The Zacks Analyst Blog Highlights: The Charles Schwab, SunTrust Banks, Bank of America, The PNC Financial Services Group and Eastman Chemical

Zacks


For Immediate Release

Chicago, IL – August 2, 2012 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include The Charles Schwab Corporation (SCHW), SunTrust Banks Inc. (STI), Bank of America Corporation (BAC), The PNC Financial Services Group Inc. (PNC) and Eastman Chemical Company (EMN).

 

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Here are highlights from Wednesday’s Analyst Blog:

Schwab to Redeem TruPS

 

The Charles Schwab Corporation (SCHW) became the latest bank to announce the redemption of trust preferred securities (TruPS). Schwab stated that it would redeem all the Fixed to Floating Rate TruPS issued by the Schwab Capital Trust I.

The redemption also involves common stock issued by the Schwab Capital Trust I and held by the company. The overall redemption forms part of the company’s plan to redeem all the junior subordinated debt, which underlies the TruPS as well.

Schwab’s decision to redeem TruPS follows the announcement of new capital rules by the Federal Reserve earlier this year. As per the new proposal, beginning 2013, the TruPS issued prior to May 19, 2010 would not be considered for the calculation of Tier 1 capital ratio.

The redemption price of the securities has been kept at 100% of the liquidation amount of each of the trust preferred security along with all the accumulated and unpaid distributions. The redemption is scheduled for August 31, 2012.

TruPS Redemption by Other Banks

During the first half of 2012, many banks have redeemed TruPS. Notable names include SunTrust Banks Inc. (STI), which redeemed TruPS worth approximately $1.19 billion. Further, Bank of America Corporation (BAC) and The PNC Financial Services Group Inc. (PNC) redeemed securities worth $3.9 billion and $967.5 million, respectively.

Our Viewpoint

Redemption of TruPS is a strategic fit as a step like this provides banks with the opportunity to bring down their interest expense. Moreover, this will help in satisfying the regulatory norms since according to the Dodd-Frank Act, from 2013, banks will no longer be able to consider these securities as regulatory capital.

Schwab currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. Considering the fundamentals, we also maintain a long-term Neutral recommendation on the stock.

 

 

Eastman Chemical, Sinopec Join Forces

 

Eastman Chemical Company (EMN) announced that it has collaborated with Sinopec Yangzi Petrochemical Company Limited to build a hydrogenated hydrocarbon resin plant in Nanjing, China. Both the companies will hold equal share in the joint venture.

The facility is expected to be operational by the end of 2014 and will expand Eastman's total capacity for hydrogenated resins by 50%. Once the plant becomes operational, it is expected to produce 50,000 metric tons of Eastman's Adhesives and Plasticizers segment's Regalite hydrocarbon resins.

Regalite is useful in making packaging and personal hygiene products, including disposable diapers. The product is quite versatile and can be used with a variety of polymers.

Eastman Chemical and Sinopec already have a joint venture for manufacturing Eastman Eastotac resins in Nanjing. The existing facility will be expanded for the new venture.

In July 2012, Eastman Chemical also took over Missouri-based chemical company Solutia under a cash and stock deal worth roughly $4.8 billion (including Solutia debt). The acquisition is expected to significantly accelerate the company's growth and offer lucrative opportunities in Asia-Pacific.

 

 

 

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Read the analyst report on SCHW

Read the analyst report on STI

Read the analyst report on BAC

Read the analyst report on PNC

Read the analyst report on EMN

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