- According to Nash, KeyCorp's cost of funds declined to 0.77% during the first quarter, from 0.93% a year earlier, with total additional "potential savings" over the next year of 38 basis points from deposit re-pricing and the redemption of $1.2 billion in trust preferred securities. KeyCorp's shares closed at $7.13 Wednesday, down 6% year-to-date, following a decline of 12% during 2011. Nash has a neutral rating on KeyCorp, and on Thursday lowered his price target for the shares to $8.00 from $8.50, while cutting his 2012 and 2013 EPS estimates by two cents, to 75 cents for both years.
- BB&T's funding cost declined to 0.82% during the first quarter, from 1.16% a year earlier, according to Nash. A relatively low 17% of the company's funding came from non-interest bearing deposits, compared to 27% for KeyCorp. Nash estimates that BB&T's funding cost could come down 29 basis points over the next year, through deposit re-pricing and trust-preferred redemptions. BB&T's shares closed at $28.39 Wednesday, returning 14% year-to-date, following a 2% decline during 2011. Based on a quarterly payout of 20 cents, the shares have a dividend yield of 2.82%. Nash rates BB&T a "Buy," but cut his price target for the shares by two dollars to $35, while raising his 2012 EPS estimate by three cents to $2.89, and cutting his 2013 EPS estimate to $3.18 from $3.26.
- Fifth Third Bancorp's cost of funds declined to 0.58% during the first quarter, from 0.77% during the first quarter of 2011. Like KeyCorp, 27% of the company's first-quarter funding came from non-interest bearing deposits. Nash estimates the company could see an additional decline in funding costs over the next year of 29 basis points, from deposit re-pricing and the redemption of trust preferred shares. Nash rates Fifth Third a "Buy." The analyst cut his price target for the shares by a dollar to $15, while maintaining his 2012 EPS estimate of $1.50, and lowering his 2013 EPS estimate to $1.46 from $1.55.
Goldman Slashes Slew of Banks
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