Banks Discover Glass Ceiling

06/20/2013 5:00 am EST

Focus: STOCKS

Jim Jubak

Founder and Editor, JubakPicks.com

One stock in particular has been a regular recommendation of MoneyShow's Jim Jubak, also of Jubak's Picks, but sadly he believes the story has changed, at least for now.

It's just not a very good environment for US banks, even one as well run as US Bancorp (USB).

That's why in my June 14 post, I recommended selling shares of US Bancorp to raise cash for the better opportunities that looked likely to rise out of the current chaos in emerging markets.

Even if the Fed doesn't take any overt action in the next few months to slow its $85 billion program of bond and mortgage-backed asset buying, or to raise interest rates, I still think interest rates—especially mortgage interest rates—will continue to inch upwards.

You could already see two effects of that in US Bancorp's first-quarter earnings report. For the quarter that ended March 31, mortgage originations fell 3% from the fourth quarter of 2012.

Net interest margins have been dropping across the banking sector in 2012 and so far into 2013. And although US Bancorp has done a good job of defending its margins, it too has seen some erosion, and I think that's likely to continue.

I've owned US Bancorp very profitably (a 36.13% gain plus dividends) in my Jubak's Picks portfolio since March 2010, but I think it's time now to look for shares with more upside where the headwinds are not quite so pronounced.

Full disclosure: I don't own shares of any of the companies mentioned in this post in my personal portfolio. When in 2010 I started the mutual fund I manage, Jubak Global Equity Fund, I liquidated all my individual stock holdings and put the money into the fund. The fund did not own shares of any stock mentioned in this post as of the end of March. For a full list of the stocks in the fund as of the end of March, see the fund's portfolio here.

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