NEW YORK (
Bank of America
was the winner among major U.S. financial names on Monday, with shares rising 3% to close at $7.25.
reported that a
between the largest loan servicers, the federal government and the states' attorneys general, was only "weeks" away.
The broad stock indexes were mixed, as investors waited for the eurozone's 17 finance ministers to agree on a second bailout International Monetary Fund bailout package for Greece, to the tune of roughly 130 billion euros ($168 billion). The
KBW Bank Index
rose slightly to close at 43.60, with 14 of the 24 index components rising for the session.
The KBW bank index has risen 11% year-to-date, following last year's 16% decline.
Bank of America's shares are now up 30% for 2012, following a 58% plunge in 2011.
FBR analyst Paul Miller on Friday said that the company "reported a weak core operating result, with most major non-interest income drivers down and expenses still at elevated levels," during the fourth quarter, and that the sale of assets that significantly boosted Bank of America's capital ratios were "likely to have a significant impact on BAC's earnings power over the long term, and set investors up for disappointment when the focus turns from capital adequacy to earnings potential."
Miller rates Bank of America's shares "Market Perform," with an $8 price target.
on Saturday, citing unnamed sources, reported that
Virgin Money Holdings (UK)
was "highly likely" to purchase the company's
With the U.S. banking facing so many pivotal events over the coming months, including the results of
in March, the coming mortgage settlement and further regulatory clarity on capital requirements, there will be plenty of drivers for Bank of America's shares, in either direction.
Bank of America's shares trade for just 0.6 times their reported Dec. 30 tangible book value of $12.95, and for a low eight times the
consensus 2012 earnings estimate
, so even after a quick 30% pop, there could be plenty fuel on the fire for investors.
Interested in more on Bank of America? See TheStreet Ratings' report card for this stock.
Fifth Third Bancorp
rose 2.5% to close at $13.49.
Miller on Monday reiterated his "Outperform" rating on Fifth Third, with a price target of $15, following the company's report on Friday that it earned $305 million, or 33 cents a share during the fourth quarter, declining from $373 million in the third quarter, but improving from $270 million a year earlier.
for a detailed discussion on Fifth Third's fourth-quarter results, including the effect of the Durbin Amendment and a one-time charge related to the sale of
shares in 2009.
Miller estimates the company will earn $1.40 a share for all of 2012, followed by EPS of $1.55 in 2013.
The analyst noted that "Fifth Third grew loan balances by 5% on a period end, one of the strongest quarters for balance sheet growth among banks.
Interested in more on Fifth Third Bancorp? See TheStreet Ratings' report card for this stock.
Monday's financial loser was
, with shares sliding over 2% to close at $8.11, heading into the company's fourth-quarter earnings announcement, scheduled for Tuesday, before the market opens.
Analysts polled by FactSet expect the Cleveland lender to post fourth-quarter EPS of 20 cents a share, compared to operating EPS of 24 cents during the third quarter, and 33 cents during the fourth quarter of 2010.
KeyCorp agreed on Jan. 12 to purchase 37 branches in the Buffalo and Rochester markets, in New York, from
First Niagara Financial Group
, after that company completes its purchase of nearly 200 branches from
. First Niagara is selling branches as part of an agreement to alleviate U.S. Justice Department concerns over market concentration in upstate New York.
KeyCorp will pay a premium of roughly $110 million, for $2.4 billion in deposits and $400 million in loans.
Guggenheim Securities analyst Jeff Davis on Jan. 13 said the branch deal "represents a sensible use of excess capital," and that if the "assets can be deployed" to generate a return on assets of roughly 1%, "given overhead leverage from KEY's existing presence in Buffalo and Rochester, the price equates to
roughly 5x earnings," which is a bargain price.
KeyCorp pays a quarterly dividend of three cents a share. Following the stress tests, Davis expects that the company will return about "40% of earnings to shareholders in 2012."
Davis rates KeyCorp a buy, with a price target of $9.00.
Interested in more on KeyCorp? See TheStreet Ratings' report card for this stock.
Written by Philip van Doorn in Jupiter, Fla.
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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 TheStreet.com 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.