WFC - Baird reviews bank earnings and finds opportunistic picks after 'solid' quarter

A look back at U.S. bank earnings for the fourth quarter showed the sector capped off a solid year, Baird says - but banks are underperforming the market thanks to high expectations, and it has opportunistic picks even as it warns not to "chase" the group. Most banks beat profit expectations based on upside to fee income (two-thirds of them beat on that measure) and some "benign" credit costs that reflected lower-than-average net charge-offs and reserve release (some 72% beat on provisioning, it says). Median core pre-provision net revenue was roughly flat from the last quarter, it notes. Still, the KBW Nasdaq Bank Index (BKX) fell 10% during earnings season, and the KBW Nasdaq Regional Banking Index (KRX) was down about 8%. The core PPNR trends were "OK," with "solid loan growth/fee income, partially offset by higher expenses and weaker (Net Interest Margin)," analyst David George and team write. Spread

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Baird reviews bank earnings, and finds opportunistic picks after 'solid' quarter