How the Major Banks Fared This Earnings Season

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24/7 Wall St. has been tracking the major banks over the course of this week to kick off corporate earnings season. We have taken a few key statistics from each of the earnings reports and listed them below, as well as the reactions of analysts and investors.

Citigroup

Citigroup Inc. (NYSE: C) beat expectation this quarter as it strives to continue its recovery, growing both earnings and revenues. It reported earnings of $1.15 per share and $19.98 billion in revenue, against Thomson Reuters consensus estimates of $1.12 in earnings per share (EPS) and $19.06 billion in revenue. The bank reported a net income of $3.44 billion, up from $3.23 billion a year ago.

The big news in Citigroup’s report was that it is exiting retail bank operations in several nations. These include a confirmed exit in Japan, as well as Costa Rica, Peru, Panama, Czech Republic, Egypt, Hungary and several other smaller countries. Citigroup is disbanding Banamex after results of its Mexico fraud investigation found illegal activities.

The bank reported a book value per common share of $67.31. It also has a Basel III common equity ratio of 10.7%.

Argus upgraded Citigroup to a Hold rating from Sell following the third-quarter results. Argus also pointed out that Citigroup has outperformed the market over the past quarter with an increase of 0.4%, versus the S&P 500 drop of 6%. However, over the past year shares have underperformed, increasing 1.2%, versus a 9.1% gain in the S&P 500.

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The initial reaction to this earnings report was positive 2.5% to open at $51.15 on Tuesday from the previous close of $49.90.

The stock has a consensus analyst target price of $59.21 and a 52-week trading range of $45.18 to $55.28. The company has a market cap of $150 billion.

J.P. Morgan

JPMorgan Chase & Co. (NYSE: JPM) had a mixed earnings report when it posted EPS of $1.36, under the consensus estimate of $1.38. However revenue beat its consensus estimate, coming in at $24.25 billion, above the estimate of $24.01 billion.

The bank’s chief financial officer noted that a sequential rise in legal expenses of $400 million included an estimate for J.P. Morgan’s expenses in a possible settlement of a U.K. investigation into the bank’s role in price-rigging in the foreign exchange markets. An investigation into currency manipulation in the United States is also continuing.

J.P. Morgan has a book value per common share was $56.50, and the company has a common equity Tier 1 ratio of 10.1%.

The initial reaction to this earnings report was negative, with shares down 2.5% to open Tuesday at $56.69 from the previous close $58.16.

The stock has a consensus analyst target price of $67.35, and its 52-week trading range is $51.30 to $61.85. The company has a market cap of $206 billion.

Wells Fargo

Wells Fargo & Co. (NYSE: WFC) met consensus estimates this quarter when it reported $1.02 in EPS and $21.2 billion in revenue. Thomson Reuters had called for EPS of $1.02 and revenue of $21.1 billion.

In the most recent quarter, Wells Fargo posted a 4% growth in total average loans to $833.2 billion from the third quarter in 2013. Total average deposits were up 10% to $1.1 trillion.

John Stumpf, chairman and CEO of Wells Fargo, said, “Loan and deposit growth was strong and diversified across both commercial and consumer businesses. Capital levels increased even as we returned more capital to shareholders through higher dividends and share repurchases from a year ago.”

The company reported its book value per share up roughly 8.9% to $31.55, compared to the previous year at $28.98. It had a common equity tier 1 ratio under Basel III of 11.16% at the end of the quarter.

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Argus upgraded Wells Fargo to a Buy rating from Hold, with a price target of $54, following the third-quarter results.

The initial reaction upon the announcement of earnings was a slight drop of about 1.4% to open the market Tuesday at $49.50 from the previous close of $50.20. Shares fell 2.7% to close at $48.83.

Wells Fargo has a consensus analyst target price of $54.68 and a 52-week trading range of $41.71 to $53.80. Its market cap is $251 billion.

Goldman Sachs

Goldman Sachs Group Inc. (NYSE: GS) handily made gains this quarter, above its estimates, and signaled more value to shareholders by raising its dividend as well. It reported its EPS of $4.57 and $8.39 billion in revenue, against consensus estimates of $3.21 in EPS and $7.85 billion in revenue.

Goldman Sachs raised its dividend to $0.60 per share from its previous level of $0.55, as 24/7 Wall St. had predicted, albeit on the lower side of the range.

The book value per common share was $161.38 and the brokerage giant claims $1.15 trillion in assets under its supervision. The firm has a Basel III tier 1 common equity ratio of 11.8%.

Keefe Bruyette & Woods upgraded Goldman Sachs to Outperform from Market Perform.

Initially the reaction to earnings was negative, with shares down almost 3% to open Thursday at $172.02 from the previous close $177.24. However this reaction was due more to the broad markets falling than the actual earnings report. Shares were trading up over 2% to $176.25 on Friday morning.

The stock has a consensus analyst target price of $182.82 and a 52-week trading range of $151.65 to $189.50. The company has a market cap of $79 billion.

Bank of America

Bank of America Corp. (NYSE: BAC) took a major hit this quarter on earnings from a U.S. Department of Justice settlement. The bank posted earnings of -$0.01 per share and $21.21 in revenue, against consensus estimates of -$0.09 per share and $21.36 billion. The settlement set Bank of America back $5.3 billion pretax, or $0.43 per share after tax.

Bank of America said that four of its five businesses report higher net income than a year ago. Investment Banking fees were up 4% to $1.4 billion, and Sales and Trading revenue was up 9%. The bank further said that credit quality continued to improve, with net charge-offs down 38% to $1.0 billion, while its net charge-off ratio of 0.46% was the lowest in a decade. By and large these appeared to be better than expected.

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The bank reported a book value per share of $14.13 and noted that its common equity tier 1 ratio under Basel III was 9.6%.

Following the earnings release, shares of Bank of America gapped down about 1.7% to open Wednesday at $16.23. Shares closed Wednesday down 4.6% at $15.76 from the previous close of $16.52, but in the days since it has made a steady recovery.

The consensus analyst target price for shares is $18.09 and the 52-week trading range is $13.80 to $18.03. The market cap is $169 billion.

Morgan Stanley

Morgan Stanley (NYSE: MS) has fared very well this earnings season, after blowing out its estimates Friday morning. It reported EPS of $0.84 and revenue of $8.9 billion, against consensus estimates of $0.54 in EPS and $8.17 billion in revenue.

The bank had a Basel III common equity tier 1 ratio of 14.3% and a tangible book value of $29.25.

Investors are, of course, delighted with the bank’s performance in the quarter, and they demonstrated their approval by bidding up the shares in Friday’s premarket session.

Morgan Stanley entered the market Friday up about 3.6% at $33.72 from the previous close of $32.53. The stock has a consensus analyst target price of $36.37 and a 52-week trading range of $28.31 to $36.44. The company has a market cap of $63 billion.

Morgan Stanley was the last of the big banks to report results this week, and it capped a solid earnings showing.

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