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3 Bank Stocks to Watch

- By Jacob Maslow

Banks are in focus as earnings season ramps up, with many major banks posting better-than-expected results. After posting their first-quarter results, these three bank stocks are worth watching.

1. Bank of America (BAC)

Bank of America posted its first-quarter earnings on April 16. Revenue was down slightly from last year, totaling $23 billion, but net income rose to $7.3 billion from $6.9 billion last year. Earnings per share were 70 cents, beating expectations of 66 cents.

Net income increased for the bank's consumer banking, global banking, and global wealth and investment management units. The consumer banking unit had net income of $3.2 billion, while global banking generated $2 billion. Bank of America's global wealth and investment management unit reported $1 billion in net income.

While the bank's performance in the first quarter was impressive, there are some concerns: Revenue fell in global markets, trading, equities and FICC.

But Bank of America is still America's second-largest bank by assets, and it is making significant headway in the digital and mobile banking sectors. The company is No. 1 in online banking, mobile banking and digital sales functionality. As of the first quarter, Bank of America has 27.1 million active mobile banking users and 37 million active digital banking users.

2. SunTrust (STI)

SunTrust reported its first-quarter earnings on April 19, including details of its proposed merger with BB&T Corp. The company posted $554 million in net income, or $1.24 per average common diluted share, down from $1.29 per share in the first quarter of 2018.

Earnings per share results included merger-related costs of 9 cents per average common share. Higher net interest income drove total revenue down 4% year-over-year, but loans remain a bright spot for the company.

Average loan balances rose 3% quarter-over-quarter and 8% year-over-year to $153.7 billion. Mortgage-related income was up to $100 million from $90 million in the same quarter last year.

SunTrust's merger with BB&T and its first-quarter revenue beat make this stock worth watching.

3. U.S. Bancorp (USB)

U.S. Bancorp posted its first-quarter earnings on April 17, with revenues coming in higher and earnings per share in line with analyst expectations.

The bank posted $5.6 billion in net revenues for the first quarter, up 2% year-over-year. Higher revenue was driven by higher net interest and non-interest income. Higher interest rates and security yields coupled with earning assets growth drove net interest income to $3.3 billion on the quarter. That figure was up 3.1% from the same period last year.

U.S. Bancorp had an impressive first quarter, but rising expenses and a slowdown in the company's mortgage business remain concerns. Still, this stock is worth considering, considering the bank's revenue growth and increased lending activities are expected to continue.

Disclosure: The author has no stakes in the listed equities.

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This article first appeared on GuruFocus.