Wall Street Titans Are Loving the Ford and GM Comebacks

Source: Alden Jewell.

Recent news regarding the resurgence in automobile sales often cites how automakers such as Ford (NYSE: F  ) , Toyota (NYSE: TM  ) , and General Motors (NYSE: GM  ) are set to reap rewards. Today, let's look at four banks that are also seeing huge benefits as this industry rebounds.

The cars
Monthly auto sales are continuing to charge back from their incredible lows in 2009:

Source: St. Louis Federal Reserve.

To really put that into perspective, we've seen almost as many car sales through the first eight months of 2013 as we did in all of 2009, which even included the huge spike as a result of the Car Allowance Rebate System -- or, as you probably knew it, "cash for clunkers":

Source: St Louis Federal Reserve.

In the midst of this huge rebound, we've also seen the stocks of three of the largest automakers -- Ford, Toyota, and General Motors -- crush the market over the past year:

F Chart

F data by YCharts.

The banks
Someone has to finance those new cars on the roads. That's where the banks come in. Here's what four major holders of automobile loans have on their balance sheets:

Automobile Loans Held, Q2 2013

Company

Loans Held (in Billions)

JPMorgan Chase (NYSE: JPM  )

$50,865

Wells Fargo (NYSE: WFC  )

$47,942

Capital One (NYSE: COF  )

$28,677

PNC (NYSE: PNC  )

$9,066

Source: Company earnings reports.

But that doesn't give the clearest picture as to who is benefiting, as two of those banks have been especially aggressive in charging into the automotive space:

Source: Company earnings reports.

Yet even though Capital One and PNC have seen their automobile loans held skyrocket, that tells only half the story. Since those two banks have a smaller starting-point number, the growth looks huge. But Wells and JPMorgan have a much larger balance sheet, so overall origination volume may provide a better picture of which bank is being the most aggressive:

Automobile Loan Originations, Q2 2013

Company

Loan Originations (in Billions)

Wells Fargo

$9,100

JPMorgan Chase

$6,800

Capital One

$4,525

Source: Company earnings reports.

Here we see that Wells Fargo is the market leader in originations, issuing over 30% more than JPMorgan, its closest competitor. It should be noted that although PNC has been aggressively adding loans to its balance sheet, it doesn't disclose its originations. New loans will move the needle more at Capital One and PNC, but the two giants look as if they will continue to dominate the space.

With both rates and new car purchases expected to rise, investors could see the big banks take advantage of the same trends that have the automakers set to benefit.

The American car market isn't the only one booming
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  • Report this Comment On September 15, 2013, at 12:32 PM, cityperson wrote:

    Why is these so called "Titans of Wall Street " parising Ford and GM? This will be short lived , the recession is not over as we are told.

  • Report this Comment On September 15, 2013, at 1:27 PM, NostromoSurLaMer wrote:

    True, The Great Recession's still raging in many parts of the country but we're conveniently tossing the jobless under the SUV in favor of players that are, for the time being, employed. Marketing is simply pandering to the 'monied' in order to recreate a semblance of what we had pre-'08 and during the go-go '90s.

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