U.S. Bank, TCF Join Other Banks in Strong 2012 Stock Run
The largest U.S. banks turned out to be solid investments last year—and Minnesota’s major players proved to be no exception.
In 2012, top performing bank stocks included Bank of America (up 109 percent), Citigroup (up 50 percent), Goldman Sachs (up 41 percent), J.P. Morgan Chase (up 32 percent), Morgan Stanley (up 26 percent), and Wells Fargo (up 24 percent).
But Minnesota’s largest players had a similarly strong performance during that same period, as shares of Minneapolis-based U.S. Bancorp and Wayzata-based TCF Financial Corporation—the state’s largest bank-holding companies—both climbed about 18 percent during the year.
For context, take the performance of Minnesota’s five-largest public companies during the same period: UnitedHealth Group, Target Corporation, and 3M Company all performed well, with their stocks rising 7 percent, 16 percent, and 14 percent, respectively. But struggling retailers Best Buy Company and Supervalu, Inc.—both of which may be on the verge of being taken private—saw their stocks plummet 49 percent and 70 percent.
In 2012, many investors went after bank stocks largely because lenders had fallen to such depressed levels that they were considered a bargain, according to a recent report by The Wall Street Journal. In some cases, banks were even trading at less than the value of their assets.
The financial portion of the Standard & Poor’s 500-stock index climbed about 25 percent in 2012, outpacing the broader S&P 500 index, which rose roughly 12 percent, The Wall Street Journal pointed out.
And while few investors expect a replay of last year’s strong run in 2013, some experts argue that bank stocks remain relatively cheap, and there could be potential for higher profits as lending picks up, according to the newspaper. For example, Matt Lloyd, chief investment strategist at Colorado-based Advisors Asset Management, told The Wall Street Journal that “the rally is still in its infancy,” as banks are flush with cash but have yet to ramp up lending. (To learn more about banks’ 2012 performance and whether analysts believe their stocks will have an encore in 2013, read more in The Wall Street Journal here.)
U.S. Bancorp reported record net income of $1.47 billion for the third quarter that ended September 30. Revenue for the quarter climbed 8 percent to $5.18 billion, and the company attributed its performance to strong new lending activity and growth in deposits, among other things.
TCF, meanwhile, reported net income of $9.3 million for the third quarter—down significantly from the same period the previous year, due largely to an after-tax charge of $20.6 million. Revenue totaled $312.6 million, up about 6 percent from the same period in 2011.
While it’s yet to be seen whether bank stocks will fare as well in 2013, Minnesota’s leaders are showing signs of a strong start. Shares of U.S. Bancorp and TCF climbed during the first several days of 2013 trading; U.S. Bancorp’s stock closed up 2.2 percent at $33.22 and TCF’s stock closed up 2 percent at $12.94 on Friday. U.S. Bancorp was trading down about 0.9 percent at $32.92 Monday afternoon; TCF, meanwhile, was down about 1.2 percent at $12.78.