Barclays on U.S. Large-Cap & Mid-Cap Banks: Top 5 Laterals from JPM's EPS 3Q Release
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Barclays on U.S. Large-Cap & Mid-Cap Banks: Top 5 Laterals from JPM's EPS 3Q Release
Barclays analyst, Jason M. Goldberg, said, "While we caution about the validity of extrapolating JPM's earnings release to the rest of our coverage, we are going to do it anyway. Our top 10 laterals include: 1) Just like the past several quarters, JPM beat consensus expectations and bank stocks traded lower. Still, this time the estimate bias was downward."
"2) JPM's outlook marked several changes from its recent past, particularly around capital. In last quarter's "Laterals" note we stated Investors may feel better about
BofA's (NYSE: BAC) view that it could leg into its requirements. Now we wonder if the opposite is true. Wells Fargo (NYSE: WFC), U.S. Bancorp (NYSE: USB), State Streeti (NYSE: STT), Bank of NY Mellon (NYSE: BK) and Comerica (NYSE: CMA) are other names where we expect active share repurchases."
"3) It seems to be questioning its branch expansion strategy. Most other banks have put branch de novo plans on hold, although Pinnacle (NYSE: PNC), First Niagara Financial (NYSE; FNFG) and First Financial (Nasdaq: FFBC) have recently purchased branch networks. Also, low rates could further pressure consolidation activity."
"4) While asset quality metrics continued to improve, loan loss reserve releases
ebbed and it seemed more cautious with its outlook. Reserve releases are expected to represent the majority of 3Q11 pre-tax income at Synovus Financial (NYSE: SNV), Regions (NYSE: RF), BAC and First Horizon National (NYSE: FHN)."
5) Wholesale loan growth showed signs of continued improvement, while consumer balances declined. Loan pricing did not appear to be an issue. CMA, City National (NYSE: CYN), East West Bancorp (Nasdaq: EWBC), Fifth Third (Nasdaq: FITB), KeyCorp (NYSE: KEY), People's United (Nasdaq: PBCT), PNC and Texas Capital (Nasdaq: TCBI) are our most C&I heavy names under coverage."
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Barclays analyst, Jason M. Goldberg, said, "While we caution about the validity of extrapolating JPM's earnings release to the rest of our coverage, we are going to do it anyway. Our top 10 laterals include: 1) Just like the past several quarters, JPM beat consensus expectations and bank stocks traded lower. Still, this time the estimate bias was downward."
"2) JPM's outlook marked several changes from its recent past, particularly around capital. In last quarter's "Laterals" note we stated Investors may feel better about
BofA's (NYSE: BAC) view that it could leg into its requirements. Now we wonder if the opposite is true. Wells Fargo (NYSE: WFC), U.S. Bancorp (NYSE: USB), State Streeti (NYSE: STT), Bank of NY Mellon (NYSE: BK) and Comerica (NYSE: CMA) are other names where we expect active share repurchases."
"3) It seems to be questioning its branch expansion strategy. Most other banks have put branch de novo plans on hold, although Pinnacle (NYSE: PNC), First Niagara Financial (NYSE; FNFG) and First Financial (Nasdaq: FFBC) have recently purchased branch networks. Also, low rates could further pressure consolidation activity."
"4) While asset quality metrics continued to improve, loan loss reserve releases
ebbed and it seemed more cautious with its outlook. Reserve releases are expected to represent the majority of 3Q11 pre-tax income at Synovus Financial (NYSE: SNV), Regions (NYSE: RF), BAC and First Horizon National (NYSE: FHN)."
5) Wholesale loan growth showed signs of continued improvement, while consumer balances declined. Loan pricing did not appear to be an issue. CMA, City National (NYSE: CYN), East West Bancorp (Nasdaq: EWBC), Fifth Third (Nasdaq: FITB), KeyCorp (NYSE: KEY), People's United (Nasdaq: PBCT), PNC and Texas Capital (Nasdaq: TCBI) are our most C&I heavy names under coverage."
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