These 39 Largest Virginia Corps had Total Pretax Income of $27.8 bil in the most recent fiscal year 2011, which was an absolutely off-the-charts 3,321% increase over the $813 mil total earned just two years earlier in 2009.
And I also found 59 additional Corps headquartered in Virginia filing with the SEC with Pretax Income or Pretax Loss of at least $10 mil in any of the most recent three fiscal years, but with none of the three years having Pretax Income or Pretax Loss of more than $100 mil.
These 59 Smaller Virginia Corps had their Total Pretax Income in the most recent fiscal year 2011 increase by a very robust 77% from such amount two years earlier in 2009. This 77% earnings growth is particularly impressive since these Virginia Smaller Corps, for the most part, hung very tough in the early parts of the Deep Recession in 2008 and in 2009.
Thus, when you combine the Largest and Smaller Virginia Corps, you get a total of 98 Largest Virginia Corps filing with the SEC and which had their Total Pretax Income in the most recent fiscal year 2011 increase by an off-the-charts 1,891% over such amount two years earlier in 2009.
Virginia citizens have to be very proud of their superb Virginia companies, of all sizes.
And Virginia citizens also have to be elated with how the Obama Administration has created such a robust US economic environment which has fostered their companies' exceptional earnings growth in the most recent two years.
Corporate earnings drive stock prices. These exceptional US corporate profits, generated during the Obama Administration, were the reason the US stock market has doubled in the past three and a half years.
Included in the 39 Largest Virginia Corps was McLean, VA-based Freddie Mac, which US taxpayers own a huge chunk of, which has generated huge losses since 2008. Freddie Mac's 2008 massive Pretax Loss of $44.6 bil, was reduced about in half to a Pretax Loss of $22.4 bil in 2009. And from there, Freddie Mac’s Pretax Loss was reduced further to $14.9 bil in 2010, and still further to $5.7 bil in 2011.
Thus, Freddie Mac’s Pretax Losses have been reduced by $38.9 bil in the past three years, and by $16.7 bil in the most recent two years.
And in a recent very favorable development, Freddie Mac reported a $563 mil of Pretax Income in the 1Q 2012, and then went even one better, with $2,944 mil of Pretax Income in the 2Q 2012. Thus, for the first half of 2012, Freddie Mac's Total Pretax Income was $3,507 mil, a $5,276 mil improvement from the Pretax Loss of $1,769 mil recorded in the first half of 2011.
Freddie Mac's $5,276 mil profit improvement in the first half of 2012 was driven mainly by much lower Credit Loss Provisions, which decreased by $2,538 mil, and by much lower Derivative Losses, which declined by $2,296 mil.
If this favorable profit trend continues, US taxpayers' exposure to the past massive losses of Freddie Mac will be substantially reduced.
But there is another very important story here.
It is just incredible how much better the total earnings growth of these 98 Largest Virginia Corps was in 2010 over 2009, when the US House was under Moderate Democratic control, than it was in 2011 over 2010, when the US House was under Very Conservative Republican control, with Vice Presidential Candidate Paul Ryan and Virginia's Eric Cantor being two of the key pivotal leaders of this Uncompromising, Block-Voting, Very Conservative Republican Movement, which has such an extremely low approval rating in the eyes of US citizens.
Just how much better were these earnings when the US House was under Democratic control?
Well, the Total Pretax Income growth of these 98 Largest Virginia Corps was 57% in 2011 over 2010. But this 57% total earnings growth under Uncompromising, Very Conservative Republican control of the US House was dwarfed by the more than 20 times higher spectacular earnings growth of 1,165% in 2010 over 2009 under Moderate Democratic control of the US House.
So, the conventional wisdom that businesses perform far better under Republican control than under Democratic control was certainly not true in Virginia.....nor was it true in nearly in any other US State.
And this pattern of substantially higher earnings growth under US House Democratic control than under Republican control was consistent with both the Largest and Smaller Virginia Corps.
In fact, the 39 Largest Virginia Corps generated total earnings growth of a massive 2,027% in 2010, when the US House was under Democratic control, versus a substantially lower 61% total earnings growth in 2011, when the US House was under Uncompromising, Very Conservative Republican control. And when you back away Freddie Mac, the 38 remaining Largest Virginia Corps generated total earnings growth of 39% in 2010 when the US House was under Democratic control, versus a substantially lower, and very modest, 4% in 2011, when the US House was under Very Conservative Republican control.
And it's the same story with the 59 Smaller Virginia Corps, which registered 72% total earnings growth in 2010 under US House Democratic control, versus a substantially lower, and very modest, 3% in 2011, when the US House was under Uncompromising, Block-Voting, Very Conservative Republican control.
Clearly, the best combination for the US economy is a Moderate Democratic President, a Moderate Democratic US House, and a Moderate Democratic US Senate. This is precisely what we had in 2009 and 2010.
So many pundits criticize the Obama Economic Stimulus. It started really kicking in the 4Q 2009, when the Obama Administration’s economic stimulus programs, both individual income tax cuts and business income tax incentives, as well as wisely designed, very carefully vetted US Government investments, were all going full throttle. And look at the result in annual 2010, with Virginia's 98 Largest Corps increasing their total earnings by a substantial 1,891% in just one year.
So, why it is that the total earnings growth was so substantially lower in 2011 in Virginia, and all over the country, when the US House was under Very Conservative Republican control, than it was in 2010?
Well, this Very Conservative Republican US House has no interest in compromise. Thus, nearly every wise, much-needed Obama economic initiative was stopped by this US House, and also stopped by filibustering by US Senate Republicans.
And the losers here were not just the unemployed, the underemployed, the dwindling middle class, and the people trying to get into the middle class. US Businesses were also big losers, by having their earnings growth substantially decelerate in 2011.
So, how does the country get out of this horrible economic pickle?
I think the only way the US economy will be great again is for a combination of a Moderate Democratic President and a US House under control by Moderate Democrats, who are willing to work across the aisle. And a US Senate under control by Moderate Democrats, who also are willing to work across the aisle, would also help immensely.
In such a political environment, I think you will see wise, effective legislation quickly passed which will spur US job creation. I also think that the key ingredient here has to be very lucrative business tax incentives that can be earned only if the business sufficiently increases its number of US full-time employees, which have to be retained for a reasonable number of years, or else these tax benefits are recaptured. That's legislation which benefits everyone.....businesses, the workers, and the want-to-be workers. Then the country will be back to 2010 again, when US business earnings were on fire! The only difference is that there will also be a quick, substantial cut in the US unemployment rate and in the US underemployment rate.
However, with Obama as President and the Uncompromising, Block-Voting, Very Conservative Republicans, unwilling to work across the aisle, remaining in control of the US House and the US Senate, there will be continued gridlock, and I think you'll see the US unemployment rate remaining above 8%, and probably averaging in the 8.5% to 9.0% range, through 2016.
And if Mitt Romney is elected President, and if both the US House and US Senate are also in Republican hands, I think you will see the US unemployment rate continually creep up, and average in the low double-digit percentages for the last three years of Romney's presidential term.
Why? Because the key components of Romney's economic plan.....(1) substantial, no-job-creation-strings-attached income tax rate cuts for both very wealthy individuals and for large corporations, (2) tax-free foreign earnings repatriation, and (3) a worldwide territorial tax system.....in the aggregate, do create many jobs overseas, but do not create any jobs, in the aggregate, in the US. And when you combine that with the more than 130,000 new people added to the available US workforce each month, you mathematically get a low double-digit percentage US unemployment rate starting in the first half of 2014.
US Larger Companies have consistently shown that when they are given lucrative tax incentives, with no job creation strings attached, they are quick to take the tax incentives, and hire no one. This strategy maximizes their companies' reported earnings, which is precisely what their stockholders want. These CEOs work for their stockholders, not for the American people.
And under Romney and Republican Congress control, where I think you will have continuing low double-digit percentage US unemployment rates, the annual US deficits will explode upwardly, and will be substantially higher than the present staggering annual US deficits.
In deriving Ongoing, Core Pretax Income, I start with Pretax Income under Generally Accepted Accounting Principles (GAAP), and then exclude several clearly unusual very large items relative to Pretax Income, such as Asset Impairments, and Gains and Losses on both Debt Retirements and Asset Dispositions.
I use Pretax Income rather than After-tax Net Income, since so much of the change in effective income tax rates just happens due to financial engineering.
I excluded Corps in the Development Stage. I also excluded Corps with not significant enough Total Revenues.
Below here is the Ongoing, Core Pretax Income (PTI) and Pretax Loss (PTL) of these 39 Largest and 59 Smaller Virginia Corps for each of the most recent three years, along with the related percentage changes.
|HQs||mils $s||mils $s||mils $s||2010||2009||2009|
|Virginia Largest Corps|
|Capital One Financial||McLean||4,587||4,330||1,336||6%||224%||243%|
|General Dynamics||Falls Church||3,829||3,790||3,513||1%||8%||9%|
|Northrop Grumman||Falls Church||3,083||2,595||2,070||19%||25%||49%|
|Advance Auto Parts||Roanoke||633||557||432||14%||29%||47%|
|Booz Allen Hamilton||McLean||344||171||49||101%||249%||602%|
|Computer Sciences Corp||Falls Church||338||917||1,022||-63%||-10%||-67%|
|Alpha Natural Resources||Bristol||307||366||233||-16%||57%||32%|
|Huntington Ingalls||Newport News||296||206||176||44%||17%||68%|
|Owens & Minor||Mechanicsville||203||202||188||0%||7%||8%|
|Hampton Roads Bankshares||Norfolk||(96)||(213)||(93)||55%||-129%||-3%|
|Total all 39 Largest Corps||27,816||17,292||813||61%||2027%||3321%|
|Virginia Smaller Corps|
|Corporate Executive Board||Arlington||96||86||80||12%||8%||20%|
|Apple REIT Nine||Richmond||50||(3)||3||1767%||-200%||1567%|
|Dynex Capital||Glen Allen||48||29||18||66%||61%||167%|
|Apple REIT Six||Richmond||44||38||33||16%||15%||33%|
|Union First Market Bankshares||Richmond||42||32||9||31%||256%||367%|
|Virginia Commerce Bancorp||Arlington||40||31||(52)||29%||160%||177%|
|First Community Bancshares||Bluefield||31||31||(71)||0%||144%||144%|
|JTH Holding||Virginia Beach||29||27||21||7%||29%||38%|
|Apple REIT Seven||Richmond||25||25||21||0%||19%||19%|
|C&F Financial||West Point||19||11||7||73%||57%||171%|
|American National Bankshares||Danville||18||11||9||64%||22%||100%|
|Arlington Asset Investment||Arlington||17||27||(20)||-37%||235%||185%|
|Monarch Financial Holdings||Chesapeake||11||10||8||10%||25%||38%|
|Community Bankers Trust||Glen Allen||2||(25)||(18)||108%||-39%||111%|
|Eastern Virginia Bankshares||Tappahannock||2||(18)||(15)||111%||-20%||113%|
|Central Virginia Bankshares||Powhatan||1||(6)||(13)||117%||54%||108%|
|New Peoples Bankshares||Honaker||(6)||(14)||(5)||57%||-180%||-20%|
|Apartment Trust of America||Richmond||(9)||(11)||(6)||18%||-83%||-50%|
|Bassett Furniture Industries||Bassett||(12)||(4)||(21)||-200%||81%||43%|
|Village Bank & Trust||Midlothian||(12)||2||(9)||-700%||-122%||-33%|
|James River Coal||Richmond||(13)||55||54||-124%||2%||-124%|
|Primus Telecommunications Group||McLean||(18)||(17)||3||-6%||-667%||-700%|
|Sunrise Senior Living||McLean||(18)||12||(79)||-250%||115%||77%|
|Alion Science & Technology||McLean||(38)||(31)||(24)||-23%||-29%||-58%|
|FBR & Co||Arlington||(44)||(42)||(24)||-5%||-75%||-83%|
|Total all 59 Smaller Corps||1,134||1,104||641||3%||72%||77%|
|Grand Total all 98 Corps||28,950||18,396||1,454||57%||1165%||1891%|