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Capital One: Financial Winner (Update 1)

Citigroup said in a statement that it expected "to record a pre-tax charge of approximately $305 million in the fourth quarter of 2012 for its cash payment portion of the settlement," and that its "approximately $500 million share of the loss mitigation or other foreclosure prevention actions in connection with the agreement will be covered by existing loan loss reserves and thus there will be no incremental financial impact to Citi." The company will report its fourth-quarter results on Jan. 17. Citi's shares rose slightly to close at $42.47.

U.S. Bancorp released a statement saying that its "share of the settlement will include a cash payment of $80 million (pretax), which is expected to reduce fourth-quarter 2012 earnings per share by approximately 3 cents. In addition, the settlement includes a commitment to provide approximately $128 million of other mortgage assistance, such as loan modifications, which is covered by existing loan loss reserves." USB will report its fourth-quarter results on Jan. 16. The company's shares pulled back 1%, closing at $32.92.

Following the market close, Wells Fargo announced that it's "portion of the cash settlement will be $766 million, which is based on the proportionate share of Wells Fargo-serviced loans in the overall IFR population." The company also said it would "record a pre-tax charge of approximately $644 million in the fourth quarter of 2012 to fully reserve for its cash payment portion of the settlement and additional remediation-related costs." Wells Fargo's shares had declined slightly, to close at $34.77.

Comptroller of the Currency Thomas J. Curry said in a statement that "when we began the Independent Foreclosure Review, the OCC pledged to fix what was broken, identify who was harmed, and compensate them for that injury. While today's announcement represents a significant change in direction, it meets those original objectives by ensuring that consumers are the ones who will benefit, and that they will benefit more quickly and in a more direct manner."

We have learned a great deal from the reviews that have been conducted to date," Curry said. "However, it has become clear that carrying the process through to its conclusion would divert money away from the impacted homeowners and also needlessly delay the dispensation of compensation to affected borrowers. Our new course of action will get more money to more people more quickly, and it will speed recovery in the nation's housing markets."

Capital One

Capital One's shares have now returned 9% year-to-date, following a 38% return during 2012.

The shares trade for 1.7 times tangible book value, according to Thomson Reuters Bank insight, and for nine times the consensus 2013 EPS estimate of $7.02, among analysts polled by Thomson Reuters. The consensus 2014 EPS estimate is $7.39.
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