Sep 18

Written by: Steve Patterson
9/18/2008 9:12 PM 

Banks that are reaching new Highs

On a day that saw two more Investment Banks in Goldman Sachs (GS) and Morgan Stanley (MS) drop down 25-45% each before rallying late to unchanged, five banks reached new 52 week highs.

Wells Fargo & Company (WFC)
    Wells Fargo & Co was flat early but made a 10% gain to a new 52 week high of $39.55 a share. This money center bank reported a decent last quarter when almost everyone was expecting more write-downs, causing all banks to rally in mid-July. Now all banks are being rescued by the Federal Government and Wells Fargo should be able to move additional bad loans to a federal program from its balance sheet.
    In addition to the macro programs that will allow good banks to further correct their balance sheets, Wells Fargo has been aggressive buying assets at highly discounted prices. The company has been purchasing insurance brokerage firms and community banks.

US Bancorp (USB)
    US Bancorp recently paid a 4.8% dividend and raised their dividend when first paid this year in January. With many banks slashing dividend payouts, US Bancorp is raising theirs. The earnings are not growing, but in comparison to banks that are close to bankrupt or performing poorly, USB is one the stronger players.

Hudson City Bancorp, Inc. (HCBK)
    Hudson City Bancorp is a smaller bank than Wells Fargo and US Bancorp, but this bank is growing in both revenue and earnings. 44.8% revenue growth for the current year compared to last year and 56.9% earnings growth year over year. The company pays a 2.5% dividend and reached a new 52 week high today of $20.97 a share.

PNC Financial Services Group Inc. (PNC)
    PNC Financial Services is a $28 billion market cap bank and financial services company head quartered in Pittsburgh Pennsylvania. This year the company had a slight decline in earnings compared to last year but has seen its revenue continue to rise near 13%. A nice 3.4% dividend payout makes PNC a bank that you can hold while the market rallies off of the Federal Bailout program that is soon to be announced.

People’s United Financial Inc. (PBCT)
    People’s United is a smaller bank in size similar to Hudson City Bancorp and has decent year over year revenue growth with a little bit larger earnings decline than the other banks mentioned here. People’s has grown revenue 39% this fiscal year while seeing their earnings decline 12.3%. It has been a sold performer reaching a new high today and continuing to pay a very respectable dividend.