Best Performing Bank Stocks of 2011
December 30, 2011 7:00 AM
Overview
The year in bank stocks got off to a rough start. It turned worse still in the second half
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.
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,"
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 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:
- Earnings beat on revenue growth - In an industry struggling with anemic loan demand, U.S. Bancorp's
4% year-over-year growth in second quarter revenue stood out. - Another beat - Another quarter, another
earnings report that exceeded analyst forecasts.
Capital One Financial Corp.
Investors were pleased that Capital One's chargeoff rates
Key Events:
- First quarter results - In its earnings report, Capital One said that its credit card chargeoff rate hit the lowest level in more than two years.
- ING deal - Capital One announced a deal to
acquire ING Group NV's U.S. online banking business . - HSBC deal - Capital One announced deal to
acquire HSBC's domestic credit card business , and bucked sharp drop in KBW Bank Index the same day.
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 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:
- BankAtlantic branch deal - PNC agreed to acquire
19 branches in the Tampa area . - RBC Bank deal - The target included about $25 billion in assets and
424 branches in the southeast . - Flagstar branch deal - PNC agreed to acquire
27 branches in the Atlanta area .
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:
- Danvers purchase - People's United
agreed to buy Danvers for about $500 million. - Charter flip - The company announced that it had applied to
convert People's United Bank to a national bank charter from a savings bank charter.
