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The Zacks Analyst Blog Highlights: JPMorgan, Wells Fargo, Bank of America, Citigroup and U.S. Bancorp

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Zacks Equity Research
·5 min read
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For Immediate Release

Chicago, IL – April 19, 2021 – 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: JPMorgan Chase & Co. JPM, Wells Fargo & Company WFC, Bank of America Corporation BAC, Citigroup Inc. C and U.S. Bancorp USB.

Here are highlights from Friday’s Analyst Blog:

Bank Stock Roundup: Q1 Earnings Edition

Though banks that reported first-quarter 2021 results this week beat estimates on higher fee income and large reserve releases, investors remain concerned about the soft lending scenario (that has been plaguing banks since the start of the coronavirus pandemic). Further, not so impressive management guidance for the second quarter has added fuel to fire. As such, bearish investor sentiments have been dragging down most bank stocks in the past five trading sessions.

Low interest rates and muted loan demand resulted in a fall in net interest income and contraction of banks’ net interest margins, despite steepening of the yield curve in the last quarter. Additionally, as banks continue to spend heavily on technology upgrades and undertook efforts to streamline operations, expenses rose during the quarter.

On the fee income front, major banks’ financials got huge support from stellar capital markets performance, as both trading and investment banking operations were robust. Also, historically low mortgage rates supported mortgage banking business as both refinancing and origination activities witnessed a surge.

This time, consumer banking operations too provided some support to banks’ fee income growth. Higher consumer sentiment on a low unemployment level during the first quarter and $1.9 trillion stimulus package mainly drove the decent performance.

Further, a substantially large reserve release by major banks (as the economy gradually rebounded) supported the results. Overall, banks’ balance sheet and liquidity positions remained solid.

(Read: Bank Stock Roundup for the Week Ending Mar 26, 2021)

Important Earnings of the Week

1. Large reserve releases and solid capital markets performance drove JPMorgan’s first-quarter 2021 earnings of $4.50 per share. The bottom line handily outpaced the Zacks Consensus Estimate of $3.05. Results included credit reserve releases and the contribution to the company’s foundation. Excluding these, adjusted earnings amounted to $3.31 per share. The company had earned 78 cents in the prior-year quarter.

2. Solid mortgage banking and capital markets performance supported Wells Fargo’s first-quarter 2021 earnings of $1.05 per share, which surpassed the Zacks Consensus Estimate of 69 cents. Also, the bottom line compared favorably with the prior-year quarter figure of 60 cents. Results included certain non-recurring items.

3. Stellar trading and investment banking performance, and big reserve release drove Bank of America’s first-quarter 2021 earnings of 86 cents per share, which handily beat the Zacks Consensus Estimate of 65 cents. Also, the bottom line compared favorably with 40 cents earned in the prior-year quarter level.

4. Citigroup delivered a positive earnings surprise of 1.4% in first-quarter 2021 on significant reserve releases. Income from continuing operations per share of $3.62 handily outpaced the Zacks Consensus Estimate of $2.56. Also, results compared favorably with $1.06 in the prior-year quarter.

5. U.S. Bancorp’s first-quarter 2021 earnings per share of $1.45 surpassed the Zacks Consensus Estimate of 95 cents. The bottom line compared favorably with the prior-year quarter’s figure of 72 cents. Provision benefits and strong deposit balance acted as tailwinds. However, lower revenues, along with escalating expenses and fall in average loan balance, were the key undermining factors.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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