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JPMorgan Chase: Financial Winner

NEW YORK (TheStreet) -- JPMorgan Chase (JPM) was the winner among large U.S. banks on Tuesday, with shares rising 2% to close at $49.14.

The broad stock indices all ended higher, and the KBW Bank Index (I:BKX) was up 1% to close at 58.28, with all 24 index components ending the session with gains.

The Federal Reserve Tuesday afternoon announced that U.S. consumer credit expanded at a seasonally adjusted annual rate of 3.4% during March, slowing from growth rates of 8.0% in February and 5.5% in January. The consumer credit growth rate for the first quarter was 5.7%, declining from 6.5% in the fourth quarter, but increasing from 5.4% in the first quarter of 2012.


JPMorgan Chase

Shares of JPMorgan Chase have returned 13% this year, following a 36% return during 2012. The shares trade for 8.3 times the consensus 2014 EPS estimate of $5.94, among analysts polled by Thomson Reuters. The consensus 2013 EPS estimate is $5.67.

The forward price-to-earnings ratio is quite low for a bank stock in the current environment. JPMorgan on Monday was include among TheStreet's 10 Cheapest Bank Stocks to Forward Earnings.

Despite a strong earnings track record over the past several years, including record last year, despite losses of at least $6.2 billion from the "London Whale" hedge trading activities of its Chief Investment Office (CIO), JPMorgan's shareholders will vote at the company's annual meeting on May 21 to decide whether or not to separate James Dimon's combined roles as CEO and chairman of the bank's board of directors.

ISS Proxy Advisory Services last Wednesday said it was "supporting the shareholder proposal requesting an independent chair given the governance failure in connection with the CIO incident, the size and complexity of JPM's business, and the continued challenges faced by the company."


Then on Tuesday, rival proxy advisory firm Glass, Lewis & Co. also said it was in favor of a vote to split Dimon's two roles, while also advising shareholders to vote against three members of JPMorgan Chase's audit committee.

It has been widely reported that bank regulators, including the Office of the Comptroller of the Currency and the Federal Reserve, have expressed distrust in JPMorgan's Management Team. Following the completion of annual bank stress tests in March, the Fed required JPMorgan to submit a revised capital plan by the end of the third quarter.

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