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!

Banks Post Stellar Earnings, but Face Skepticism

Stocks in this article: I:BKX BAC JPM

NEW YORK (TheStreet) -- U.S. banks turned in a strong first quarter earnings performance, but face questions about whether they will be able to sustain the strong showing.

Out of 165 banks covered by Keefe, Bruyette & Woods, 80% beat or met consensus expectations in the first quarter and some 96% showed a profit.

JPMorgan Chairman and CEO Jamie Dimon has plenty of reasons for the grim face

Still, both large-cap and regional bank indices, which were outperforming the market before earnings season began, began to lag the market once JPMorgan Chase (JPM) kicked off earnings season April 13.

Since that date, the S&P 500 is up 0.8%, the KBW Regional Banking Index (I:KRX) is up 0.7%, and the KBW Bank Index (I:BKX) is down 0.8%.

Weakness in Europe does not appear to explain the big banks' underperformance, since the iShares S&P Europe 350 Index (IEV) is up 0.72% since April 13.

The largest U.S. banks, however, including JPMorgan, Bank of America (BAC), Citigroup (C), Wells Fargo (WFC), Goldman Sachs (GS) and Morgan Stanley (MS) face pressure from the threat of ratings downgrades and an increasing drumbeat of public support for breaking them up .

Even if they don't break up, new regulations represent a real threat to powerhouses like Goldman and JPMorgan. Meanwhile, Bank of America, the giant hardest-hit by the U.S. housing crisis, has had to shrink substantially, raising questions about earnings potential.

Bank of America, the most volatile of the big bank stocks, may offer the best illustration of big banks' share performance in 2012.

Bank of America shares gained 65% through April 12, as management demonstrated they could strengthen the balance sheet without highly dilutive equity issuance. But assuming analysts are correct in saying the focus has now shifted to ongoing earnings potential, the picture isn't pretty. Bank of America shares are down 11% since April 13.

-- Written by Dan Freed in New York.

Follow me on Twitter

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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 17,941.42 +136.62 0.77%
S&P 500 2,077.53 +6.88 0.33%
NASDAQ 4,778.2620 +12.8820 0.27%

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