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The Zacks Analyst Blog Highlights: JPMorgan Chase, Wells Fargo, BB&T, Citigroup and Fifth Third Bancorp

For Immediate Release

Chicago, IL – April 11, 2016 – 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 the JPMorgan Chase & Co. (JPM), Wells Fargo & Company (WFC), BB&T Corporation (BBT), Citigroup Inc. (C) and Fifth Third Bancorp ( FITB).

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Here are highlights from Friday’s Analyst Blog:

Bank Stock Roundup: Pre-Q1 Earnings Edition

Major banking stocks remained under pressure over the last five trading days reflecting concerns over weak first-quarter 2016 results, due to commence next week. With investment banking revenues projected to be disappointing and a lower trading revenue outlook provided by some of the major banks, the earnings picture looks rather subdued heading into the first quarter results. Therefore, banks’ top lines are likely to remain largely under pressure.

Furthermore, banks will continue to be adversely impacted by a low-rate environment which is not expected to change any time soon. Per the minutes released of the Federal Open Market Committee (FOMC) meeting in March, an interest rate hike is unlikely in April as officials remain concerned about economic output and inflation to underscore their estimates. “Many participants expressed a view that the global economic and financial situation still posed appreciable downside risks to the domestic economic outlook,” the minutes cite.

Also, despite undertaking efforts to modifying their businesses and “client relationship” to comply with regulatory rules, questions regarding breakup of big banks into smaller manageable entities continue relentlessly. This time, JPMorgan Chase & Co. ( JPM) CEO Jamie Dimon raised this matter in the annual letter to the company’s shareholders.

To add to the woes, the past five trading days for banking stocks did not remain unscathed from legal issues. Headlines also consisted of banks' strategies to boost profitability through acquisitions.

(Read: Bank Stock Roundup for the week ending Apr 1, 2016 )

Recap of the Week’s Major Developments

1. Legal troubles seem to be a never-ending affair for banks. Wells Fargo & Company’s ( WFC) appeal, which challenged the $203 million judgment on allegations of manipulation of debit card transactions by the company in order to maximize overdraft fee, was dismissed by the Supreme Court.

In Oct 2014, Wells Fargo was ordered to pay $203 million to its customers in California as the U.S. Court of Appeals for Ninth Circuit upheld the ruling of U.S. District Judge William Alsup. The class action was brought by California Wells Fargo customers who were charged overdraft fees on debit card transactions in the period between Nov 15, 2004 and Jun 30, 2008 (read more: Wells Fargo's Appeal Against $203M Judgement Rebuffed ).

2. An array of acquisitions was witnessed among banks. Recently, BB&T Corporation ( BBT) closed the deal to acquire Swett & Crawford from U.K.-based global wholesale, underwriting management and reinsurance broking group, Cooper Gay Swett & Crawford, for $500 million in cash. The transaction, which exceeds BB&T's acquisition criteria, is expected to add more than $200 million in annual revenue or an additional 15% to BB&T Insurance. Moreover, the company is anticipated to record around $500 million of goodwill and intangibles (read more: BB&T Completes Swett & Crawford Acquisition for $500M ).

Further, BB&T has completed the deal to buy Allentown, PA-based National Penn Bancshares Inc. (effective Apr 1). The announcement of this $1.8 billion stock-and-cash transaction was made by the bank in August last year. The core banking systems conversion as well as signage and account changes for the customers will be completed by the early third quarter of 2016 (read more: BB&T Closes National Penn Deal: What's in the Cards Now? ).

3. Restructuring activities of banks are also on a roll. Following shareholders’ concerns, Citigroup Inc. ( C) revised the performance pay plan of its senior executives, according to a regulatory filing. Under the new plan, revisions were made to executives’ performance-based share awards based on Citigroup’s shareholders’ returns compared to peers.

Notably, per a clause in the plan, if shareholders’ returns are positive, executives will be awarded more than 100% of their annual performance-based compensation. Such a plan ensures executives are not paid bonuses higher than previous amount on falling returns of shareholders though performs well compared with peers.

However, Institutional Shareholder Services (ISS) – the analyzer of corporate proxies and advisor for big investors for their voting shares – was not satisfied with the new plan (read more: Citi Revises Executive Pay Plan, Proxy Advisors Unsatisfied ).

4. As part of its attempts to curb costs, Fifth Third Bancorp (FITB) offered employees early retirement buyouts in the first quarter of 2016. The proposal was made on Jan 4 to 775 employees out of a total of 18,000 employees in an official email by the company. Fifth Third is expected to provide more information about the buyout program when it reports first-quarter earnings on Apr 21. Details like related upfront costs, long-term expected savings and additional cost cuts associated with jobs will likely be disclosed then.

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JPMORGAN CHASE (JPM): Free Stock Analysis Report
WELLS FARGO-NEW (WFC): Free Stock Analysis Report
BB&T CORP (BBT): Free Stock Analysis Report
CITIGROUP INC (C): Free Stock Analysis Report
FIFTH THIRD BK (FITB): Free Stock Analysis Report
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