This Week in Finance: Bank of America, Citigroup, Wells Fargo and More

It’s been a busy week for banking stocks as many have reported earnings results for their latest fiscal quarters. Similarly, sector and macro events have caused other banking stocks to move sharply in one direction or the other. In this article, we take a closer look at the events that have occurred this week to Bank of America Corp (NYSE:BAC), Wells Fargo & Co (NYSE:WFC), JPMorgan Chase & Co. (NYSE:JPM), Citigroup Inc (NYSE:C), and U.S. Bancorp (NYSE:USB) and use the data from the last round of 13F filings to see what the funds from our database think about these companies.

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Seeing as how investors have largely forgotten about the Brexit given that the S&P 500 and Dow are near record territory, most banks did well this week with the lone exception of one bank. According to the numbers, Citigroup Inc (NYSE:C) led the way in terms of performance, with its stock rising 5.5% on the week. U.S. Bancorp (NYSE:USB) was next with a 4.46% rally and Bank of America Corp (NYSE:BAC) and JPMorgan Chase & Co. (NYSE:JPM) were close behind with an around 3.7% surge. Wells Fargo & Co (NYSE:WFC) was the only bank that didn’t rally, with its shares inching lower by 0.2% from Monday to Friday.

In-line earnings played a big part in Wells Fargo & Co (NYSE:WFC)‘s under-performance, as apparently investors were expecting more than the analyst estimate of $1.01 per share on revenue of $22.16 billion for the second quarter. Investors were not impressed with Wells Fargo’s ROE of 11.7% for the time period, a metric that the company traditionally does very well with. According to our data, Wells Fargo’s 11.7% print is the lowest ROE number since 2010. Bulls hope that energy prices will go higher so that Wells Fargo’s potential loan losses in its energy portfolio will decline and that interest rates will rise so Wells Fargo’s NIM will expand. Warren Buffett’s Berkshire Hathaway is a big believer in the bank, with a holding of almost 480 million shares.

In some ways, top weekly performer Citigroup Inc (NYSE:C) didn’t turn in spectacular earnings either, despite the bank beating both the top and bottom lines on Friday. Analysts just lowered their expectations too much for various reasons macro reasons, and the lower expectations helped Citigroup beat estimates by $0.14 per share, with EPS of $1.24 per share for its second quarter. To be fair, one reason for Citigroup’s out-performance this week could be its dirt cheap valuation of 0.62 times book value. Ken Fisher’s Fisher Asset Management was one of the top shareholders of the bank at the end of March.

On the next page, we take a closer look at the events that occurred to JPMorgan Chase & Co, Citigroup Inc, and US Bancorp.

Strong earnings results from U.S. Bancorp (NYSE:USB) and JPMorgan Chase & Co. (NYSE:JPM) helped both stocks rally this week, with both companies beating the consensus on the top and bottom line. JPMorgan earned $1.55 per share on revenue of $12.21 billion, beating estimates by $0.12 per share and $1.05 billion for its second quarter. For U.S. Bancorp, the financial institution reported slightly less spectacular results, with EPS of $0.83 on sales of $5.45 billion, exceeding the consensus estimates by $0.03 per share and $260 million. Both companies stand to benefit from the strong U.S. economy and potential accommodative central bank stances around the world. A total of 97 funds from our database had a bullish position in JPMorgan Chase & Co. (NYSE:JPM) and 47 funds were long U.S. Bancorp (NYSE:USB) at the end of March.

Although it didn’t report earnings this week, Bank of America Corp (NYSE:BAC) shares nevertheless rallied with its peers due to more optimism about the global economy. If the Brexit is no longer considered much of a threat, interest rates could rise faster than expected, and Bank of America could make more in interest income. The more in interest income could translate to more buybacks and dividends and a higher stock price. Among the investors we track, 110 funds owned $5.52 billion worth of Bank of America Corp (NYSE:BAC)’s stock, which accounted for 4.00% of the float on March 31, versus 113 funds and $6.8 billion, respectively, a quarter earlier.

Disclosure: none