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The Zacks Analyst Blog Highlights: U.S. Bancorp, Citigroup, Bank Of America, Wells Fargo And PNC Financial Services Group

Published 07/24/2016, 09:30 PM
Updated 07/09/2023, 06:31 AM

For Immediate Release

Chicago, IL – July 25, 2016 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include U.S. Bancorp (USB), Citigroup Inc (NYSE:C). (C), Bank of America Corporation (NYSE:BAC) (BAC), Wells Fargo & Company (NYSE:WFC) ( WFC) and PNC Financial Services Group (NYSE:PNC), Inc. (PNC).

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Here are highlights from Friday’s Analyst Blog:

Bank Stock Roundup

In spite of the tough industry backdrop and rising provisions due to energy sector lending, most of the banks that reported second-quarter 2016 results this week managed to beat estimates with their cost-control measures and top-line strength. This also led to positive price movement for most stocks.

Further, the results demonstrated an upswing in loans driven by a rise in commercial loan demand, which ultimately boosted net interest income. Additionally, the rise in deposit balances helped drive organic growth at the banks.

However, an overall rise in non-interest expenses owing to high spending on technology and other market development initiatives was an undermining factor. Moreover, the low-rate environment adversely impacted net interest margins for most of the banks. Nevertheless, the absence of exceptionally high legal expenses helped banks outpace the Zacks Consensus Estimate.

BANKS-MAJOR REGIONAL Industry Price Index

(Read: Bank Stock Roundup for the week ending Jul 15, 2016 )

Important Earnings of the Week

1. U.S. Bancorp (USB) reported a positive surprise of 2.5% in the second quarter of 2016. The company reported earnings per share of 83 cents, beating the Zacks Consensus Estimate by 2 cents. Results also exceeded the prior-year quarter earnings of 80 cents. Excluding non-recurring items related to equity investments, legal and regulatory matters and charitable contributions, earnings per share came in at 82 cents. Organic growth was driven by higher revenues along with elevated average loans and deposits. Steady capital deployment activities reflected a strong capital position. However, an increase in expenses and provisions were a major drag (read more: U.S. Bancorp Beats Q2 Earnings on High Revenues ).

2. Driven by a decline in operating expenses, Citigroup Inc. ( C) delivered a positive earnings surprise of nearly 15% in second-quarter 2016. The company’s earnings from continuing operations per share of $1.25 for the quarter outpaced the Zacks Consensus Estimate of $1.09. However, earnings compared unfavorably with the year-ago figure of $1.51 per share. Though profitability was hit by a decline in overall revenues, the company recorded higher fixed income markets revenues, driven by an improved trading environment and increase in corporate client activity in rates and currencies in the reported quarter (read more: Citi Tops Q2 Earnings on Low Costs, Trading Revenues Up).

3. Higher provisions and a decline in revenues resulted in a 16% year-over-year drop in Bank of America Corporation’s ( BAC) second-quarter 2016 earnings of 36 cents per share. However, earnings surpassed the Zacks Consensus Estimate of 34 cents. The results in the reported quarter included 5 cents per share of negative market-related net interest income adjustments and 1 cent per share of negative net debit valuation adjustments. Excluding these, the company would have earned 42 cents per share. Weaknesses in equity trading revenues, investment banking fees and mortgage banking revenues were the headwinds. Further, a jump in provisions added to concerns (read more: BofA Q2 Earnings Slide on Higher Provisions ).

4. Impacted by higher expenses, Wells Fargo & Company’s ( WFC) second-quarter 2016 earnings recorded a negative surprise of about 1%. Earnings of $1.01 per share missed the Zacks Consensus Estimate by a penny. Moreover, it compared unfavorably with the prior-year quarter’s earnings of $1.03 per share. Wells Fargo witnessed organic growth aided by higher revenues along with strong loans and deposit balances. Moreover, a strong capital position along with returns on assets and equity acted as the primary drivers. However, higher provisions and expenses were a concern (read more: Wells Fargo Q2 Earnings Miss Estimate, Expenses Up ).

5. The PNC Financial Services Group, Inc.’s (PNC) second-quarter 2016 earnings per share of $1.82 handily beat the Zacks Consensus Estimate of $1.75. However, the bottom line declined 3% year over year. Better-than-expected results were aided by increased net interest income and relatively stable expenses, partially offset by lower non-interest income. Also, continued growth in loans and deposits were among the other positives. However energy related headwinds persisted, which led to higher provisions (read more: PNC Financial Tops Q2 Earnings, Provisions High ).

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.



US BANCORP (USB): Free Stock Analysis Report

CITIGROUP INC (C): Free Stock Analysis Report

BANK OF AMER CP (BAC): Free Stock Analysis Report

WELLS FARGO-NEW (WFC): Free Stock Analysis Report

PNC FINL SVC CP (PNC): Free Stock Analysis Report

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