Buy This ‘Analyst Darling’ Now For Gains In 2013
CNBC recently had a roundtable discussion on the wisdom of purchasing some of the nation’s leading banks. Among the winners in that discussion were JPMorgan Chase (JPM), Wells Fargo (WFC), Huntington Bancshares (HBAN) and Fifth Third Bancorp (FITB). These four banks are all over the map in terms of size, profitability, and in my view, prospects. So, lets take a look, especially at Huntington, which I have not looked at in detail recently, and the all-star performer among large banks, Wells Fargo, to see which are viable investments.
Huntington, a large $50-billion-plus midwestern bank, presented at the June 13, 2012 Morgan Stanley Financials Conference. In the first quarter of 2012, Huntington earned $153.3 million, or $0.17 per share. This was a 21% increase from the same quarter of last year, viewed from either the total or the per share. The return on assets rose to an annualized 1.13%, the first quarter in excess of 1 percent since pre-recessionary times. But considering all factors, it was not a particularly impressive quarter, especially compared to other regional banks.
The loan portfolio, which for many successful regional banks such as U.S. Bancorp (USB) and Fifth Third increased sharply in the first quarter, barely budged at Huntington. It rose by less than 3% from the first quarter of 2011, and actually fell by about one percent from the fourth quarter of 2011. Part of the reason for the decline was the bank packaged and sold for $1.3 billion in automobile loans, but given the larger, national banks are mostly shrinking their loan portfolios, it is disappointing Huntington could not take advantage of the opportunity to grow its portfolio more aggressively.To continue reading, click here.