Financial stocks have taken a hit over the summer: the KBW Bank indextumbled almost 10 percent since the beginning of May. So will the industry see a rebound in the fall—and should investors get in now? Anton Schutz, president of Mendon Capital, and Paul Miller, group head of financial services at FBR Capital Markets, shared their insights.
“They’re really cheap versus P/E, versus book value,” Schutz told CNBC.
“We’re going to see some return of capital to shareholders and companies like Citigroup and JPMorgan have huge tangible common equity ratios,” he continued.
“I think dividends and buybacks will be something we’ll be talking about, as soon as a quarter or two from now.”
Schutz said he also likes the regionals, as he expects to see a wave of M&A activity in the sector.
Miller: 'Tons of Money'
In the meantime, Miller said he favors big and medium-big banks such as Bank of America and PNC Financial.
“We started reserving tons of money over the last 3 to 4 years in these banks, so the reserves are there, credits are improving… We have another refi boom going on and the gain on sale margins and the mortgage banking space is very strong. And it's going to help earnings into the quarter,” he explained.
Scorecard—What They Said:
- Schutz's Previous Appearance on CNBC (Jun. 25, 2010)
- Miller's Previous Appearance on CNBC (Aug. 23, 2010)
More Insight on Financials:
- Expect Bank M&A 'Explosion' After November: Bove
- M&A Likely to Move at Substantial Pace
- Bank Dividend Increases Near 30% Coming: Analyst
CNBC Data Pages:
No immediate information was available for Miller or Schutz.