This Day On The Street
Continue to site right-arrow
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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

3 Regional Bank Stock Best Bets From KBW

Stocks in this article: BAC C JPM FITB USB CRBC VNTV

NEW YORK ( TheStreet) -- KBW on Wednesday raised its price targets for three regional banks that carry "Outperform" ratings, with improved mortgage banking as the main theme for the first quarter.

Following KBW's universal banks first-quarter earnings preview, the firm on Wednesday published its preview for regional banks, which included a number of upward earnings estimate revisions, with implied upside from "early signs of macro-economic improvement and real estate recovery in distressed regions, in particular in the Southeast," with "less incremental impact" for banks in less-stressed regions.

With banks still facing a threat to their net interest margins -- the difference between the average yield on loans and investments and the average cost for deposits and wholesale borrowings -- in the prolonged low-rate environment, KBW said that "earnings contraction" could disappoint investors with "overly optimistic expectations."

Looking at the three banks that KBW rates "Outperform," for which the firm raised price targets on Wednesday, there is an interesting contrast for long-term investors who have strong confidence in the unfolding U.S. economic recovery. These three banks trade for at least 1.4 times tangible book value, according to HighlineFI, and multiples to consensus 2013 earnings estimates -- among analysts polled by Thomson Reuters. Multiples range from 10 to 12.5, painting quite a contrast with three of the largest U.S. banks:

  • Shares of Bank of America (BAC) closed at $9.49 on Tuesday, returning 71% year-to-date, following an epic 58% decline during 2011. Despite that remarkable run, the shares trade for just 0.7 times the company's Dec. 30 tangible book value of $12.95, and for a relatively low nine times the consensus 2013 EPS estimate of $1.06. KBW analyst Jefferson Harralson rates Bank of America "Market Perform," with a price target of $9.00, and estimates the company will report first-quarter EPS of six cents, followed by full-year earnings of 65 cents, and 2013 EPS of $1.20.
  • Citigroup (C) closed at $36.37 Tuesday, returning 38% year-to-date, following last year's 44% decline. Like Bank of America, Citi's shares are heavily discounted, at just 0.7 times the Dec. 30 tangible book value of $49.81. The shares trade for eight times the consensus 2013 EPS estimate of $4.70. KBW analyst David Konrad rates Citi "Market Perform," with a price target of $42, and estimates the company will report first-quarter EPS of 80 cents, with full-year earnings of $3.40 for 2012, followed by 2013 EPS of $4.40.
  • Shares of JPMorgan Chase (JPM) closed at $45.42 Tuesday, returning 38% year-to-date, following a 20% decline during 2011. The shares trade for 1.5 times tangible book value, and for eight times the consensus 2013 EPS estimate of $5.52. Based on a quarterly payout of 30 cents, the shares have a dividend yield of 2.64%, and the company's board of directors has authorized $12 billion in share buybacks for 2012, followed by another $3 billion for the first quarter of 2013. Konrad rates JPMorgan "Outperform," with a price target of $52, estimating the company will post first-quarter earnings of $1.07, followed by EPS of six dollars.

The following are quick summaries for the three regional banks rated "Outperform" by KBW, for which the firm raised price targets on Wednesday.

1 of 4

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,030.21 +6.04 0.03%
S&P 500 2,081.88 -0.29 -0.01%
NASDAQ 4,773.4720 +8.0480 0.17%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs