Latest quarterly results help National General, hurt Resource Capital; Deutsche Bank weak

By Stephanie N. Rotondo

Seattle, Nov. 4 – Recent earnings were driving some activity in the preferred stock market, a trader said Wednesday.

National General Holdings Corp., for instance, had “strong earnings” on Monday, the trader said, which was pushing up the company’s 7.625% $25-par subordinated notes due 2055 (Nasdaq: NGHCZ).

The notes finished up 3 cents at $24.74.

The New York-based insurance company reported earnings per share of 43 cents for the most recent quarter. Analysts had expected EPS of 37 cents.

Meanwhile, Resource Capital Corp.’s numbers – which came out after Tuesday’s close – “missed estimates, but they are still making money,” a trader said.

Still, the 8.25% series B cumulative redeemable preferreds (NYSE: RSOPB) were down on the news, falling 11 cents to $17.54. The 8.625% series C fixed-to-floating rate cumulative redeemable preferreds (NYSE: RSOPC) declined 35 cents, or 1.87%, to $18.40.

For the third quarter, the New York-based specialty finance company reported EPS of 44 cents, which compared to analysts’ expectations of 65 cents. Revenue was $23.71 million, down 8.1% year over year and nearly $17.5 million less than analyst forecasts.

Deutsche drifts down

Deutsche Bank AG’s preferreds have been coming in since the company reported its third-quarter results last week. The carnage continued Wednesday after it was announced that the bank was being slapped with a $258 million fine for violating U.S. sanctions.

The 8.05% trust preferred securities (NYSE: DKT) weakened 44 cents to $26.61, as the 7.6% trust preferreds (NYSE: DTK) dipped 9 cents to $26.27.

New York and U.S. banking regulators agreed to settle with the German bank in regards to an investigation that showed that the company handled $10.8 billion in transactions with countries currently under sanctions, such as Iran, Libya and Syria.

Six employees will also be fired, according to the deal.

Of the settlement amount, $200 million will go to New York, while $58 million will go to the Federal Reserve.

Fannie, Freddie busy

Fannie Mae and Freddie Mac preferreds were active, but mixed, in midweek trading, just one day ahead of Fannie’s earnings on Thursday.

Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were steady at $5.00. Freddie’s 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) also ended at $5.00, which was off a nickel.

On Tuesday, Freddie reported a $475 million loss for the third quarter, its first loss in four years.

One market source opined that the loss gives credence to the federal government’s conscription of a majority of the GSEs profits.

“Maybe the motives of the Treasury were reasonable, not the ransacking of a corporate entity, as they are being charged.”

Investors from Fairholme Capital Management to Pershing Square have challenged the government’s sweeping of the profits in an effort to set themselves up for better recoveries in the event of liquidation.

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