This Day On The Street
Continue to site
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

Bank Stocks Recover on Shutdown Day 4: Financial Winners

"Conversely, "Mutascio added, "it is hard for us to envision further outperformance at these levels if economic growth remains sluggish -- leading to tepid revenue growth and EPS growth that is driven more by non-cash loan loss reserve releases than it is by pre-tax pre-provision income growth."

There's no indication the U.S. economy may seeing a "breakout" from its estimated second-quarter GDP growth rate of 2.5%, and depending on the length of the government's shutdown, the fourth-quarter number could look ugly.

For several years investors have been seeing bank earnings padded by a decline in loan loss reserves, as banks lower their quarterly provisions for loan losses. Major threats to third-quarter growth in pre-provision net income include major declines in mortgage revenue, as the refinancing boom subsides, with the biggest banks also expected to see a significant decline in trading revenue.

Atlantic Equities analyst Richard Staite in a report on Sept. 23 estimated the eight large-cap U.S. banks he covers -- including Bank of America (BAC - Get Report), Citigroup (C - Get Report), Goldman Sachs (GS), Morgan Stanley (MS), PNC Financial Services Group (PNC) and U.S. Bancorp (USB), in addition to Wells Fargo and JPMorgan Chase -- would see third-quarter mortgage production revenue drop 45% sequentially and 55% year-over-year, with trading revenue declining 20% year-over-year.


-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BAC $11.15 -6.90%
C $35.09 -6.20%
JPM $53.13 -4.30%
ZION $19.96 -3.80%
AAPL $93.99 -0.30%


Chart of I:DJI
DOW 15,630.08 -284.66 -1.79%
S&P 500 1,830.44 -21.42 -1.16%
NASDAQ 4,262.3280 -21.2640 -0.50%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs