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BB&T: Financial Winner

NEW YORK (TheStreet) -- BB&T was the winner among the largest U.S. banks on Tuesday, with shares rising 2% to close at $30.90.

The broad indices ended higher as investors looked forward to a slew of first-quarter earnings reports, although results for Alcoa late on Monday were mixed. The aluminum producer beat earnings expectations, but disappointed on revenue.

Investors were pleased that China's National Bureau of Statistics said Tuesday that annual consumer inflation in the country eased in March, as food prices retreated from nine-month highs and producer price deflation increased, giving hope that China can afford an easy monetary policy to stimulate growth.

The KBW Bank Index (I:BKX) rose 1% to close at 56.10, with all but three of the 24 index components showing gains for the session.

First-quarter earnings season for the big banks will kick off Friday, with JPMorgan Chase (JPM) and Wells Fargo (JPM) scheduled to report before the market opens.

The consensus among analysts polled by Thomson Reuters is for JPMorgan Chase to report first-quarter EPS of $1.40 a share, increasing from $1.39 in the fourth quarter and $1.19 in the first quarter of 2012.

Analysts expect Wells Fargo to report first-quarter earnings of 88 cents a share, declining from 92 cents in the fourth quarter, but increasing from 75 cents in the first quarter of 2012.

Wells Fargo's mortgage loan origination and sale revenue is expected to suffer a major decline this year, although the drop may be largely offset by increases in loan servicing revenue and accounting adjustments.

BB&T


Shares of BB&T of Winston-Salem, N.C., have returned 8% this year, following a 19% gain during 2012. The shares trade for 1.9 times tangible book value, according to Thomson Reuters Bank Insight, and for 9.9 times the consensus 2014 EPS estimate of $3.11. The 2013 EPS estimate is $2.87.

BB&T in March had its 2013 capital plan rejected by the Federal Reserve, based on a "qualitative assessment." Guggenheim Securities analyst Marty Mosby said in an interview on March 15 that "we believe BBT was penalized for requesting a dividend payout in excess of 30% of earnings. The Fed had warned banks that any requests that exceeded 30% of earnings on dividends or 100% of earnings in total capital distributions would receive increased scrutiny and they backed up this warning by making BBT this year's example."

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