Oct. 16, 2014, 5:30 PM
Jul. 18, 2014, 6:48 PM
- The big banks aren't quite ready to let go of their reserve releases: The big four - JPMorgan Chase (NYSE:JPM), Citigroup (NYSE:C), Bank of America (NYSE:BAC) and Wells Fargo (NYSE:WFC) - released a combined $2.25B of their bad-loan reserves in Q2, up nearly 20% from the $1.88B they released in Q1.
- The banks continue to see improvement in their customers’ credit quality, but their earnings continue to rely in part on freeing up some of their rainy-day cushions, rather than being able to generate strong earnings from their operating businesses.
- Even with the Q2 uptick, the banks are releasing less in the way of reserves than they have for most of the past four years, and analysts see the practice ending before too much longer.
- Some regional banks such as Comerica (NYSE:CMA) and Huntington Bancshares (NASDAQ:HBAN) that had been releasing reserves started building their reserves up again by small amounts during Q2.
Jul. 16, 2014, 8:16 AM| Comment!
Jul. 15, 2014, 6:48 AM
Jul. 14, 2014, 5:30 PM
Jul. 11, 2014, 3:58 PM
- Wells Fargo’s (WFC -0.7%) disappointing Q2 results could be good news for PNC Financial Services (PNC +0.4%), Fifth Third (FITB +1%), KeyCorp (KEY +0.1%) and Comerica (CMA +0.5%), according to Nomura analysts.
- The strength in WFC’s commercial loan portfolio - total core loan growth came in at 6.9% Y/Y, up from 5.6% last quarter - bodes well for other regional banks, given high C&I growth correlations (~80% or higher); total loan growth correlations also exceed 90% for PNC, FITB, KEY and CMA.
- The firm notes that the R-squared between earning asset growth and net interest income growth is 98% for regional banks, suggesting that stronger loan growth will lead to positive EPS revisions.
Jul. 10, 2014, 11:57 AM
- Guggenheim cashes in its chips on a trio of Buy calls, downgrading Washington Trust Bancorp (WASH -2.1%), Investors Bancorp (ISBC -1.7%), and S&T Bancorp (STBA -2.8%) to Neutral. The team also finds a name to upgrade, boosting Comerica (CMA -0.5%) to a Buy, noting the lender's exposure to Texas and California.
- Sandler O'Neill chimes in with a couple of upgrades, lifting SVB Financial (SIVB) and Square 1 Financial (SQBK +0.5%) each to Buy. Peapack-Gladstone Financial (PGC -0.5%) is started with a Buy.
May. 30, 2014, 8:56 AM
May. 14, 2014, 10:17 AM
- Among those started at Buy is M&T Bank (MTB -0.9%), with analyst Bill Carcache noting the usually strong performer has lagged over the past 16 months amid regulatory issues and the delay of the Hudson City Bancorp (HCBK -1%) acquisition. Carcache expects approval this year, along with meaningful operating efficiency improvements. "We believe MTB shares are trading at a significant discount to their intrinsic value and expect to see meaningful share price appreciation through 2015."
- Also a Buy is Wells Fargo (WFC -0.8%), with Carcache seeing the bank as well-positioned if the economic recovery remains muted thanks to a combination of fee income and expense control.
- Started at Reduce with $40 price target is Comerica (CMA -1.7%), with Carcache saying the stock price has gotten ahead of itself.
- See also: More on Nomura's wide-ranging new bank coverage
Apr. 15, 2014, 6:45 AM
Apr. 15, 2014, 12:05 AM
Apr. 14, 2014, 5:30 PM
Apr. 2, 2014, 7:28 AM
- Upping Comeria (CMA) to Market Perform, analyst Matthew Burnell notes the bank's leverage to improving commercial lending activity, above-peer capital returns after last week's CCAR results, and above-peer asset sensitivity in a possible rising short-term interest rate world (timing yet to be established).
Mar. 20, 2014, 5:07 PM
- Again, all 30 lenders subject to the Fed stress test passed with the exception of Zions Bancorp. Checking the individual results:
- Regional banks passing: BB&T Corp. (BBT), Comerica (CMA), Fifth Third (FITB), Huntington (HBAN), KeyCorp (KEY), M&T (MTB), PNC, Regions (RF), SunTrust (STI), U.S. Bancorp (USB).
- Credit card lenders: American Express (AXP), Discover (see here), Capital One (COF).
- Those controlled by overseas holding companies: BBVA Compass, BMO FInancial, HSBC North America, RBS Citizens Financial, Santander Holdings USA (SAN), UnionBanCal (MTU).
- Trust banks: Bank of New York (BK), State Street (STT), Northern Trust (NTRS).
- TBTFs: See here.
- More on Zions (ZION): The failure likely has something to do with CDOs on its books backed by trust-preferred securities. The bank signaled earlier this year it would likely resubmit its capital plan to the Fed as the test's calculation of its capital ratio wouldn't reflect Zion's planned sale of these.
Feb. 20, 2014, 3:29 PM
- Expecting dividends to grow 49% on average for the banks subject to the Fed's stress tests (about the same as last year), Markit, says Citigroup (C) and Bank of America (BAC) will lead the way with 400% boosts. "They are the last of the major banks paying minimal dividends ... change is overdue."
- While 400% is a big number, Citi and BofA will continue to lag their peers in terms of yield (400% growth on a penny just leads to a nickel).
- Also expected to have a significant pop is Morgan Stanley (MS) - a doubling of the payout to $0.10 per share and a 1.4% yield. Others in the top 5 in increases are Zions Bancorp (ZION) with a 75% boost to $0.07 and Regions Financial (RF) up 67% to $0.05.
- The others: KEY +27%, HBAN +20%, BK +20%, STI +20%, COF +17%, DFS +15%, AXP +13%, STT +12%, JPM +11%, CMA +11%, PNC +9%, USB +9%, GS +9%, FITB +8%, WFC +7%, NTRS +6%, and no soup for BBT and MTB where the dividends are expected to be flat at $0.23 and $0.70 per share, respectively.
- As for ETFs, the dividend jumps are expected to have the biggest impact on the XLF which would see a 25% increase in payout: The ETF has 81 companies, but the top 5 holdings - BofA, Wells, JPM, Citi, USB - make up 41% of assets. In contrast, just two CCAR banks make up the top five holdings of the KBE and it should see a more muted increase of just 18%.
- Related ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, IAT, SEF, IYG, FXO, PFI, KBWB, RKH, QABA, FNCL, FINU, KRU, RWW, KBWR, RYF, PSCF, KRS, FINZ
Feb. 14, 2014, 10:13 AM
- The easy leader in the regional banking sector today is Comerica (CMA +2.1%) after an upgrade to Buy at Ciitgroup.
- The bank two weeks ago boosted its quarterly dividend by 11.7% to $0.19 per share. Between dividends and share repurchases, the bank returned 73% of 2013 net income to its owners. The dividend hike comes at it awaits word from the Fed (expected in March) on its 2014-15 capital plan.
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