SOURCE: Five Star Equities

Five Star Equities

June 20, 2012 08:20 ET

U.S. Banks Perform Admirably in 2012 - HARP Boost "Big Banks" Revenues

Five Star Equities Provides Stock Research on Bank of America and Citigroup

NEW YORK, NY--(Marketwire - Jun 20, 2012) - U.S. banks have performed admirably this year despite growing concerns of a euro zone recession. Collectively the U.S. Banking Industry has posted a first quarter profit of $35.3 billion, the best in nearly five years. This makes it 11 consecutive quarters FDIC insured banks have seen year-over-year increases. "The condition of the industry continues to gradually improve," said Martin J. Gruenberg, the FDIC's acting chairman. Five Star Equities examines the outlook for companies in the Banking Industry and provides equity research on Bank of America Corp. (NYSE: BAC) and Citigroup Inc. (NYSE: C).

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The Home Affordable Refinance Program (HARP) has provided an unexpected revenue boost to the "Big Banks" this year. HARP provides an opportunity for struggling homeowners to take advantage of record-low mortgage rates by allowing them to refinance homes that are worth less than their mortgages. According to data collected by Nomura Holdings Inc. banks that refinance mortgages under HARP could see as much as $12 billion in revenue this year.

"HARP and refinancing more broadly is providing a meaningful boost to homeowners' cash flow, particularly in the stressed housing states like Florida," said Mark Zandi, chief economist at Moody's Analytics Inc. "This is going to be a big plus for stressed homeowners in very stressed markets with negative equity."

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Bank of America has recently overtaken JPMorgan as the top lender to the commodities industry during first five months of the year. According to data collected by Bloomberg total commodity loans for Bank of America were $14.71 billion compared to $14.41 billion from JPMorgan. Citigroup was ranked third with $13.68 billion in commodity loans.

Citigroup last month sold a 10.1 percent stake in Turkey's Akbank for $1.15 billion. Citigroup in 2007 had purchased a 20.1 percent stake in the bank for a total of $3.1 billion. A term sheet of the sale obtained by Bloomberg shows that Citigroup will keep their remaining stake for a period of three years. The sale will result in a second quarter after-tax loss of $243 million.

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