Larger Money Center Banks or Regional Banking: Which Should Investors Choose for Balance of 2013?

Wall Street Transcript

67 WALL STREET, New York - July 2, 2013 - The Wall Street Transcript has just published the U.S. Banking Review 2013. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: U.S. Banking Review 2013

Companies include: JPMorgan Chase & Co. (JPM), Wells Fargo & Company (WFC), US Bancorp (USB), PNC Financial Services Group I (PNC), Capital One Financial Corp. (COF), American Express Company (AXP), Discover Financial Services (DFS), Visa, Inc. (V), Mastercard Incorporated (MA), Citigroup, Inc. (C), Bank of America Corporation (BAC) and many others.

In the following excerpt from the 2013 U.S. Banking Review, an expert analyst from Credit Suisse discusses his top U.S. bank stock picks:

TWST: What are your top investment picks right now and why?

Mr. Orenbuch: The two that are our top would be Citigroup (C) and JPMorgan (JPM); Citi for the very simple reason that we think it sells at not just a discount to book value, but a discount to what it would be worth if you looked at the banks that comprise Citi in the various countries in which Citi operates. Mexico is one of the largest countries for Citigroup, and Mexican banks trade at probably 2.5 times earnings. Brazil is a fairly large component as well; non-Japan Asia in the aggregate is a reasonable driver. And yet Citi as a company still trades at 90% of tangible book. Profitability has been under pressure, and they have a large deferred tax asset, but we believe both of these factors will improve in 2013 and 2014.

The second pick would be JPMorgan, which has been consistently earning 15% on tangible equity, trades at 1.25 times tangible book, does have an almost 2.5% dividend yield and is buying back stock. I think it has maybe a little less capital return than was approved for in 2012, although we would expect that they will actually do more of it than they did last year, when they had to stop it because of trading issues that they had come to light in April and May. So those would be our top two ideas on the large-cap banks.

TWST: Are there any names you are particularly cautious about?

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Rates

View Comments