When I compare assets among the 'too big to fail" banks at the end of 2010 to the assets at the end of first quarter of 2013 three of the big four are bigger.
The table above shows that at the end of 2010 The FDIC Quarterly Banking Profile showed that the four TBTF banks accounted for 43.3% of the total assets in the banking system at $5.77 trillion. At the end of the first quarter 2013 these four banks added 10.1% to this for a total of $6.35 trillion, or 44.0% of all assets.
Bank of America
In my opinion, no bank should be allowed to have more than 10% of the assets in the banking system. All four of the TBTF have hold ratings according to ValuEngine with limited upside over the next 12 months. Investors long these names should consider cutting positions by 50% at this time.
Reading the Table
OV/UN Valued: Stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage according to ValuEngine.
VE Rating: A "1-engine" rating is a strong sell, a "2-engine" rating is a sell, a "3-engine" rating is a hold, a "4-engine" rating is a buy and a "5-engine" rating is a strong buy.
Last 12-Month Return (%): Stocks with a red number declined by that percentage over the last 12 months. Stocks with a black number increased by that percentage.
Forecast 1-Year Return: Stocks with a red number are projected to decline by that percentage over the next 12 months. Stocks with a black number in the table are projected to move higher by that percentage over the next 12 months.
Value Level: Price at which to enter a GTC limit order to buy on weakness. The letters mean; W-weekly, M-monthly, Q-quarterly, S-semiannual and A-annual.
Pivot: A level between a value level and risky level that should be a magnet during the time frame noted.
Risky Level: Price at which to enter a GTC limit order to sell on strength.
All 24 components of the banking index have hold ratings and only one is undervalued with the finance sector 20.4% overvalued. Citigroup has become the most overvalued by 105.1%.
Note that 23 of 24 regional banks gained by double-digit percentages over the last 12 months. Bank of America was the leader with a gain of 103.2% versus a year ago.
All 24 components are projected to move sideways over the next 12 months which justifies my asset allocation rating of equal-weight for bank stocks.
All 24 are above their 200-day simple moving averages reflecting the risk of a reversion to the mean.
Banks reporting quarterly results this week:
Cullen Frost Bank
New York Community Bank
At the time of publication the author held no positions in any of the stocks mentioned.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
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