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Information Technology : Software | Large Cap Growth
Company profile

DocuSign, Inc. automates manual, paper-based processes with the open, independent, standards-based digital transaction management (DTM) platform for managing all aspects of documented business transactions. Customers can open new accounts and start loans in minutes. The Company helps banks give customers the convenience of anywhere, anytime access for completing forms, contracts or lending documents. The Company works simply on any Internet connected device including all mobile devices. The Company offers a he following product editions with varying combinations of functionality: trial, single-user, multi-user, business pro, enterprise pro, standards-based signatures, ehanko, DocuSign transaction rooms for real estate, DocuSign payments, and enotary. In Trial user can send documents for signature, basic fields, such as signature, date, name, and text, mobile app, basic workflows, real-time audit trail, integration with Dropbox, Google Drive, and more, and multiple languages.

Price
Delayed
$199.38
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0.00 (0.00%)
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Today's volume of 8,656 shares is on pace to be much lighter than DOCU's 10-day average volume of 3,916,908 shares.

8,656

UPDATE: You should avoid shares of these banks with too much oil and gas exposure

7:20 am ET March 11, 2020 (MarketWatch)
Print

By Philip van Doorn, MarketWatch

Oil prices are now so low, banks' bad loans to the energy sector may lead to dividend cuts -- or worse

Investors had better worry about banks with significant exposure to the oil and natural gas industry, in the wake of Saudi Arabia's decision to cut oil prices and increase production at a time of greatly reduced demand.

That adds to a pile of other concerns for banks, particularly the plunge in interest rates as the coronavirus continues to spread across the world.

Analysts at Keefe, Bruyette & Woods published a list March 8 of U.S. banks with the largest amount of credit exposure to tangible common equity (TCE) -- the measure of capital that is particularly useful to common shareholders, because it tells them what their stake in the bank is really worth.

Very high energy-industry credit exposure relative to TCE could signal trouble if borrowers begin to default en masse, because then the banks need to immediately add to loan-loss reserves, which would wipe out profits and lower equity. It could lead banks to suspend share buybacks, stop increasing dividends and even lower dividend payouts.

Here's KBW's list of U.S. banks whose loan exposure to the energy industry are highest relative to TCE as of Dec. 31, 2019:

Bank Ticker Energy Loan exposure/ TCE Headquarters

BOK Financial Corp. US:BOKF 108% Tulsa, Okla.

Bank7 Corp. US:BSVN 104% Oklahoma City, Okla.

Cadence Bancorporation Class A US:CADE 76% Houston

CrossFirst Bankshares Inc. US:CFB 69% Leawood, Kan.

Cullen/Frost Bankers Inc. US:CFR 53% San Antonio

Independent Bank Group Inc. US:IBTX 45% McKinney, Texas

First Horizon National Corp. US:FHN 39% Memphis, Tenn.

Hancock Whitney Corp. US:HWC 38% Gulfport, Miss.

Associated Banc-Corp US:ASB 35% Green Bay, Wis.

CBTX Inc. US:CBTX 33% Houston

Comerica Inc. US:CMA 32% Dallas

Allegiance Bancshares Inc. US:ABTX 31% Houston

East West Bancorp Inc. US:EWBC 29% Pasadena, Calif.

Prosperity Bancshares Inc. US:PB 26% Houston

BancFirst Corp. US:BANF 25% Oklahoma City, Okla.

Zions Bancorporation US:ZION 25% Salt Lake City

Sources: KBW, FactSet

The big four

The largest U.S. banks have provided additional industry credit exposure in their annual reports.

-- J.P. Morgan Chase's (JPM) oil and gas loan exposure was 7% of TCE as of Dec. 31, according to KBW. In its annual report (on page 110 of its 10-K filing (https://www.sec.gov/ix?doc=/Archives/edgar/data/19617/000001961720000257/corp10k2019.htm)), the largest U.S. bank said total credit exposure to the oil and gas industry was $41.57 billion, or 4.4% of wholesale credit exposure, net of hedges, and 22.1% of TCE.

-- Bank of America (BAC) had total oil and gas loan exposure of 10% of TCE as of Dec. 31, according to KBW. But the bank said on page 65 of its 10-K (https://www.sec.gov/ix?doc=/Archives/edgar/data/70858/000007085820000011/bac-1231201910xk.htm) that total credit and committed credit exposure to the energy industry was $36.33 billion, or 3.5% of total commercial credit exposure and 21.2% of TCE.

-- Citigroup's (C) oil and gas loan exposure was 15% of TCE as of Dec. 31, according to KBW. On page 70 of the company's 10-K (https://www.sec.gov/ix?doc=/Archives/edgar/data/831001/000083100120000031/c-12312019x10k.htm), Citi said energy and commodities credits made up 8% of its total corporate credit portfolio as of Dec. 31. The company only provided that percentage, and not a dollar total for industry exposure. However, 8% of its total corporate credit exposure of $692 billion would be $55.36 billion, or 37% of its $148.81 billion in TCE. Citi also said 9% of its $35.2 billion in hedge protection for its corporate credit portfolio was for energy and commodities credits. That would be $3.27 billion in hedge protection for credit exposure to energy and commodities, for net exposure of $52.1 billion, or 35% of TCE.

-- Wells Fargo (WFC) had oil and gas loan exposure of 10% of TCE as of Dec. 31, according to KBW. On page 61 of its 10-K (https://www.sec.gov/ix?doc=/Archives/edgar/data/72971/000007297120000217/wfc-12312019xex13.htm), the bank said its total loan portfolio for the oil, gas and pipeline industries totaled $13.56 billion, or 1% of total loans.

Big trouble

Richard Bove, a sell-side bank analyst with several decades of experience who works for Odeon Capital Group, says investors should avoid bank stocks as a group because of the disruption to their business models from low interest rates and evolving technology for products and services that have become commodities.

He detailed all those concerns in a report Feb. 3, well before the S&P 500 Index hit its last record high Feb. 19.

On March 8, after Saudi Arabia announced its oil price cuts and plans to increase production, Bove sent a note to clients expressing particular concern for the big four.

"One might argue that both J.P. Morgan and Citigroup were built on oil," he wrote.

He listed Comerica (CMA), KeyCorp (KEY) and Regions Financial (RF) as regional banks that "may be hurt."

Comerica is on the table above. Regions had oil and gas loans to TCE exposure of 21% as of Dec. 31, according to KBW. On page 55 of its 10-K (https://www.sec.gov/ix?doc=/Archives/edgar/data/91576/000009157620000007/key-123119x10k.htm), Keycorp said oil and gas loans totaling $2.36 billion made up 3.5% of total loans and 19.3% of TCE as of Dec. 31.

Aside from the oil-industry risk, Bove reiterated that bank stocks had been performing poorly because of pressure on their net interest margins, increasing loan losses and "most importantly, price deflation across their product mix."

In note about J.P. Morgan on March 7, Bove expressed concern that CEO Jamie Dimon might reduce his responsibilities at the nation's largest bank following his heart surgery, possibly giving up the CEO title.

"The likelihood that he will continue as the hands-on leader of the company is relatively low," he wrote.

If Dimon steps down as CEO, Bove believes JPM "will definitely be hurt." However, he reiterated his "buy" recommendation for the bank's stock because "many funds must own some bank stocks and, if so, this is the one they should own."

Don't miss:Here's how easy it is to buy U.S. Treasury bonds without fees or commissions (http://www.marketwatch.com/story/heres-how-easy-it-is-to-buy-us-treasury-bonds-without-fees-or-commissions-2020-03-05)

Create an email alert for Philip van Doorn's Deep Dive columns here (http://www.marketwatch.com/tools/alerts/newsColumn.asp).

-Philip van Doorn; 415-439-6400; AskNewswires@dowjones.com

(END) Dow Jones Newswires

March 11, 2020 07:20 ET (11:20 GMT)

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