Wells Fargo (WFC)

Wells Fargo is as good of a bank that you will get in the US. They are better at balance sheet management than anybody in the business. Through multiple cycles, manages interest rate risk better than anybody in the industry. They have a well diversified balance sheet. They manage credit well. They manage interest rate risk well. He thinks it is a great place to be even with a consolidated role.

Bank Of America or Wells Fargo? Bank of America has a spottier past with balance management and on risks that they have taken. He would defer to Wells Fargo. They have that core banking exposure . They are consumer focused. They have great leverage to a steeper yield curve and to an interest rate increase. They have less capital market exposure. More volatile, less sensitive to a interest rate increase which he feels is on the horizon. Would look to Bank of America if the fundamental came through and if the charts supported it.

This is a premium US banking company. They didn’t suffer as much in 2008. Have a great mortgage book. One thing that concerns him is that they are going a little bit more into investment banking, but they are incredibly well run. Trading at a much bigger premium than its competition. He prefers Bank of America (BAC-N) because it has underperformed a great deal, are changing, and will be able to do better over the next little while.

Probably one of the biggest, broadest, coast-to-coast coverage banks, but it has the least growth compared to Citibank (C-N) or Bank of America (BAC-N). Great company and very strong. Very friendly to shareholders. He would rate Citibank or Bank of America much higher.

He is bullish on the US consumer, and a name like this stands to benefit from that because of the retail banking operations. Have done a great job over the last year of accelerating loan growth, and at the same time reducing their write down and expects this to continue. Feels the US consumer is in the early days of having a good 3-5 year run. This bank is very good at cross-selling their products. He feels the real growth is going to come from the consumer focused area, and regional banks are primarily focused on that. He likes Columbia Banking System (COLB-Q), National Penn Bancshares (NPBC-Q) and City Holding (CHCO-Q).

Domestically focused US bank. This is the bank with the best exposure to the US housing market. As the housing market slowly improves they benefit. They grew the dividend 23% over the last three years. Bought part of GE Capital. You get a good yield and exposure to a domestically improving economy in the US.

One of the best managed banks in the US, if not Globally. They are the largest lender for small to midsized business. They never got into the problems the other banks got into in the recession. The play is on the improving US economy. FX will not impact their financial results.

This is a play on the US economy. It is very domestic so you don’t have to worry about the strength of the US$ and how that is going to impact their earnings. Very good loan growth. The largest mortgage originator and the top lender in autos, small business and midmarket. Very good history and track record of keeping their costs low. Dividend yield of 2.62%.

The most consistent of the US banks. It is less exciting because it does not have the exposure to investment banking. Its earnings are consistent. It is a safer bank. It is expensive and he would buy it only at a cheaper price.

Best of breed. One of the most well respected US banks. They pay a strong dividend and buy back stock. They cross sell. They are a very conservatively managed bank so you have less headline risk. A good combination of offense and defense. 16% ROE next year. A great core holding.

He is adding to his weighting in banks in anticipation of that strengthening of the fundamentals and earnings of the banks. This is a more senior bank and very involved with domestic US. One of the largest originators of mortgages. We are very early in the home building recovery. Dividend yield of 2.62%.

Canada is slowing relative to the US. US banks have been held back on paying out dividends. They will have better dividend growth. He prefers US banks to Canadian. WFC-N is his preference as well as one of his Top Picks today.

(Market Call Minute.) She would buy it here for the recovery in the US.

This has done okay, but net interest margin compression has probably hurt this more so than its peer group. It has a higher level of deposits investment securities, so it will get hit by the fact that interest rates are very low and not moving very much. When interest rates start moving back up, this can do quite well. From a valuation perspective, there are probably other banks that look more interesting. (See Top Picks.)

Financials in the US is one sector that is trading below market multiple. This is a retail bank and he considers it is one of the best in breed in the US. Had a recent dividend increase and a commitment to buy back shares. Anywhere around here would be a fair price.