As always, the quarterly earnings were kicked off by the major large-cap money center banks, and as expected they all delivered solid earnings reports. The team at Jefferies remains very positive on the four top companies that beat earnings expectations and, most importantly, provided reassuring forward guidance. Net interest income, or NII, across all banks was impressive, and with the debate over where interest rates will be as we move through the rest of 2026 remaining a wild card for all the financial giants, the second half of the year could prove interesting.
The Jefferies team had this to say when discussing the results:
We’re out with our thoughts following large-cap bank earnings. We highlight that results were largely positive, with all four banks beating Earnings Per Share and Pre-Provision Net Revenue expectations. Loan growth came in modestly above expectations, while deposit trends were generally stable. NII growth remained healthy, supported by strong balance sheet momentum, deposit growth, and fixed-rate asset repricing. Fee income remained constructive, benefiting from strength in payments, treasury services, securities services, wealth management, and transaction banking. Meanwhile, capital markets were a standout performer, driven by robust trading activity, improving investment banking fees, and healthy client engagement.
Here are the four dividend-paying financial giants that Jefferies rates as Buy.
Bank of America
Warren Buffett has trimmed his position over the past two years and sold a 50 million shares in the fourth quarter. This quality financial giant remains an exceptional long-term holding with a solid 1.89% dividend yield. Bank of America (NYSE:BAC | BAC Price Prediction) is a bank holding company that reported impressive Q2 results. Berkshire Hathaway owns 513,624,165 shares, which is 7.9% of the portfolio and 7.2% of the float. Berkshire did lower its Bank of America position in Q1 2026, but only modestly. According to the Q1 2026 13F filing, it was reduced by just 0.71%, a very small cut compared to other positions.
The Jefferies analyst noted this:
Bank of America delivered a strong quarter, with core EPS and Pre-Provision Net Revenue ahead of expectations, driven primarily by strength in investment banking and sales & trading. While NII was largely in line, management reiterated growth at the upper end of 6-8% and raised FY26 operating leverage guide to 300-400 bp from >200 bp previously following 2Q’s POL of 640 bp. The return on tangible common equity of 17.0% vs our 16.1% reinforces the earnings power of the franchise.
Its segments include:
- Consumer Banking, which offers a range of credit, banking, and investment products and services to consumers and small businesses.
- Global Wealth & Investment Management (GWIM) comprises two businesses: Merrill Wealth Management, which offers tailored solutions to meet clients’ needs through a comprehensive suite of investment management, brokerage, banking, and retirement products. Bank of America Private Bank provides comprehensive wealth management solutions.
- Global Banking offers a range of lending-related products and services, including integrated working capital management and treasury solutions, as well as underwriting and advisory services.
- Global Markets offers sales and trading services, as well as research services, to institutional clients across fixed income, credit, currency, commodity, and equity markets.
The Jefferies price target is $75.
Citigroup
This money-center giant pays a solid 1.64% and could be poised to deliver continued upside. Citigroup (NYSE:C) is a global diversified financial services holding company. The Jefferies team had this to say when discussing the second-quarter results:
Citi delivered a strong quarter, with core earnings per share and pre-provision net revenue ahead of expectations, driven by stronger-than-expected NII, Markets, and Investment Bank results. Still, the expense outlook was worse than expected, as the return on tangible common equity guide for FY26 was reiterated at 10-11% despite 1H’26 ROTCE trending at 13%. Revenue outperformance could be offset by $5 billion of spending pulled forward that was originally planned for ’27/’28 related to US Card, growth, and productivity initiatives.
The company’s segments include:
- Services
- Markets
- Banking
- Wealth
- U.S. Personal Banking (USPB)
The Services segment includes Treasury and Trade Solutions (TTS) and securities services. TTS provides an integrated suite of tailored cash management, trade, and working capital solutions to multinational corporations, financial institutions, and public sector organizations.
The Markets segment provides corporate, institutional, and public-sector clients worldwide with a full range of sales and trading services across equities, foreign exchange, rates, spread products, and commodities.
The Banking segment includes investment banking, which supports client capital-raising needs to help strengthen and grow their businesses.
The Wealth segment includes Private Bank, Wealth at Work, and Citigold, and provides financial services to a range of client segments.
The USPB segment includes branded cards and retail services.
Jefferies has a $165 target price for the shares.
Goldman Sachs
The white-glove banking giant delivered exceptional results and pays a 1.47% dividend. Goldman Sachs (NYSE:GS) is a global financial institution that delivers a range of financial services to a large and diversified client base, including corporations, financial institutions, governments, and individuals.
The Jefferies team said this:
Following 2Q26 results, our EPS estimates for the second half of 2026 and FY2027 increase by 9% and 8%, respectively, following a record 1H26 in both markets and advisory. Record equities revenues, all-time-high prime balances, accelerating large-cap M&A, and a five-year-high backlog provide strong support for continued earnings momentum.
Its segments include:
- Global Banking & Markets
- Asset & Wealth Management
- Platform Solutions
The Global Banking & Markets segment offers a range of services, including financing, advisory services, risk distribution, and hedging for its institutional and corporate clients. It facilitates client transactions and makes markets in fixed income, equity, currency, and commodity products.
The Asset & Wealth Management segment manages assets and offers investment products across all asset classes to a diverse client base. It also provides investment and wealth advisory solutions.
The Platform Solutions segment includes consumer platforms, such as partnerships offering credit cards and point-of-sale financing, as well as transaction banking and other platform businesses.
Jefferies has set a price target of $1,299 for the shares.
Wells Fargo
With some difficult years in the rearview mirror, this bank could be one of the best values in the financial sector, and pays a 2.11% dividend. Wells Fargo (NYSE:WFC) is a financial services company. The company provides a diversified set of banking, investment, and mortgage products and services, as well as consumer and commercial finance, to individuals, businesses, and institutions.
Jefferies analysts noted this:
WFC posted a headline beat on strong fee income and continued expense discipline, and reiterated its FY26 NII and expense guidance. Despite a solid quarter, shares traded lower amid a net interest margin outlook that fell short of expectations and rising deposit costs. NIM compressed as expected, down 4 bp, in line with the guide, but better-than-expected AEA growth drove a modest NII beat. IB deposit costs rose 9 bps Q/Q, with continued pressure expected in 2H’26 as IB outpaces NIB growth.
Wells Fargo operates through four segments:
- Consumer Banking and Lending
- Commercial Banking
- Corporate and Investment Banking
- Wealth & Investment Management
The company provides consumer financial products and services, including checking and savings accounts, credit and debit cards, and auto, residential mortgage, and small business lending.
In addition, the company offers financial planning, private banking, investment management, and fiduciary services. It also provides financial solutions to businesses through products and services, including traditional commercial loans and lines of credit, letters of credit, asset-based lending and leasing, trade financing, treasury management, and investment banking services.
The Jefferies target price is $100.
Contact [email protected] for any questions or corrections.
Top Gaining Stocks
Top Losing Stocks