BB&T: Financial Winner

NEW YORK ( TheStreet) -- BB&T ( BBT) was the winner among the largest U.S. financials on Tuesday, with shares rising over 2% to close at $29.52.

BB&T on Friday agreed to purchase the life and P&C insurance operating divisions of Roseland, N.J.-based Crump Group from J.C. Flowers for $570 million in cash, saying the deal would "add approximately $300 million in annual revenue."

The broad indexes saw gains after reports that the Greek government was close to signing an agreement on austerity actions, including pension and wage cuts, in order to secure a second bailout of 130 million ($171 billion) from the European Central Bank, International Monetary Fund and European Commission.

The KBW Bank Index ( I:BKX) was up slightly to close at 44.71.

BB&T's Crump deal follows the company's agreement in November to purchase BankAtlantic Bancorp's ( BBX) main thrift subsidiary for a premium of $301 million. The deal will bring on roughly 3.3 billion in deposits, spread across 78 South Florida branches.

Wunderlich Securities analyst Kevin Reynolds on Jan. 31 initiated his coverage of BB&T with a "Buy" rating and $34 price target, calling the Winston-Salem, N.C., lender "the blue chip of the large regional banks, with a highly disciplined, returns-based culture that pursues a commercially oriented business model with a community banking approach to its local markets."

Reynolds pointed out that BB&T's expanding market area -- extending from Washington, D.C., to Texas -- is "projected to experience population increases significantly higher than the nation overall." The analyst estimates that the company will earn $2.80 a share in 2012, followed by EPS of $3.15 in 2013.

Please see TheStreet's regional earnings coverage for a detailed discussion of BB&T's fourth-quarter results.

BB&T's shares have now returned 18% year-to-date. The shares trade for 1.9 times tangible book value, according to HighlineFI, and for 12 times the consensus 2012 EPS estimate of $2.47, among analysts polled by Thomson Reuters.

Interested in more on BB&T? See TheStreet Ratings' report card for this stock.

Monday's financial sector loser was Bank of America ( BAC), with shares pulling back 1.5% to close at $7.85.

Bank of America's shares have now returned 41% year-to-date, after declining 58% in 2011.

While the shares are still heavily discounted, at just 0.7 times tangible book value, they appear relatively pricey at 11 times the consensus EPS estimate of 72 cents, when compared to the rest of the "big four" U.S. bank holding companies:
  • Shares of Citigroup (C) closed at $33.07 on Tuesday, rising 27% year-to-date. Like Bank of America, the shares trade for just 0.7 times tangible book value, but they trade at a much lower multiple of eight times the consensus 2012 EPS estimate of $3.99.
  • JPMorgan Chase (JPM) closed at $37.87, returning 15% year-to-date. The shares trade for 1.2 times tangible book value, and eight times the consensus 2012 EPS estimate of $4.67. With JPM, you also have a rdividend yield of 2.70%, based on a 25-cent quarterly payout.
  • Wells Fargo's (WFC) shares have returned 10% year-to-date, through Tuesday's close at $30.26. The shares trade for 1.7 times tangible book value -- reflecting the company's status as the most consistent earner among the big four over the past year -- and for nine times the consensus 2012 EPS estimate of $3.20. With a quarterly payout of 12 cents, the shares have a dividend yield of 1.59%.

Then again, Rochdale Securities analyst Richard Bove things Bank of America's stock will hit $30 within four years.

Interested in more on Bank of America? 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 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.