This list was compiled by looking at the year-to-date total returns -- assuming the reinvestment of dividends -- of the 24 components of the KBW Bank Index (I:BKX) , along with other large-cap banks not included in the index, such as Morgan Stanley (MS) - Get Morgan Stanley Report, Goldman Sachs (GS) - Get Goldman Sachs Group, Inc. Report, Discover Financial (DFS) - Get Discover Financial Services Report and CIT Group (CIT) - Get CIT Group Inc. Report.
The banking industry has seen a remarkable recovery, with the KBW Bank Index rising 33% this year through Wednesday's close at 68.05, followoing a 30% gain during 2012. Banks have outpaced the broad market, with the S&P 500undefined rising 27% this year, following an increase of 13% during 2012.
Here are some quick data points for the four large-cap bank stocks faring worst so far during 2013. The return numbers below may differ from those on the chart, which will include today's price action.
Northern Trust (NTRS) - Get Northern Trust Corporation Report of Chicago has been the weakest performer during 2013 among large-cap U.S. banks, with what in fairness could only be described as an excellent year-to-date return of 19% through Wednesday's close at $58.94. Based on a quarterly payout of 31 cents, the shares have a dividend yield of 2.10%. The shares trade for 3.6 times tangible book value, according to Thomson Reuters Bank Insight, and for 17.2 times the consensus 2014 earnings estimate of $3.43. The consensus 2015 EPS estimate is $3.87. Those valuation ratios are rather high when compared to most other large-cap banks, underlining the greater value investors place on a bank that focus on institutional asset management and custody services. Northern Trust hasn't been facing the mortgage overhang many other banks have been suffering from.
M&T Bank (MTB) - Get M&T Bank Corporation Report of Buffalo, N.Y., is the second-worst performer, with a total return of 21% this year through Wednesday's close at $115.95. The shares trade for 2.4 times tangible book value, and for 11.6 times the consensus 2014 EPS estimate of $8.49. The consensus 2015 EPS estimate is $9.40. Based on a 70-cent quarterly payout, the shares have a dividend yield of 2.41%. M&T is a strong performer, with a return on average tangible common equity of 18.72% this year, following ROTCE ranging from 18.09% to 18.56% from 2010 through 2012, according to Thomson Reuters Bank Insight. The stock may have trailed the sector this year because of the long delay to the expected completion of M&T's acquisition of Hudson City Bancorp (HCBK) of Paramus, N.J., in a deal originally valued at $3.7 billion in cash and stock, when it was announced in August 2012.
The merger was expected to be completed during the second quarter, but the two companies in April announced that the time needed to gain regulatory approval of the deal would be "extended substantially," because M&T had "learned that the Federal Reserve [had] identified certain regulatory concerns with M&T's procedures, systems and processes relating to M&T's Bank Secrecy Act and anti-money-laundering compliance program."
The two companies extended the date after which either company could walk away from the deal until Jan. 31, 2014, but also said in April that there could be "no assurances that the merger will be completed by that date."
BB&T Corp. (BBT) - Get BB&T Corporation Report of Winston-Salem, N.C., is the third-worst performer, with a total return of 24% this year through Wednesday's close at $34.90. The shares trade for 2.2 times tangible book value, and for 11.6 times the consensus 2014 EPS estimate of $3.02. The consensus 2015 EPS estimate is $3.30. Based on a quarterly payout of 23 cents, the shares have a dividend yield of 2.64%. Please see TheStreet'searnings coverage for more on BB&T.
Capital One Financial (COF) - Get Capital One Financial Corporation Report is the fourth-worst performer among the large-cap banks we looked at, with shares returning 25% this year through Wednesday's close at $71.51. The shares trade for 10.3 times tangible book value, and for 15.5 times the consensus 2014 EPS estimate of $6.96. The consensus 2015 EPS estimate is $7.46. Based on a quarterly payout of 30 cents, the shares have a dividend yield of 1.68%.
Please see Capital One, Discover Are Bargains as Industry Resumes Growth for more on Capital One and other credit card lenders.
-- 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.