3 Banks in 3 Different Positions

News is being generated about earnings and losses from various lenders. Today we find three stories with 3 different banks in 3 very different positions. But the one common thread is the affect that Mortgages and HELOCs are having on the companies' bottom lines. Lets start with the hardest hit, Washington Mutual which is reporting the loss of $3.3 Billion. as posted in CNN Money.

"I still think there is more to come in the way of provisions because of the increasing rate of non-performing loans in the home loan, home equity, and subprime categories," said Stephanie Hall, a senior analyst with the Scottsdale, Ariz.-based research firm Gradient Analytics. "But they have taken a step in the right direction by increasing the loan loss accrual."

Yet, the company offered some signs of encouragement as delinquencies in its troubled subprime and home equity portfolios showed "early signs of stabilization" during the quarter, according to the company.

Next is E-Trade with losses that appear to be $94.6 million. Let's take a look at the BusinessWeek report -

Provisions for losses were primarily tied to increasing charge-offs in E-Trade's home equity portfolio. Charge-offs are loans that are written off as not being repaid.

The brokerage firm has been actively reducing its exposure to home equity products in recent quarters as part of a broader turnaround plan to return to profitability and refocus itself on its core retail brokerage business.

Undrawn home equity lines of credit in E-Trade's portfolio were reduced to about $3.7 billion at the end of June, compared with more than $7 billion at the same time last year.

But there does seem to be some good news on this front - and from of all places the New Jersey based Valley National Bank. Let's take a look at MarketWatch -

Valley National Bancorp, the holding company for Valley National Bank, announced that SNL Financial ranked Valley's home equity loan portfolio the 8th best-performing portfolio among publicly traded banks and thrifts with more than $100 million in home equity lines of credit on their books during the twelve months ended March 31, 2008 based on a combination of low delinquency rates and net charge-offs.

At June 30, 2008, Valley's $538 million home equity portfolio consisting of over 14,200 loans continued to perform well, with only 11 loans past due 30 days or more. These delinquent loans totaled $727 thousand or 0.14 percent of the total home equity portfolio at June 30, 2008 as compared to $1.1 million or 0.21 percent of the portfolio at March 31, 2008. Gerald H. Lipkin, Chairman, President and CEO of Valley noted that, "These numbers continue to demonstrate the strong performance of our loan portfolio and management's dedication to high loan underwriting standards in a time when many bank analysts are anticipating more bad news about home equity losses and delinquencies from the financial sector."

It seems that a few years back everyone thought they could make a bundle from mortgages and home equity loans. Now only those who made prudent, conservative choices are in good financial standing. Look at the differences between E-Trade and Valley. E-Trade had to cut the value of their equity lines in half - and have significant writedowns. In the meantime Valley is less than 0.1% of its loans non-performing. Pretty stark contrasts in running a bank.