trading and began sliding. Investors were concerned that the operator of the world's biggest social-networking service would struggle to profit from its growing base of mobile users. Facebook had only rolled out an advertising service for wireless devices during the IPO process.

The stock began climbing from its lows in September 2012, and it wasn't until July of this year that Facebook put many of those concerns to rest when it announced revenue from mobile made up more than 40 percent of advertising dollars in the second quarter. The stock topped the IPO price of $38 in August and earlier this month surpassed its all-time high.

Shares in Facebook fell less than 1 percent to $44.75 at yesterday's close in New York, leaving the stock up 68 percent this year.Growth Targets

Facebook filed for its IPO in February 2012, giving investors an early look at its financials. Each subsequent filing would get scrutinized for any changes or surprises, and a later filing raised questions over mobile revenue.

Twitter will be able to keep that information under wraps until shortly before the market debut.

“Twitter did it because they can,” said Michael Pachter, an analyst Wedbush Securities Inc. in Los Angeles. “It just avoids the public scrutiny.”

Twitter, which started in 2006 and didn't introduce advertising service until 2010, is also at an earlier stage of growth than Facebook was at its public debut. While Facebook had almost $4 billion in revenue the year prior to the IPO, Twitter is targeting sales of $1 billion in 2014. That means the company has a better shot at showing robust growth after it goes public.Investment Option

“Twitter is probably coming to market with a different phase of their growth cycle than Facebook did,” Pakman said. “I think their strategy of when to go public is more about where the company is in the maturity of its core business model, and what kind of growth it sees ahead of it.”

Twitter will grow advertising revenue to $950 million in 2014, an increase of 63 percent from $582.8 million this year, EMarketer Inc. estimates. That's up from just $139.5 million in 2011, according to the research firm.

The microblogging service also has a strong mobile story. Advertising tied to wireless devices should make up more than half of revenue this year, according to EMarketer.

“Twitter is establishing itself as a leader with a growing strength in pure-play mobile advertising, ” Brian Wieser, an analyst at Pivotal Research Group, wrote in a research note yesterday.

Twitter is already attracting investor interest. The company will be a welcome option for those seeking to diversify from the other two big social-media sites, Facebook and LinkedIn Corp.

“This is the one main company that was missing,” said Bruno del Ama, CEO at Global X Funds. “Having a company like Twitter as a potential investment in our fund is very exciting for us.”

(Bloomberg News) Like what you've read?

CFP Board to set guidance on compensation disclosure

CFP Board's Keller said 'Our effort is not to capture people doing things wrong. Our efforts are toward helping people comply.'

Differing definitions of “fee-only” were hashed out by the Certified Financial Planner Board of Standards Inc., NAPFA and the Financial Planning Association earlier this week and while no conclusion was reached, the CFP Board will have the last word.

"It was a very healthy discussion,” said Geoffrey Brown, chief executive of the National Association of Personal Financial Advisors, referring to a meeting of the Financial Planning Coalition in Chicago on Tuesday. “Everyone came away from it with an understanding that we would be working toward coming up with a common set of definitions for all compensation, 'fee-only' being one of them.”

It's not exactly a negotiation. The groups agree that their aim is to strengthen consumer protection by defining clearly how an investment adviser is paid. The CFP Board, however, is the body that determines the requirements for financial planning certification.

“This is not about us changing,” CFP Board chief executive Kevin Keller said in an interview. “FPA and NAPFA fully support the CFP Board as the standard-setting body, and we're working to facilitate their compliance with our standards.”

Within the next couple weeks, the CFP Board will send to its certificants a document designed to help them understand how to describe their compensation.

The CFP Board is compiling a set of frequently asked questions that have cropped up since an early August webinar and a follow-up notice distributed at that time to the nearly 69,000 CFPs. The FAQs also will be posted on the CFP website.

The organization has renewed its focus on compensation disclosure in the wake of recent enforcement cases, including one against former CFP Board chairman Alan Goldfarb, that centered on advisers' misrepresenting their compensation as fee-only under the CFP Board definition of the term.

“The FAQs are designed to provide guidance within the limitations of facts and circumstances,” Mr. Keller said. “Our effort is not to capture people doing things wrong. Our efforts are toward helping people comply, so that when the public sees CFP after [an adviser's] name, they know that person is meeting high ethical standards and that they've met competency standards.”

The CFP Board defines fee-only as meaning that an adviser derives compensation only from charging fees to a client. If the adviser is affiliated with a broker or insurer that charges commissions — even if the adviser doesn't charge clients a commission — the adviser's compensation is deemed to be “commission and fee.”

The CFP Board's definition differs from that used by NAPFA. The organization allows its members to own up to a 2% stake in a financial services company, which means they can be affiliated with a firm that charges commissions and still use the fee-only designation.

Mr. Brown said that fewer than 100 of NAPFA's approximately 2,400 member! s might find themselves out of compliance with the CFP Board's definition of fee-only.

“We've aligned ourselves with the CFP designation, and we will work with our partners to resolve the situation,” Mr. Brown said. NAPFA last year implemented a requirement that new members hold the CFP mark.

Mr. Keller said that the relationship between the organizations is strong, despite the compensation differences.

The three compensation designations that the CFP Board uses are “fee-only,” “commission and fee,” and “commission only.” The organization recently dropped “salary” as a term an adviser can use to describe compensation on the CFP website. The FPA also has eliminated “salary” as a compensation option.

“There are many different, complex ways folks can be compensated,” Mr. Keller said. “We just think words have meaning. If you're fee-only, you and the firms you're affiliated with are fee-only.”

The recent compensation matters that have come before the CFP Board's Disciplinary and Ethics Commission don't necessarily signal a trend in compensation enforcement. The organization will look into alleged compensation misrepresentation that's brought before it but won't go looking for cases, Mr. Keller said.

“It is not our policy now — nor do I see it going forward — to conduct audits or investigations,” he said. “We focus our resources on helping people comply with our standards.”

How a Giant Rubber Ducky May Lift Taiwan's Fortunes

dragon935676/Flickr What's a good way to drum up interest in your city and generate tens of millions of dollars in the process? If you are Kaohsiung -- Taiwan's second-largest city, located on the opposite side of the island from Taipei -- you do everything in your power to lure an outsized version of an age-old tub toy to your harbor. Behold the 18-meter (59-foot) rubber ducky. Some 200,000 eager fans -- including dozens decked out in duck costumes -- lined the shores of Kaohsiung's harbor last Thursday to welcome the 1,000-kilogram (2,205-pound) floating duck to Taiwan. Yet, the festivities were short-lived. Just 24 hours later, the duck was gone. It wasn't an act of vandalism, an art heist or a deflating leak. Organizers plucked the duck out of the water and put it back in its industrial coop Friday amid the threat of Typhoon Usagi, which brushed the southern coast of Taiwan over the weekend. Two days of duck drama only served to catapult the toy to iconic status in Taiwan, and it lured another 100,000 spectators to Kaohsiung's Glory Pier and Love Pier early Sunday for a re-welcoming ceremony. The beloved duck itself is the brainchild of Dutch artist Florentijn Hofman, and it's his largest yet to nest in Asia. Hofman has made a name for himself over the last six years by transporting his playful installations to 15 cities, including Sao Paulo, Osaka, Sydney and Auckland -- all in the name of "spreading joy around the world." Before arriving in Taiwan last week, versions of the rubber ducky also graced Hong Kong's Victoria Harbor and a Beijing park. Both of those inflatables had widely-publicized issues with deflation, but the team in Kaohsiung said they had created a new air pump and duck design to ensure the art maintains its bulbous figure. Kaohsiung officials hope their new inanimate guest can attract more than 3 million visitors to the city and generate $33.71 million dollars for local businesses in the process, according Kaohsiung Information Bureau Director General Lai Jui-lung. Lai said many businesses in the area had developed tour packages and products based around the duck's visit. If the plan seems a bit outlandish, consider this: The duck lured half a million people in its first three days in the harbor, and its dedicated website has already sold out of some of the official authorized rubber duck merchandise. Its arrival in Taiwan alone is a testament to just how eager Kaohsiung was to secure the honor. Hofman said recently that more than 300 other cities had contacted him in hopes of turning their harbors into proverbial bathtubs.

Can Citigroup Perform Well After Recent News?

With shares of Citigroup (NYSE:C) trading around $49, is C an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Citigroup is a global diversified financial services holding company providing consumers, corporations, governments, and institutions with a broad range of financial products and services. It operates in two segments: Citicorp and Citi Holdings. The company's products and services include: consumer banking and credit, corporate and investment banking, securities brokerage, wealth management, and transaction services to consumers, corporations, governments, and institutions worldwide.

Citigroup shares are down in premarket trading as people familiar with the matter who spoke to the Financial Times said the company will report a sharp drop in trading revenue due to a slump in trading across the market. The FT pointed out that Citi's focus on interest rates and foreign exchange, which have been weak as of late, are reasons the company will likely report disappointing earnings. Citi, the country's third-largest bank by assets, is the most exposed of all U.S. banks to emerging markets, which investors have been shying away from and have seen falling currency rates. Citi declined to give the FT a comment.

T = Technicals on the Stock Chart Are Mixed

Citigroup stock has made significant progress in recent years. The stock is currently pulling-back from highs for the year. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Citigroup is trading between its rising key averages, which signal neutral price action in the near-term.

(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of Citigroup options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Citigroup Options	28.67%	66%	65%

What does this mean? This means that investors or traders are buying a significant amount of call and put options contracts as compared to the last 30 and 90 trading days.

	Put IV Skew	Call IV Skew
October Options	Flat	Average
November Options	Flat	Average

As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a significant amount of call and put option contracts and are leaning neutral to bullish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Rising Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Citigroup’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Citigroup look like and more importantly, how did the markets like these numbers?

	2013 Q2	2013 Q1	2012 Q4	2012 Q3
Earnings Growth (Y-O-Y)	41.05%	29.47%	24.51%	-87.80%
Revenue Growth (Y-O-Y)	11.38%	5.59%	5.82%	-33.03%
Earnings Reaction	1.96%	0.20%	-2.91%	5.49%

Citigroup has seen rising earnings and revenue figures over the last four quarters. From these numbers, the markets have mostly been satisfied with Citigroup’s recent earnings announcements.

P = Excellent Relative Performance Versus Peers and Sector

How has Citigroup stock done relative to its peers, JPMorgan Chase (NYSE:JPM), Bank of America (NYSE:BAC), Wells Fargo (NYSE:WFC), and sector?

	Citigroup	JPMorgan Chase	Bank of America	Wells Fargo	Sector
Year-to-Date Return	25.66%	17.76%	21.71%	23.42%	22.17%

Citigroup has been a relative performance leader, year-to-date.

Conclusion

Citigroup is a bellwether that offers essential financial products and services to consumers and companies worldwide. It is believed that the company will report a sharp drop in trading revenue due to a slump in trading across the market. The stock has made significant progress but is now trading slightly below highs for the year. Over the last four quarters, earnings and revenues have been rising which has mostly left investors satisfied with the company. Relative to its peers and sector, Citigroup has been a year-to-date performance leader. WAIT AND SEE what Citigroup does this coming quarter.

Wednesday Closing Bell: Markets Open, Close Lower

Source: thinkstockAugust 21, 2013: Markets opened mixed this morning as traders and investors waited for the afternoon's release of the July FOMC meeting minutes. Existing home sales rose more than expected in July. A report on mortgage applications showed a decline, however, as interest rate increases continue to slow the number of refinancings. The U.S. crude inventory fell last week, and crude spot prices for October delivery dropped 1.2% today to $103.85.

European closed lower today, while Latin American and Asian markets markets closed mixed.

The FOMC minutes did not reveal anything unexpected. But then, they never really do. Markets reacted with a buying spurt on the inference that the Fed's asset purchases wouldn't stop next month, but the uptick was short-lived.

In addition to a speech from Dallas Fed President Richard Fisher, Thursday's calendar includes a number of data releases:

8:30 a.m. – New claims for unemployment benefits 8:58 a.m. – Flash PMI manufacturing index 9:00 a.m. – FHFA house price index 10:00 a.m. – Leading indicators 10:30 a.m. – EIA weekly natural gas storage report 11:00 a.m. – Kansas City Fed manufacturing index 1:00 p.m. – 5-year TIPS auction 4:30 p.m. – Fed balance sheet and money supply

We also broke out the top Wall Street calls with analyst upgrades and analyst downgrades. Here are the closing bell levels for Wednesday:

S&P500 1,642.80 (-9.55; -0.38%) DJIA 14,897.55 (-105.44; -0.70%) NASDAQ 3,599.79 (-13.80; -0.38%) 10YR TNOTE 2.893% (-0.625) Gold $1,370.10 (-2.50; -0.02%) Oil $103.85 (-1.26; -1.2%) Dollar/Euro: 1.3347 (-0.0070; -0.52%)

Big earnings winners: Incyte Corp. (NASDAQ: INCY) up 34.4% to $36.02 on a successful drug trial, Target Corp. (NYSE: TGT) down 3.5% to $65.54 on weak earnings and lowered outlook, and Lowe's Companies Inc. (NYSE: LOW ) up 4.4% at $46.01 on strong earnings and an improved outlook.

DJIA stocks on the move: Lions Gate Entertainment Corp. (NYSE: LGF) hit a new 52-week high of $35.13 on Wednesday. Trina Solar Ltd. (NASDAQ: TSL) rose more than 15% after posting better than expected earnings on Tuesday, Aeropostale Inc. (NYSE: ARO) put up a new 52-week low of $11.40, and another teen retailer, and American Eagle Outfitter Inc. (NYSE: AEO) also put up a new low of $14.33.

In all, 146 stocks put up new lows today, while only 29 stocks posted new 52-week highs.

Top 10 Bank Companies To Buy Right Now

Carolina Alliance Bank (CRLN)

Today, CRLN remains (0.00%) +0.000 at $9.60 thus far (ref. google finance Delayed: 10:00AM EDT August 16, 2013).

Carolina Alliance Bank and Forest Commercial Bank jointly previously reported that they have signed a definitive merger agreement. The proposed combination will create a full-service community bank serving customers principally in upstate South Carolina and western North Carolina. The combined bank will have three full-service offices located in Spartanburg, SC, Asheville, NC, and Hendersonville, NC; a loan production office in Charlotte, NC; and a proposed branch office to be located in Seneca, SC. All of the offices will operate as Carolina Alliance Bank. The bank will be headquartered in Spartanburg, SC, with senior management personnel operating from both Spartanburg and Asheville. On a combined basis, the bank will have approximately $385 million in assets, approximately $277 million in loans, approximately $314 million in deposits, and a very strong capital position of approximately $50 million. The transaction is expected to close in the first quarter of 2014, subject to receipt of regulatory approvals and the approval of the shareholders of each institution.

Top 10 Bank Companies To Buy Right Now: KeyCorp (KEY)

KeyCorp is a bank holding company for KeyBank National Association (KeyBank). Through KeyBank and certain other subsidiaries, the Company provides a range of retail and commercial banking, commercial leasing, investment management, consumer finance and investment banking products and services to individual, corporate and institutional clients through two business segments: Key Community Bank and Key Corporate Bank. As of December 31, 2011, these services were provided through KeyBank�� 1,058 full-service retail banking branches in 14 states, additional offices, a telephone banking call center services group and a network of 1,579 automated teller machines (ATMs) in 15 states. On January 17, 2012, the Company opened another national bank subsidiary.

In addition to the banking services of accepting deposits and making loans, the Bank and trust company subsidiaries offer personal and corporate trust services, personal financial services, access to mutual funds, cash management services, investment banking and capital markets products, and international banking services. Through its bank, trust company and investment adviser subsidiaries, the Company provides investment management services to clients that include corporate and public retirement plans, foundations and endowments, individuals and trust funds. The Company provides other financial services - both within and outside of its primary banking markets - through various nonbank subsidiaries. These services include community development financing, securities underwriting and brokerage. It is also an equity participant in a joint venture that provides merchant services to businesses.

Lending Activities

As of December 31, 2011, the Company�� Commercial, Financial and Agricultural loans, also referred to as Commercial and Industrial, represented 39% of its total loan portfolio. As of December 31, 2011, commercial real estate loans represented approximately 19% of its total loan portfolio. These loans include bo! th owner and nonowner-occupied properties and constitute approximately 27% of its commercial loan portfolio. Its commercial real estate lending business is conducted through two primary sources: its 14-state banking franchise, and Real Estate Capital and Corporate Banking Services. The Company conducts financing arrangements through its equipment finance line of business. Commercial lease financing receivables represented 17% of commercial loans at December 31, 2011. The home equity portfolio is the largest segment of its consumer loan portfolio.

Investment Activities

The Company�� securities portfolio totaled $18 billion at December 31, 2011. Available-for-sale securities were $16 billion at December 31, 2011. Held-to-maturity securities were $2.1 billion at December 31, 2011. At December 31, 2011, it had $2.1 billion in collateralized mortgage obligations (CMOs) in its held-to-maturity securities portfolio. At December 31, 2011, the Company had $15.9 billion invested in CMOs and other mortgage-backed securities in the available-for-sale portfolio. Federal Agency CMOs constitute most of its held-to-maturity securities along with foreign bonds and preferred equity securities. The investments in equity and mezzanine instruments made by its principal investing unit represented 61% of other investments at December 31, 2011. They include direct investments (investments made in a particular company), as well as indirect investments (investments made through funds that include other investors).

Sources of Funds

Domestic deposits are the Company�� primary source of funding. During the year ended December 31, 2011, these deposits averaged $58.5 billion and represented 80% of the funds it used to support loans and other earning assets. Wholesale funds, consisting of deposits in its foreign office and short-term borrowings, averaged $3.4 billion during 2011. At December 31, 2011, the Company had $4.7 billion in time deposits of $100,000 or more.

Top 10 Bank Companies To Buy Right Now: Northern Trust Corporation(NTRS)

Northern Trust Corporation, through its subsidiaries, provides asset servicing, fund administration, asset management, and fiduciary and banking solutions for corporations, institutions, families, and individuals worldwide. The company offers corporate and institutional services, including global master trust and custody, trade settlement, and reporting; fund administration; cash management; investment risk and performance analytical services; investment operations outsourcing; and transition management and commission recapture services. It also provides personal financial services, such as personal trust, investment management, custody, and philanthropic services; financial consulting; guardianship and estate administration; brokerage services; and private and business banking services, as well as customized products and services. In addition, the company offers active and passive equity and fixed income portfolio management, as well as alternative asset classes comprisin g private equity and hedge funds of funds, and multi-manager products and advisory services. Further, it engages in fund administration, investment operations outsourcing, and custody business that provides specialized services to a range of funds, which include money-market, multi-manager, exchange-traded funds, and property funds for on-shore and off-shore markets. Additionally, the company provides administrative and middle-office services consisting of trade processing, valuation, real-time reporting, accounting, collateral management, and investor servicing. Northern Trust Corporation was founded in 1889 and is based in Chicago, Illinois.

Top Safest Companies To Invest In Right Now: Signature Bank (SBNY)

Signature Bank (the Bank) is a full-service commercial bank with 25 private client offices located in the New York metropolitan area serving the needs of privately owned business clients and their owners and senior managers. The Bank offers a variety of business and personal banking products and services through the Bank, as well as investment, brokerage, asset management and insurance products and services through its wholly owned subsidiary, Signature Securities Group Corporation (Signature Securities), a licensed broker-dealer and investment adviser. Through Signature Securities, it also purchases, securitizes and sells the guaranteed portions of the United States Small Business Administration (SBA) loans. The Bank offers a variety of deposit, escrow deposit, credit, cash management, investment and insurance products and services to its clients. As of December 31, 2011, the Bank maintained approximately 78,000 deposit accounts, 6,900 investment accounts, 8,600 loan accounts and 14,300 client relationships. In April 2012, it formed a new subsidiary, Signature Financial, LLC.

The Bank offers a range of products and services oriented to the needs of its business clients, including deposit products, such as non-interest-bearing checking accounts, money market accounts and time deposits; escrow deposit services; cash management services; commercial loans and lines of credit for working capital and to finance internal growth, acquisitions and leveraged buyouts; permanent real estate loans; letters of credit; investment products to help better manage idle cash balances, including money market mutual funds and short-term money market instruments; business retirement accounts, such as 401(k) plans, and business insurance products, including group health and group life products. It offers a range of products and services oriented to the needs of its high net worth personal clients, including interest-bearing and non-interest-bearing checking accounts, with optional features, such as debit/ autom! ated teller machine (ATM) cards and overdraft protection and, for its clients, rebates of certain charges, including ATM fees; money market accounts and money market mutual funds; time deposits; personal loans, both secured and unsecured; mortgages, home equity loans and credit card accounts; investment and asset management services, and personal insurance products, including health, life and disability.

Lending Activities

The Bank�� commercial and industrial (C&I) loan portfolio is consisted of lines of credit for working capital and term loans to finance equipment, company owned real estate and other business assets, along with commercial overdrafts. Its lines of credit for working capital are generally renewed on an annual basis and its term loans generally have terms of 2 to 5 years. The Bank�� lines of credit and term loans typically have floating interest rates, and as of December 31, 2011, approximately 61% of its outstanding C&I loans were variable rate loans. As of December 31, 2011, funded C&I loans totaled approximately 15% of its total funded loans. The Bank�� real estate loan portfolio includes loans secured by commercial and residential properties. It also provides temporary financing for commercial and residential property. As of December 31, 2011, funded real estate loans totaled approximately $5.74 billion, representing approximately 80% of its total funded loans. It issues standby or performance letters of credit, and can service the international needs of its clients through correspondent banks. As of December 31, 2011, its commitments under letters of credit totaled approximately $235.7 million. Its personal loan portfolio consists of personal lines of credit and loans to acquire personal assets. As of December 31, 2011, its consumer loans totaled $11.8 million, representing less than 1% of its total funded loans.

Investment and Asset Management Products and Services

Investment and asset management products and services are ! provided ! through the Bank�� subsidiary, Signature Securities. Signature Securities is a licensed broker-dealer. Signature Securities is an introducing firm and, as such, clears its trades through National Financial Services, Inc., a wholly owned subsidiary of Fidelity Investments. Signature Securities is also registered as an investment adviser in New York, New Jersey, Pennsylvania and Florida. It offers an array of asset management and investment products, including the ability to purchase and sell all types of individual securities, such as equities, options, fixed income securities, mutual funds and annuities. The Bank offers transactional, cash management type brokerage accounts with check writing and daily sweep capabilities. It also offers retirement products, such as individual retirement accounts (IRAs) and administrative services for retirement vehicles, such as pension, profit sharing, and 401(k) plans to its clients. Signature Securities offers wealth management services to its high net worth personal clients. Together with its client and their other professional advisors, including attorneys and certified public accountants, it develops a financial plan that can include estate planning, business succession planning, asset protection, investment management, family office advisory services, bill payment, art and collectible advisory services and concentrated stock services.

Sources of Funds

The Bank offers a variety of deposit products to its clients. Its business deposit products include commercial checking accounts, money market accounts, escrow deposit accounts, lockbox accounts, cash concentration accounts and other cash management products. Its personal deposit products include checking accounts, money market accounts and certificates of deposit. The Bank also allows its personal and business deposit clients to access their accounts, transfer funds, pay bills and perform other account functions over the Internet and through ATM machines. As of December 31, 2011, it main! tained ap! proximately 78,000 deposit accounts representing $11.70 billion in client deposits, excluding brokered deposits.

Insurance Services

The Bank offers its business and private clients an array of individual and group insurance products, including health, life, disability and long-term care insurance products through its subsidiary, Signature Securities. The Bank does not underwrite insurance policies. It only acts as an agent in offering insurance products and services underwritten by insurers.

Top 10 Bank Companies To Buy Right Now: EverBank Financial Corp (EVER.N)

EverBank Financial Corp, incorporated in 2004, is an unitary savings and loan holding company. The Company provides a range of financial products and services directly to customers through multiple business channels. Its operating subsidiary is EverBank. As of December 31, 2011, EverBank had $ 10.3 billion deposits. EverBank offers a range of banking, lending and investing products to consumers and businesses. EverBank provides services to customers through Websites, over the phone, through the mail and at 14 Florida-based Financial Centers. The Company operates in two operating business segments: Banking and Wealth Management, and Mortgage Banking. Its Banking and Wealth Management segment includes earnings generated by and activities related to deposit and investment products and services and portfolio lending and leasing activities. Its Mortgage Banking segment consists of activities related to the origination and servicing of residential mortgage loans. In April 201 2, the Company acquired MetLife Bank�� warehouse finance business. In October 2012, it acquired Business Property Lending, Inc.

Asset Origination and Fee Income Businesses

The Company has a range of asset origination and fee income businesses. The Company generates generate fee income from its mortgage banking activities, which consist of originating and servicing one-to-four family residential mortgage loans. It originates prime residential mortgage loans using a centrally controlled underwriting, processing and fulfillment infrastructure through financial intermediaries (including community banks, credit unions, mortgage bankers and brokers), consumer direct channels and financial centers. Its mortgage origination activities include originating, underwriting, closing, warehousing and selling to investors prime conforming and jumbo residential mortgage loans. From its mortgage origination activities, it earns fee-based income on fees charged to b orrowers and other noninterest income from gains on sales ! fr! om mortgage loans and servicing rights. During the year ended December 31, 2011, it originated six billion dollars of residential loans. It generates mortgage servicing business through the retention of servicing from its origination activities, acquisition of bulk mortgage servicing rights (MSR) and related servicing activities.

The Company�� mortgage servicing business includes collecting loan payments, remitting principal and interest payments to investors, managing escrow funds for the payment of mortgage-related expenses, such as taxes and insurance, responding to customer inquiries, counseling delinquent mortgagors, supervising foreclosures and liquidations of foreclosure properties and otherwise administering its mortgage loan servicing portfolio. It earns mortgage servicing fees and other ancillary fee-based income in connection with these activities. It services a portfolio by both product and investor, including agency and private pools of mortgages secured by properties throughout the United States. As of December 31, 2011, its mortgage servicing business, which services mortgage loans for itself and others, managed loan servicing administrative functions for loans with unpaid principal balance (UPB) of $54.8 billion.

The Company originates originate equipment leases nationwide through relationships with approximately 280 equipment vendors with networks of creditworthy borrowers and provide asset-backed loan facilities to other leasing companies. Its equipment leases and loans finance essential-use health care, office product, technology and other equipment. Its commercial financings range from approximately $25,000 to $1.0 million per transaction, with typical lease terms ranging from 36 to 60 months. Its commercial finance activities provide it with access to approximately 25,000 small business customers nationwide, which creates opportunities to cross-sell its deposit, lending and wealth management pro ducts. It focuses to offer warehouse loans, which are s! hort-! te! rm revo! lving facilities, primarily securitized by agency and government collateral. It provides financial advisory, planning, brokerage, trust and other wealth management services to its mass-affluent and high-net-worth customers through its registered broker dealer and recently-formed registered investment advisor subsidiaries.

Interest-Earning Asset Portfolio

As of December 31, 2011, the Company�� interest-earning assets were $11.7 billion. As of December 31, 2011, its loan and lease held for investment portfolio was $6.5 billion. As of December 31, 2011, the carrying values of its interest-earning assets are: residential, government-insured (residential), securities, commercial and commercial real estate, Bank of Florida (covered), lease financing receivables, and other.

Residential includes primarily prime loans originated and retained from its mortgage banking activities, acquired from third parties or held for sale to other investors. government-insured (residential) includes Government National Mortgage Association (GNMA) pool buyouts with government insurance, sourced from its mortgage banking segment and third-party sources. Securities include non-agency residential mortgage-backed securities (MBS) and collateralized mortgage obligation (CMO) purchased at significant discounts. This portfolio includes protection against credit losses from purchase discounts, subordination in the securities structures and borrower equity. Commercial and commercial real estate includes a range of commercial loans, including owner-occupied commercial real estate, commercial investment property and small business commercial loans. As of December 31, 2011, Bank of Florida (Covered) includes commercial, multi-family and commercial real estate loans with $71.3 million of purchase discounts. Lease financing receivables include covered lease financing receivables. As of December 31, 2011, the lease portfolio had $64.7 million of total discounts. Other includes home equity loan! s and lin! ! es of cre! dit, consumer and credit card loans and other investments.

Deposit Generation

As of December 31, 2011, the Company had approximately $10.3 billion in deposits. Its market-based deposit products, consisting of its WorldCurrency, MarketSafe and EverBank Metals Select products, provide investment capabilities for customers seeking portfolio diversification with respect to foreign currencies, commodities and other indices. Its financial portal includes online bill-pay, account aggregation, direct deposit, single sign-on for all customer accounts and other features. Its Website and mobile device applications provide information on its product offerings, financial tools and calculators, newsletters, financial reporting services and other applications for customers to interact with it and manages all of their EverBank accounts on a single integrated platform. Its new mobile applications allow customers using iPhone, iPad, Android and Blackberry devices to view account balances, conduct real time balance transfers between EverBank accounts, administer billpay, review account activity detail and remotely deposit checks.

The Company generates deposit customer relationships through its consumer direct, financial center and financial intermediary distribution channels. Its consumer direct channel includes Internet, e-mail, telephone and mobile device access to product and customer support offerings. Its direct distribution with a network of 14 financial centers in Florida metropolitan areas, include Jacksonville, Naples, Ft. Myers, Miami, Ft. Lauderdale, Tampa Bay and Clearwater. As of December 31, 2011, its financial centers had average deposits of $130.5 million, which is approximately double the industry average. In addition, it generates noninterest-bearing escrow deposits from its mortgage servicing business.

Top 10 Bank Companies To Buy Right Now: New York Community Bancorp Inc (NYCB)

New York Community Bancorp, Inc. is a bank holding company and a producer of multi-family mortgage loans in New York City, with an emphasis on apartment buildings that feature below-market rents. It has two bank subsidiaries: New York Community Bank (the Community Bank),New York Commercial Bank (the Commercial Bank. The Community Bank has 241 branches and operates through seven divisional banks. The Commercial Bank has 34 branches in Manhattan and operates 17 of its branches under the divisional name Atlantic Bank.

During the year ended December 31, 2011, all of the one-to-four family loans the Company originated was sold to government-sponsored enterprises (GSEs). In New York, the Company serves its Community Bank customers through Roslyn Savings Bank, with 55 branches on Long Island; Queens County Savings Bank, with 34 branches in the New York City borough of Queens; Richmond County Savings Bank, with 22 branches in the borough of Staten Island, and Roosevelt Savings Bank, with eight branches in the borough of Brooklyn. As of December 31, 2011, in the Bronx and neighboring Westchester County, the Company had four branches that operated directly under the name New York Community Bank.

In New Jersey, the Company serves its Community Bank customers through 51 branches that operate under the name Garden State Community Bank. In Florida and Arizona, where it has 25 and 14 branches, respectively, the Company serves its customers through the AmTrust Bank (AmTrust) division of the Community Bank. In Ohio, the Company serves its Community Bank customers through 28 branches of Ohio Savings Bank. Customers of the Community Bank and the Commercial Bank have access to their accounts through 261 of its 285 automatic teller machines (ATMs) locations in five states. The Company also serves its customers through three Websites, which include www.myNYCB.com, www.NewYorkCommercialBank.com and www.NYCBfamily.com.

Lending Activities

The Company�� principal asset is l! oans. Its loan portfolio consists of three components: covered loans, non-covered loans held for sale and non-covered loans held for investment. As of December 31, 2011, the balance of covered loans was $3.8 billion, of which $3.4 billion were one-to-four family loans. Non-covered loans held for sale consists of the one-to-four family loans that are originated for sale, primarily to GSEs. At December 31, 2011, the held-for-sale loan portfolio totaled $1.0 billion

As of December 31, 2011, loans held for investment consisted of loans that it originates for its own portfolio, and totaled $ 25.5 billion.

In addition to multi-family loans, loans held for investment include commercial real estate loans (CRE); acquisition, development and construction (ADC) loans; commercial and industrial loans (C&I), and one-to-four family loans. As of December 31, 2011, its multi-family loans represented $17.4 billion, or 68.3%, of total loans held for investment, and represented $5.8 billion, or 64.1%, of the total loans that it originated for investment. The multi-family loans it originates are typically secured by non-luxury apartment buildings in New York City. It also makes multi-family loans to property owners who are seeking to expand their real estate holdings by purchasing additional properties.

As of December 31, 2011, CRE loans represented $6.9 billion, or 26.9%, of total held for investment; ADC loans represented $445.7 million, or 1.7%, of total loans held for investment. Its ADC loan portfolio consists of loans that were originated for land acquisition, development, and construction of multi-family and residential tract projects in New York City and Long Island.

C&I loans represented $600.0 million, or 2.4%, of total held for investment. It also offers a range of loans to small and mid-size businesses for working capital (including inventory and receivables), business expansion, and the purchase of equipment and machinery. Non-covered one-to-four family loans totaled $127! .4 millio! n at December 31, 2011.

Investment Activities

The Company�� securities portfolio primarily consists of mortgage-related securities, and debt and equity (other) securities. Its investments include GSE certificates, GSE collateralized mortgage obligations (CMOs) and GSE debentures. The Community Bank and the Commercial Bank are members of the Federal Home Loan Bank of New York (FHLB-NY), one of 12 regional Federal Home Loan Banks (FHLBs) consisting of the FHLB system. As of December 31, 2011, the Company�� securities represented $4.5 billion, or 10.8%, of total assets. As of December 31, 2011, 93.7% of its securities portfolio consisted of GSE obligations; held-to-maturity securities represented $3.8 billion, or 84.0%, of total securities, and its investment in bank-owned life insurance (BOLI) was $769.0 million.

Source of Funds

The Company has four primary funding sources. These include the deposits that it added through its acquisitions or gathered through its branch network, and brokered deposits; wholesale borrowings, primarily in the form of FHLB advances and repurchase agreements with the FHLB and various brokerage firms; cash flows produced by the repayment and sale of loans, and cash flows produced by securities repayments and sales. As of December 31, 2011, deposits totaled $ 22.3 billion, which included certificates of deposit (CDs) of $7.4 billion; negotiable order withdrawal (NOW) and money market accounts of $8.8 billion; savings accounts of $ 4.0 billion, and non-interest-bearing accounts of $2.2 billion. As of December 31, 2011, the Company�� borrowed funds totaled $14.0 billion, loan repayments and sales generated cash flows of $15.0 billion, and securities sales and repayments generated cash flows of $4.2 billion.

Subsidiary Activities

As of December 31, 2011, Community Bank had 34 subsidiary corporations. Of these, 22 are direct subsidiaries of the Community Bank and 12 are subsidiaries of Community Bank! -owned en! tities. The 22 direct subsidiaries of the Community Bank include DHB Real Estate, LLC, Mt. Sinai Ventures, LLC, NYCB Community Development Corp., NYCB Mortgage Company, LLC, Eagle Rock Investment Corp., Pacific Urban Renewal, Inc., Somerset Manor Holding Corp., Synergy Capital Investments, Inc., 1400 Corp., BSR 1400 Corp., Bellingham Corp., Blizzard Realty Corp., CFS Investments, Inc., Main Omni Realty Corp., NYB Realty Holding Company, LLC, O.B. Ventures, LLC, RCBK Mortgage Corp., RCSB Corporation, RSB Agency, Inc., Richmond Enterprises, Inc. and Roslyn National Mortgage Corporation.

The 12 subsidiaries of Community Bank-owned entities include Bronx Realty Funding Company, LLC, Columbia Preferred Capital Corporation, Ferry Development Holding Company, Peter B. Cannell & Co., Inc., Roslyn Real Estate Asset Corp., Walnut Realty Funding Company, LLC, Woodhaven Investments Inc, Your New REO, LLC, Ironbound Investment Company, Inc.,The Hamlet at Olde Oyster Bay, LLC, The Hamlet at Willow Creek, LLC and Richmond County Capital Corporation.

The two direct subsidiaries of the Commercial Bank include Beta Investments, Inc., and Gramercy Leasing Services, Inc. The two subsidiaries of Commercial Bank-owned entities include Omega Commercial Mortgage Corp. and Long Island Commercial Capital Corp.

Top 10 Bank Companies To Buy Right Now: Access National Corp (ANCX)

Access National Corporation (ANC) operates as a bank holding company. The Company has two wholly owned subsidiaries: Access National Bank (the Bank) and Access National Capital Trust II. The Bank is the operating business of the Company. The Bank provides credit, deposit, and mortgage services to middle market commercial businesses and associated professionals, primarily in the greater Washington, D.C. Metropolitan Area. The Bank offers a range of financial services and products and specializes in providing customized financial services to small and medium sized businesses, professionals, and associated individuals. The Bank provides its customers with personal customized service utilizing the latest technology and delivery channels. The Bank�� business is serving the credit, depository and cash management needs of businesses and associated professionals. The products and services offered by the Bank include accounts receivable lines of credit, accounts receivable collection accounts, growth capital term loans, business acquisition financing, online banking, checking accounts, money market accounts, sweep accounts, personal checking accounts, savings /money market accounts and certificates of deposit.

The Bank�� revenues are derived from interest and fees received in connection with loans, deposits, and investments. The Bank operates from five banking centers located in Chantilly, Tysons Corner, Reston, Leesburg and Manassas, Virginia and online at www.accessnationalbank.com. The Mortgage Corporation specializes in the origination of conforming and government insured residential mortgages to individuals in the greater Washington, D.C. Metropolitan Area, the surrounding areas of its branch locations, outside of its local markets through direct mail solicitation, and otherwise. The Mortgage Corporation has offices throughout Virginia, in Fairfax, Reston, Roanoke, and McLean.

Lending Activities

The Bank�� lending activities involve commercial real estate loa! ns, residential mortgage loans, commercial loans, commercial and residential real estate construction loans, home equity loans, and consumer loans. These lending activities provide access to credit to small to medium sized businesses, professionals, and consumers in the greater Washington, D.C. Metropolitan Area. Loans originated by the Bank are classified as loans held for investment. At December 31, 2011 loans held for investment totaled $569.4 million. At December 31, 2011 unsecured loans were comprised of $2.9 million in commercial loans and approximately $124 thousand in consumer loans and collectively equal approximately 0.5% of the loans held for investment portfolio.

The Bank�� commercial real estate loans-wner Occupied represented 30.14% of our loan portfolio held for investment, as of December 31, 2011. Its commercial real estate loans-non-owner occupied loans represent ed18.44% of its loan portfolio held for investment, as of December 31, 2011. The Bank�� residential real estate loans represented 22.56% of the loan portfolio, as of December 31, 2011.

These loans fall into one of three situations: loans supporting an owner occupied commercial property; properties used by non-profit organizations, such as churches or schools where repayment is dependent upon the cash flow of the non-profit organizations, and loans supporting a commercial property leased to third parties for investment. Its residential real estate loans category includes loans secured by first or second mortgages on one to four family residential properties, extended to the Bank clients.

As of December 31, 2011, commercial loans represented 23.15% of the Bank�� loan portfolio held for investment. These loans are to businesses or individuals within its market for business purposes. As of December 31, 2011, real estate construction loans consisted of 5.22% of loans held for investment loan portfolio. These loans include loans to construct owner occupied commercial buildings; l! oans to i! ndividuals; loans to builders for the purpose of acquiring property and constructing homes for sale to consumers, and loans to developers for the purpose of acquiring land, which is developed into finished lots for the ultimate construction of residential or commercial buildings. As of December 31, 2011, consumer loans made up approximately 0.49% of its loan portfolio.

Investment Activities

The Company�� investment securities portfolio is consisted of the United States Treasury securities, the United States Government Agency securities, municipal securities, Community Reinvestment Act (CRA) mutual fund, and mortgage backed securities issued by the United States Government sponsored agencies and corporate bonds. At December 31, 2011, securities totaled $85.8 million. . The securities portfolio is comprised of $45.8 million in securities classified as available-for-sale and $40.0 million in securities classified as held-to-maturity.

Sources of Funds

As of December 31, 2011, deposits totaled $645.0 million. As of December 31, 2011, deposits consisted of noninterest-bearing demand deposits in the amount of $113.9 million, savings and interest-bearing deposits in the amount of $182.0 million, and time deposits in the amount of $349.1 million. The Bank also uses wholesale funding or brokered deposits to supplement traditional customer deposits for liquidity. It participates in the Certificate of Deposit Account Registry Service (CDARS). Through CDARS its depositors are able to obtain FDIC insurance of up to $50 million. As of December 31, 2011, brokered deposits totaled $223,554,000, which includes $192,326,000 in reciprocal CDARS deposits. It also maintains lines of credit with the Federal Home Loan Bank (FHLB) and Federal Reserve Bank (FRB). At December 31, 2011 there was $284.9 million available under these lines of credit. Borrowed funds consist of advances from the FHLB, senior unsecured term note, FHLB long-term borrowings, subordinated debentures (! trust pre! ferred), securities sold under agreement to repurchase, United States Treasury demand notes, federal funds purchased, and commercial paper. As of December 31, 2011 borrowed funds totaled $123.6 million. At December 31, 2011 borrowed funds totaled $70.9 million.

Top 10 Bank Companies To Buy Right Now: HDFC Bank Ltd (HDB)

HDFC Bank Limited (HDFC Bank), incorporated in August 1994, is a banking company engaged in providing a range of banking and financial services, including commercial banking and treasury operations. The Bank has overseas branch operations in Bahrain and Hong Kong. The Bank operates in four segments: treasury, which primarily consists of net interest earnings from the Bank�� investment portfolio, money market borrowing and lending, gains or losses on investment operations and on account of trading in foreign exchange and derivative contracts; retail banking, which serves retail customers through a branch network and other delivery channels; wholesale banking, which provides loans, non-fund facilities and transaction services to corporate, public sector units, government bodies, financial institutions and medium scale enterprises, and other banking business, segment includes income from para banking activities, such as credit cards, debit cards, third party product distribution, primary dealership business and the associated costs. Revenues of the retail banking segment are derived from interest earned on retail loans, net of commission (net of subvention received) paid to sales agents and interest earned from other segments for surplus funds placed with those segments, fees from services rendered, foreign exchange earnings on retail products.

Retail Banking

The Bank is a financial services provider of various deposit products, of retail loans (auto loans, personal loans, commercial vehicle loans, mortgages, business banking, loan against gold jewellery), credit cards, debit cards, depository (custody services), investment advisory, bill payments and several transactional services. Apart from its own products, the Bank distributes third party financial products, such as mutual funds and life and general insurance. As of March 31, 2012, the Bank had 2,544 branches in 1,399 Indian cities. The Bank had 8,913 automated teller machines (ATMs) during the fiscal year ended March 31,! 2012. In addition to the Bank does home loans in conjunction with HDFC Limited. Under this arrangement the Bank sells loans provided by HDFC Limited through its branches. HDFC Limited approves and disburses the loans, which are booked in their books, with the Bank receiving a sourcing fee for these loans. HDFC Limited offers the Bank an option to purchase up to 70% of the fully disbursed home loans sourced under this arrangement through either the issue of mortgage backed pass through certificates (PTCs) or by a direct assignment of loans; the balance is retained by HDFC Limited. It also distributes life, general insurance and mutual fund products through its tie-ups with insurance companies and mutual fund houses.

Wholesale Banking

The Bank provides its corporate and institutional clients a range of commercial and transactional banking products. The Bank�� commercial banking business covers the corporate sector, the emerging corporate segments and some small and medium enterprises (SMEs). The Bank has a number of business groups catering to various segments of its wholesale banking customers with a range of banking services covering their working capital, term finance, trade services, cash management, foreign exchange and electronic banking requirements. The Bank�� financial institutions and government business group (FIG) offers commercial and transaction banking products to financial institutions, mutual funds, public sector undertakings, central and state government departments. The main focus for this segment is offering various deposit and transaction banking products to this segment besides offering funded, non-funded treasury and foreign exchange products.

The Bank provides its customers both working capital and term financing. The Bank�� corporate banking business includes cash management and vendor and distributor (supply chain) finance products. The Bank has a wholesale banking branch in Bahrain, a branch in Hong Kong and two representative offic! es in the! United Arab Emirates (UAE) and Kenya. The branches offer the Bank�� suite of banking services including treasury and trade finance products to its corporate clients. The Bank offers wealth management products, remittance facilities and markets deposits to the non-resident Indian community from its representative offices.

Treasury

The treasury group is responsible for compliance with reserve requirements and management of liquidity and interest rate risk on the Bank�� balance sheet. On the foreign exchange and derivatives front, revenues are driven primarily by spreads on customer transactions based on trade flows and customers��demonstrated hedging needs. The Bank offers Indian rupee and foreign exchange derivative products to its customers. The Bank enters into foreign exchange and derivative deals with counterparties after it has set up appropriate counterparty credit limits based on its evaluation of the ability of the counterparty to meet its obligations in the event of crystallization of the exposure. The Bank also deals in Indian rupee derivatives on its own account, including for the purpose of its own balance sheet risk management.

Other banking business

The Bank has two subsidiaries: HDFC Securities Limited (HSL) and HDB Financial Services Limited (HDBFS). HSL is primarily in the business of providing brokerage services through the Internet and other channels. As of March 31, 2012, HSL had a network of 184 branches across the country. HDBFS is a non-deposit taking non-bank finance company (NBFC). Apart from lending to individuals, it grants loans to small and medium business enterprises and micro small and medium enterprises, the principle businesses of HDBFS include loans, which offers a range of loans in the secured and unsecured loans space that fulfill the financial needs of its target segment; insurance services, HDBFS is a corporate agent for HDFC Standard Life Insurance Company and sells insurance products ,as well as products, ! such as L! oan Cover and Asset Cover, and collections-BPO services, which runs six call centres. These centres cover collection requirements at over 200 towns through its calling and field teams. As on March 31, 2012, HDBFS had 180 branches in 135 cities in order to distribute its products and services.

Top 10 Bank Companies To Buy Right Now: FirstMerit Corporation(FMER)

FirstMerit Corporation operates as the bank holding company for FirstMerit Bank, N.A. that provides a range of banking, fiduciary, financial, insurance, and investment services to corporate, institutional, and individual customers in northern and central Ohio, and western Pennsylvania. The company?s commercial business offers commercial term loans, revolving credit arrangements, asset-based lending, leasing, commercial mortgages, real estate construction lending, letters of credit, cash management services, and other depository products. Its retail business provides various financial products and services, including consumer direct and indirect installment loans, debit and credit cards, debit gift cards, residential mortgage loans, home equity loans and lines of credit, fixed and variable annuities, and ATM network services, as well as deposit products comprising checking, savings, money market accounts, and certificates of deposit. The company?s wealth business provides a sset management, private banking, financial planning, estate settlement and administration, and credit and deposit products and services. FirstMerit Corporation also offers trust and investment services, including personal trust and planning, and investment management; retirement plan services; retail mutual funds, other securities, variable and fixed annuities, personal disability and life insurance products, and brokerage services; and private banking services, including credit, deposit, and asset management solutions. As of December 31, 2009, it operated a network of 160 full service banking offices and 182 ATMs. The company was founded in 1855 and is headquartered in Akron, Ohio.

Top 10 Bank Companies To Buy Right Now: Access National Corp (ANCX.W)

Access National Corporation (ANC) operates as a bank holding company. The Company has two wholly owned subsidiaries: Access National Bank (the Bank) and Access National Capital Trust II. The Bank is the operating business of the Company. The Bank provides credit, deposit, and mortgage services to middle market commercial businesses and associated professionals, primarily in the greater Washington, D.C. Metropolitan Area. The Bank offers a range of financial services and products and specializes in providing customized financial services to small and medium sized businesses, professionals, and associated individuals. The Bank provides its customers with personal customized service utilizing the latest technology and delivery channels. The Bank�� business is serving the credit, depository and cash management needs of businesses and associated professionals. The products and services offered by the Bank include accounts receivable lines of credit, accounts receivable col lection accounts, growth capital term loans, business acquisition financing, online banking, checking accounts, money market accounts, sweep accounts, personal checking accounts, savings /money market accounts and certificates of deposit.

The Bank�� revenues are derived from interest and fees received in connection with loans, deposits, and investments. The Bank operates from five banking centers located in Chantilly, Tysons Corner, Reston, Leesburg and Manassas, Virginia and online at wwwaccessnationalbank.com. The Mortgage Corporation specializes in the origination of conforming and government insured residential mortgages to individuals in the greater Washington, D.C. Metropolitan Area, the surrounding areas of its branch locations, outside of its local markets through direct mail solicitation, and otherwise. The Mortgage Corporation has offices throughout Virginia, in Fairfax, Reston, Roanoke, and McLean.

Lending Activities

The Bank�� lending activities involve commercial real estate ! ! loans, residential mortgage loans, commercial loans, commercial and residential real estate construction loans, home equity loans, and consumer loans. These lending activities provide access to credit to small to medium sized businesses, professionals, and consumers in the greater Washington, D.C. Metropolitan Area. Loans originated by the Bank are classified as loans held for investment. At December 31, 2011 loans held for investment totaled $569.4 million. At December 31, 2011 unsecured loans were comprised of $2.9 million in commercial loans and approximately $124 thousand in consumer loans and collectively equal approximately 0.5% of the loans held for investment portfolio.

The Bank�� commercial real estate loans-wner Occupied represented 30.14% of our loan portfolio held for investment, as of December 31, 2011. Its commercial real estate loans-non-owner occupied loans represent ed18.44% of its loan portfolio held for investment, as of December 31, 2011. The Bank�� residential real estate loans represented 22.56% of the loan portfolio, as of December 31, 2011.

These loans fall into one of three situations: loans supporting an owner occupied commercial property; properties used by non-profit organizations, such as churches or schools where repayment is dependent upon the cash flow of the non-profit organizations, and loans supporting a commercial property leased to third parties for investment. Its residential real estate loans category includes loans secured by first or second mortgages on one to four family residential properties, extended to the Bank clients.

As of December 31, 2011, commercial loans represented 23.15% of the Bank�� loan portfolio held for investment. These loans are to businesses or individuals within its market for business purposes. As of December 31, 2011, real estate construction loans consisted of 5.22% of loans held for investment loan portfolio. These loans in clude loans to construct owner occupied commercial buildi! ngs! ; lo! ans t! o individuals; loans to builders for the purpose of acquiring property and constructing homes for sale to consumers, and loans to developers for the purpose of acquiring land, which is developed into finished lots for the ultimate construction of residential or commercial buildings. As of December 31, 2011, consumer loans made up approximately 0.49% of its loan portfolio.

Investment Activities

The Company�� investment securities portfolio is consisted of the United States Treasury securities, the United States Government Agency securities, municipal securities, Community Reinvestment Act (CRA) mutual fund, and mortgage backed securities issued by the United States Government sponsored agencies and corporate bonds. At December 31, 2011, securities totaled $85.8 million. . The securities portfolio is comprised of $45.8 million in securities classified as available-for-sale and $40.0 million in securities classified as held-to-maturity.

Sources of Funds

As of December 31, 2011, deposits totaled $645.0 million. As of December 31, 2011, deposits consisted of noninterest-bearing demand deposits in the amount of $113.9 million, savings and interest-bearing deposits in the amount of $182.0 million, and time deposits in the amount of $349.1 million. The Bank also uses wholesale funding or brokered deposits to supplement traditional customer deposits for liquidity. It participates in the Certificate of Deposit Account Registry Service (CDARS). Through CDARS its depositors are able to obtain FDIC insurance of up to $50 million. As of December 31, 2011, brokered deposits totaled $223,554,000, which includes $192,326,000 in reciprocal CDARS deposits. It also maintains lines of credit with the Federal Home Loan Bank (FHLB) and Federal Reserve Bank (FRB). At December 31, 2011 there was $284.9 million available under these lines of credit. Borrowed funds consist of advances from the FHLB, senior unsecured term note, FHLB long-term borrowings, subordinated d! ebenture!! s (trust ! preferred), securities sold under agreement to repurchase, United States Treasury demand notes, federal funds purchased, and commercial paper. As of December 31, 2011 borrowed funds totaled $123.6 million. At December 31, 2011 borrowed funds totaled $70.9 million.

Top 10 Bank Companies To Buy Right Now: Federal National Mortgage Association (FNMA.OB)

Federal National Mortgage Association (Fannie Mae) is a government-sponsored enterprise (GSE) chartered by the United States Congress to support liquidity and stability in the secondary mortgage market, where mortgage-related assets are purchased and sold. The Company�� activities include providing market liquidity by securitizing mortgage loans originated by lenders in the primary mortgage market into Fannie Mae mortgage-backed securities (Fannie Mae MBS), and purchasing mortgage loans and mortgage-related securities in the secondary market for its mortgage portfolio. Fannie Mae operates in three business segments: Single-Family business, Multifamily Business (formerly Housing and Community Development (HCD)) and Capital Markets group. Its Single-Family Credit Guaranty and Multifamily businesses work with its lender customers to purchase and securitize mortgage loans customers deliver to the Company into Fannie Mae MBS.

The Company obtains funds to suppo rt its business activities by issuing a variety of debt securities in the domestic and international capital markets. Fannie Mae acquires funds to purchase mortgage-related assets for its mortgage portfolio by issuing a variety of debt securities in the domestic and international capital markets. It also makes other investments. Fannie Mae conducts its business in the United States residential mortgage market and the global securities market. It conducts business in the United States residential mortgage market and the global securities market. During the year ended December 31, 2011, the Company��

Single-Family Business

Single-Family business includes mortgage securitizations, mortgage acquisitions, credit risk management and credit loss management. Single-Family business works with the Company�� lender customers to provide funds to the mortgage market by securitizing single-family mortgage loans into Fannie Mae MBS. Its Single-Family business also works with its Capital Markets group to facilitate th! e! purchase of single-family mortgage loans for the Company�� mortgage portfolio. Fannie Mae�� Single-Family business prices and manages the credit risk on its single-family guaranty book of business, which consists of single-family mortgage loans underlying Fannie Mae MBS and single-family loans held in its mortgage portfolio. Single-Family business and Capital Markets group securitize and purchase primarily single-family fixed-rate or adjustable-rate, first lien mortgage loans, or mortgage-related securities backed by these types of loans.

The Company securitizes or purchases loans insured by Federal Housing Administration (FHA), loans guaranteed by the Department of Veterans Affairs (VA), and loans guaranteed by the Rural Development Housing and Community Facilities Program of the Department of Agriculture, manufactured housing loans, reverse mortgage loans, multifamily mortgage loans, subordinate lien mortgage loans and other mortgage-related securities. I ts Single-Family business securitizes single-family mortgage loans and issues single-class Fannie Mae MBS. Fannie Mae�� Single-Family business securitizes loans solely in lender swap transactions, in which lenders deliver pools of mortgage loans to the Company, which are placed immediately in a trust, in exchange for Fannie Mae MBS backed by these loans. Generally, the servicing of the mortgage loans held in its mortgage portfolio or that backs its Fannie Mae MBS is performed by mortgage servicers on the Company�� behalf. Lenders who sell single-family mortgage loans to Fannie Mae service these loans for the Company. For loans it owns or guarantees, the lender or servicer must obtain its approval before selling servicing rights to another servicer.

Fannie Mae�� mortgage servicers collect and deliver principal and interest payments, administer escrow accounts, monitor and report delinquencies, perform default prevention activities, evaluate transfers of own ership interests, respond to requests for partial releas! es o! f s! ecurit! y, and handle proceeds from casualty and condemnation losses. Its mortgage servicers are the primary point of contact for borrowers and perform implementation of its homeownership assistance initiatives, negotiation of workouts of troubled loans, and loss mitigation activities. Mortgage servicers also inspect and preserve properties and process foreclosures and bankruptcies.

Multifamily Mortgage Business

Multifamily business works with the Company�� lender customers to provide funds to the mortgage market by securitizing multifamily mortgage loans into Fannie Mae MBS. Through its Multifamily business, Fannie Mae provides liquidity and support to the United States multifamily housing market principally by purchasing or securitizing loans that finance multifamily rental housing properties. It also provides some limited debt financing for other acquisition, development, construction and rehabilitation activity related to projects that complement this business. Fannie Mae�� Multifamily business also works with its Capital Markets group to facilitate the purchase and securitization of multifamily mortgage loans and securities for Fannie Mae�� portfolio, as well as to facilitate portfolio securitization and resecuritization activities.

The Company�� multifamily guaranty book of business consists of multifamily mortgage loans underlying Fannie Mae MBS and multifamily loans and securities held in Fannie Mae�� mortgage portfolio. Revenues for Fannie Mae�� Multifamily business are derived from a variety of sources, including guaranty fees received as compensation for assuming the credit risk on the mortgage loans underlying multifamily Fannie Mae MBS and on the multifamily mortgage loans held in its portfolio and on other mortgage-related securities; transaction fees associated with the multifamily business, and other bond credit enhancement related fees. As with the servicing of single-family mortgages, multifamily mortgage servicing is performed by the ! lenders !! who sell ! the mortgages to the Company. Fannie Mae�� Multifamily business is organized and operated as an integrated commercial real estate finance business.

Capital Markets

Capital Markets group's primary business activities include mortgage and other investments, mortgage securitizations, structured mortgage securitizations and other customer services, and interest rate risk management. Capital Markets group manages the Company�� investment activity in mortgage-related assets and other interest-earning, non-mortgage investments. It funds its investments primarily through proceeds the Company receives from the issuance of debt securities in the domestic and international capital markets. Its business activity is focused on making short-term use of its balance sheet rather than long-term investments. Activities Fannie Mae is undertaking to provide liquidity to the mortgage market include whole loan conduit, early funding, real estate mortgage investment c onduit (REMICs) and other structured securitizations and dollar roll transactions. Whole loan conduit activities include its purchase of both single-family and multifamily loans principally for the purpose of securitizing them. During the year ended December 31, 2010, it was engaged in dollar roll activity. A dollar roll transaction is a commitment to purchase a mortgage-related security with a concurrent agreement to re-sell a similar security at a later date or vice versa.

Fannie Mae�� Capital Markets group is engaged in issuing both single-class and multi-class Fannie Mae MBS through both portfolio securitizations and structured securitizations involving third party assets. Its Capital Markets group creates single-class and multi-class Fannie Mae MBS from mortgage-related assets held in its mortgage portfolio. Fannie Mae�� Capital Markets group may sell these Fannie Mae MBS into the secondary market or may retain the Fannie Mae MBS in its investment portf olio. The Company�� Capital Markets group cr! eates sin! gle-c! lass and ! multi-class structured Fannie Mae MBS, for its lender customers or securities dealer customers, in exchange for a transaction fee. The Company�� Capital Markets group provides its lender customers and their affiliates with services that include offering to purchase a range of mortgage assets, including non-standard mortgage loan products; segregating customer portfolios to obtain optimal pricing for their mortgage loans, and assisting customers with hedging their mortgage business.

Although the Company�� Capital Markets group�� business activities are focused on short-term financing and investing, revenue from its Capital Markets group is derived primarily from the difference, or spread, between the interests it earns on its mortgage and non-mortgage investments and the interest it incurs on the debt the Company issues to fund these assets. Its Capital Markets revenues are primarily derived from the Company�� mortgage asset portfolio. Capital Markets gro up funds its investments primarily through the issuance of a variety of debt securities in a range of maturities in the domestic and international capital markets. Investors in the Company�� debt securities include commercial bank portfolios and trust departments, investment fund managers, insurance companies, pension funds, state and local governments, and central banks.

The Company competes with Freddie Mac, FHA and Ginnie Mae.