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Best Performing Bank Stocks of 2011

Overview Overview

The year in bank stocks got off to a rough start. It turned worse still in the second half amid high volatility and repeated rallies inspired by euro zone rescue attempts that failed to sustain investor confidence.

Key Events:

  • Libya spillover - Turmoil in Libya appeared to trigger the KBW Bank Index's first one-day decline of more than 3% in 2011.
  • Bad economic news - A cluster of negative reports catalyzed worries about the faltering recovery, and the KBW Bank Index notched its first one-day loss of more than 4%.
  • Debt-ceiling deadline - After weeks of gut-wrenching partisan brinksmanship, President Obama signed the Budget Control Act of 2011.
  • Ratings cut - The KBW Bank Index plummeted 11% in the first trading day after S&P cut its rating of the U.S.
  • Currency swap expansion - The Fed joined with other central banks to expand currency swap arrangements, driving the KBW Bank Index to a 7% one-day jump.

Commerce Bancshares Inc. Commerce Bancshares Inc.

In a turbulent market, Commerce Bancshares was rewarded for its quiet stability. "They don't chase the latest fads and they don't run out to hot markets," an analyst told American Banker in July.

Key Events:

  • 40% jump in EPS - The company reported that EPS increased 40% from the year prior in the first quarter as credit losses fell.
  • Earnings miss - The company's shares tumbled on an earnings report that fell shy of analyst forecasts, reflecting pressure on the company's net interest margin and a contraction in its loan portfolio.

U.S. Bancorp U.S. Bancorp

U.S. Bancorp cemented its reputation as one of the nation's most consistent and best performing large banks by expanding its loan portfolio and resisting net interest margin pressure.

Key Events:

Capital One Financial Corp. Capital One Financial Corp.

Investors were pleased that Capital One's chargeoff rates fell below pre-recession levels. They appeared to give their assent as the company announced a pair of transformative deals.

Key Events:

BB&T Corp. BB&T Corp.

BB&T raised its loan growth forecast after the third quarter and announced another significant bank acquisition.

Key Events:

  • Strong earnings - BB&T's shares outran the KBW Bank Index by 3 percentage points on the day of its first quarter earnings report, and the company declared its intent to be "aggressive" in looking for deals.
  • BankAtlantic deal - BB&T agreed to acquire most of the ailing Florida operation for a 9% deposit premium, leaving bad assets with the seller.

PNC Financial Services Group Inc. PNC Financial Services Group Inc.

PNC announced three acquisitions in 2011, and investors appeared to cheer the deals. Combined, the targets' assets are equal to about 10% of PNC's January 1 total.

Key Events:

People's United Financial Inc. People's United Financial Inc.

People's United capped a string of purchases with a cash-and-stock deal for Danvers Bancorp early this year, and then refocused on consolidating its acquisitions and organic growth. The company underperformed the KBW Bank Index at first, but overtook its peers in the second half with the help of a large share repurchase program.

Key Events:

It was a bad year for bank stocks, but some bucked the trend. Here are the top six performers in the KBW Bank Index.

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