Nomura Securities on Banks: Mortgage Update - Adjusting Estimates on WFC, USB, FITB, STI & HCBK

Nomura Securities on Banks: Mortgage Update

Analyst, Brian Foran, said, "The yield curve flattening is mostly bad for regional banks, however, the one line in the P&L that benefits is mortgage. Lower rates have led to higher-than-forecast volume in 2Q. In addition, 2Q has a full-quarter benefit from higher margin HARP 2.0 originations. Putting it all together, industry mortgage revenues look like they could be flat or even up a bit from record 1Q levels. We revise our estimates in 2012 for WFC (Buy), USB (Neutral), FITB (Buy), and STI (Buy) to reflect the positive revisions to the MBA volume outlook. Given the move down in rates and pick up in refi, we lower our estimates and TP for HCBK (Reduce).

Wells Fargo (NYSE: WFC): F12E EPS from $3.40 to $3.45 vs. Street $3.26; F13E EPS $3.60 vs. Street $3.68; PT $38

Fifth Third (Nasdaq: FITB): F12E EPS from $1.55 to $1.60 vs. Street $1.49; F13E EPS $1.55 vs. Street $1.55; PT $16.50

SunTrust (NYSE: STI): F12E EPS from $1.90 to $1.95 vs. Street $1.89; F13E EPS $2.85 vs. Street $2.66; PT $29

U.S. Bancorp (NYSE: USB): F12E EPS from $2.85 to $2.90 vs. Street $2.77; F13E EPS $3.00 vs. Street $3.00; PT $33

Hudson City Bancorp (Nasdaq: HCBK): F12E EPS from $0.55 to $0.53 vs. Street $0.57; F13E EPS from $0.60 to $0.50 vs. Street $0.55; PT from $6.00 to $5.50

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