This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Bank Stocks: Jobs Report Winners

NEW YORK ( TheStreet) -- Fifth Third Bancorp (FITB - Get Report) was the winner among the largest U.S. banking names on Friday, with shares rising over 2.12% to close out the week at $13.76.

The U.S. Labor Department reported that the U.S. economy added 227,000 nonfarm jobs during February, declining from an upwardly revised increase of 284,000 in January, while the unemployment rate remained at 8.3%. This was the first time since early last year that payrolls have grown more than 200,000 three months in a row. In its daily economic commentary Deutsche Bank pointed out that the payroll numbers "have been revised higher in 19 of the past 20 months, which is consistent with what has transpired in the early stages of most economic cycles."

The The KBW Bank Index (I:BKX) pulled back from earlier gains and was up 1% to close at 45.72, with all 24 index components rising for the day, except for Bank of America (BAC - Get Report), which was down a penny, to close at $8.05.

The Wall Street Journal on Friday reported that Bank of America was negotiating with regulators to avoid $850 million in penalties -- part of the $25 billion mortgage foreclosure settlement between federal regulators, states' attorneys general, and the largest loan servicers, announced on Feb. 9 -- by offering loan modifications, including principal reductions, to 200,000 borrowers.

A Bank of America spokesman told the Journal that the average balance reduction would be more than $100,000. While the full details of the plan have not been released, it's quite possible that investors holding mortgage paper backed by the mortgages Bank of America wishes to modify, may have other ideas.

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

Bank of America's shares have returned 45% year-to-date, following last year's 58% plunge. The shares trade for 0.7 times tangible book value, according to Highline Financial, and 11 times the consensus 2012 earnings estimate of 71 cents a share, among analysts polled by Thomson Reuters. The consensus 2012 EPS estimate is $1.19.

Are bank stocks too hot?

The KBW Bank Index has now risen 16% year-to-date, following last year's 25% decline.

Sterne Agee analyst Todd Hagerman on Friday expressed caution over the sector's strong year-to-date performance, heading into next week, when the Federal Reserve will publicly announce the results of its annual stress tests on the largest U.S. bank holding companies, saying that "while bank stocks have regained their footing with an improved investor outlook and the recent steady flow of positive economic data," the likelihood for more subdued GDP forecasts relative to 2H11 are each likely to weigh on valuations and further potential upside in the shares."
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BAC $14.21 -1.00%
FITB $17.80 -1.30%
AAPL $94.46 -0.76%
FB $117.96 0.45%
GOOG $694.84 0.36%


Chart of I:DJI
DOW 17,712.42 -38.49 -0.22%
S&P 500 2,056.97 -6.40 -0.31%
NASDAQ 4,748.1640 -15.06 -0.32%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs