NEW YORK ( TheStreet) -- Citigroup ( C) was the winner among large financial services companies on Wednesday, with shares rising 2% to close at $29.91. The broad indexes all showed modest gains, while the KBW Bank Index ( I:BKX) rose 1% to close at 47.36, with all but three of the 24 index components rising for the session. In its Beige Book report -- an informal review published eight times a year -- the Federal Reserve said that reports from its 12 district banks "suggest economic activity continued to expand gradually in July and early August across most regions and sectors," with six districts indicating a "modest pace" for growth, while three districts cited moderate growth, with the Federal Reserve Bank of Chicago noting "that the pace of growth had slowed from the prior period." The central bank also said that "the Philadelphia and Richmond Districts reported slow growth in most sectors and declines in manufacturing, while Boston cited mixed reports from business contacts and some slowdown since the previous report." Following the Federal Deposit Insurance Corp.'s report on Tuesday that the nation's banks and thrifts earned $34.5 billion during the second quarter, for the industry's twelfth straight year-over-year earnings improvement, Rochdale Securities analyst Richard Bove late on Tuesday said that the "basic reason" for the continued improvement is "that banks borrow money at lower rates than the United States government does and they lend it out at a reasonable spread, collecting fees for what they do along the way," and that "when they are unburdened by bad loans their earnings grow consistently as they have for three years now." Bove added that "bank stocks are finally responding to the earnings increases," and have "outperformed the broader market all year." Looking ahead, "the underlying, unused capital, and liquidity in these companies suggest that their earnings advances have just begun and their stock prices are likely to go much higher." Citigroup's shares have now returned 14% year-to-date, following a 44% decline last year. The shares trade for a very low 0.6 times their reported June 30 tangible book value of $51.81, and for less than seven times the consensus 2013 earnings estimate of $4.53 a share, among analysts polled by Thomson Reuters. The consensus 2012 EPS estimate is $4.09.