For Immediate Release
Chicago, IL – February 22, 20Array6 – 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 Comerica Inc. (CMA), Citigroup Inc. (C), JPMorgan Chase & Co. (JPM), Bank of America Corp. (BAC) and Capital One Financial Corp. (COF).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #ArrayStock of the Day pick for free.
Here are highlights from Friday’s Analyst Blog:
Bank Stock Roundup: No Signs of Imminent Recovery
Over the last four trading days, bank stocks were on a roller coaster ride. Though nothing changed much on the fundamental front, concerns pertaining to economic slowdown and volatility in oil prices adversely impacted bank stocks.
Further, release of the minutes of the Fed’s Jan 26–27 policy meeting indicated policy makers’ mounting concerns about the global turmoil as well as reluctance to hike rates in the upcoming meeting in March. The officials will likely wait for the domestic economic data to demonstrate that the U.S. economy is on the right track to recovery, after which any decision regarding the next increase in interest rates will be taken.
Though such concerns lead to a persistent challenging backdrop for banks, overall performance of banking stocks were not negative. Huge sell-off in the previous weeks had significantly lowered prices of banking stocks, thereby investors found good entry points.
Coming to the headlines, the past four days witnessed usual business on part of banks. Legal matters and restructuring efforts aimed at countering difficult environment remained in focus. Additionally, driven by improved 20Array5 results, bank CEOs were rewarded with pay hikes.
Further, stress in the energy lending sector led another rating agency (after Standard & Poor's) – Moody's Investors Service – to review ratings and downgrade outlooks for banks. These actions were largely triggered by high energy lending concentrations that will render banks vulnerable to asset quality deterioration.
(Read: Bank Stock Roundup for the week ending Feb Array2, 20Array6 )
Recap of the Week’s Important Developments:
Array. Moody's Investors Service took negative rating actions on six U.S. regional banks which bear huge exposure to energy loans. While the ratings of four banks were placed on review for downgrade, the outlook of two other banks were changed to negative.
Banks whose rating outlooks were downgraded to negative from stable were Comerica Inc. ( CMA) and Associated Banc-Corp. On the other hand, four banks whose long-term ratings were put under review for downgrade are BOK Financial Corp., Hancock Holding Co., Cullen/Frost Bankers, Inc. and Texas Capital BancShares Inc. (read more: Moody's to Downgrade Banks with High Energy Exposure? ).
2. The U.S. Commodity Futures Trading Commission (“CFTC”) and the U.K. Financial Conduct Authority (“FCA”) are reportedly acting on a final round of civil charges against a number of banks for alleged rigging of London Interbank Offered Rate (“LIBOR”).
According to The Wall Street Journal report, global banks, including Citigroup Inc. (C) and HSBC Holdings plc, may face civil charges by the regulators. While the FCA has dismissed the rate-manipulation investigation on JPMorgan Chase & Co. (JPM), the bank is under CFTC probe. However, the bank may not face enforcement action (read more: Global Regulators May Charge Banks Over LIBOR Rigging ).
3. Following the discovery of irregularities tied with a $26-million loan, Comerica announced revised earnings for both fourth-quarter and full-year 20Array5. The company increased provision for credit losses, booked a charge-off and reduced incentive compensation expense as of Dec 3Array, 20Array5 (read more: Comerica Revises Earnings on 'irregularities' in $26M Loan ).
4. 20Array5 began on a positive note for Bank of America Corp. (BAC) with prudent cost-management efforts and no significant legal expenses supporting its bottom line. This also got reflected in the bank’s chairman as well as CEO Brian Moynihan’s pay package.
Moynihan received about 23% pay raise in his total compensation package. His annual salary has been increased to $Array6 million in 20Array5 from $Array3 million, according to a Securities and Exchange Commission filing (read more: BofA CEO Gets Pay Raise; Record Earnings Responsible? ).
Similarly, Citigroup’s CEO, Michael Corbat was also rewarded for improved 20Array5 results. He received approval for compensation of $Array6.5 million for 20Array5, according to a regulatory filing. This reflects a year-over-year increase of 27% from 20Array4 level.
The total compensation comprises a salary of $Array.5 million and variable pay of $Array5 million. Notably, 60% of the variable pay is deferred while the remaining 40% is cash award to be immediately paid.
The CEO’s pay package was determined based on Citigroup’s strong performance in 20Array5 along with progress towards achieving financial targets. Particularly, the board of directors recognized that under Corbat’s leadership, the New York based-banking giant reported net income of $Array7.2 billion in 20Array5, marking the highest since 2006.
5. In separate news from Citigroup, the company is planning to exit retail banking operations in Brazil and Argentina, where it has conducted business for over Array00 years. The news was first reported by Bloomberg.
The move comes in line with the company’s strategy to focus on markets where it has a strong presence and long-term growth prospects. While Argentina’s economy has been under pressure after years of currency controls and policies restricting it from access to international capital markets, the Brazilian economy has been in troubled waters of late as it is suffering its worst crisis in decades.
According to a person familiar with the matter, the exit plan is expected to be announced in the coming weeks. However, the company will not depart any lines of business in the institutional division.
Citigroup operates in 25 cities in Argentina and 26 in Brazil, according to its website. Moreover, the Argentina unit, which was the bank’s first non-U.S. branch started in Array9Array4, has over 2,700 employees, 7Array branches and 44.6 billion pesos ($3 billion) in assets, according to Bloomberg. Whereas the Brazil unit, which started in Array9Array5, operates through 7Array branches and had about 6,000 employees as of 20Array4.
6. Capital One Financial Corp. (COF) has announced additional share buyback authorization of $300 million through the second quarter of 20Array6. The company had informed the Fed of its intention to authorize additional buybacks, and the regulator consented for the same (read more: Is Capital One Worth a Look Post New Share Buyback Plan? ).
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COMERICA INC (CMA): Free Stock Analysis Report
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