Regional Bank Earnings Roundup
For those investors that follow the financial sector, this week provides a smorgasbord of information. JPMorgan Chasekicked things off last week, with megabanks Citigroup and Wells Fargo reporting on Tuesday. Bank of America was scheduled to report earnings this morning.
Not to be forgotten, smaller regional banks also report their quarterly results this week. As the name suggests, regional banks tend to limit operations to smaller regions of the country, and thus are not as exposed as some of their larger cousins to trouble in Europe or investment banking.
Average Estimated EPS
|Community Trust Bancorp (NAS: CTBI)||$0.65||$0.64||(1.5%)|
|Northern Trust Corporation (NAS: NTRS)||$0.68||$0.53||(22.1%)|
|State Street (NYS: STT)||$0.94||$0.76||(19.1%)|
|US Bancorp (NYS: USB)||$0.63||$0.69||9.5%|
|Wintrust Financial (NAS: WTFC)||$0.37||$0.41||10.8%|
Source: Yahoo! Finance and company press releases.
With a current dividend yield around 5%, Community Trust is a favorite of insiders, with many purchasing shares within the last six months. The company was affected by a $3.2 million decrease in the value of some foreclosed homes that were vandalized, and, though insurance claims have been filed, the company took the entire loss against earnings for the fourth quarter.
CVB Financial met quarterly earnings estimates, but produced record earnings for the year ending Dec. 31, 2011. The California-based bank reported net income of $81.7 million, the highest income since the previous record high of $70.6 million in 2006. Stunningly, non-performing loans were down more than 60% from Dec. 31, 2010, ending 2011 at $62.7 million.
Northern Trust may be ready to roar due to its close proximity to many of the nation's millionaires and its primarily trust-driven business. However, the company announced that it will be cutting 700 jobs as a cost-cutting measure as record-low interest rates continue to affect profit.
State Street's dull business makes it stand out among its peers, and that has helped the bank to be successful. Despite only missing earnings expectations by a penny, however, the stock has fallen as much as 8.7% off of yesterday's close. This was driven primarily by lower net income margins and lower fee generation in asset management.
Warren Buffet favorite US Bancorp has seen a boost in net interest income due to low interest rates. The big Minnesota bank's loan growth drove income higher for the third straight quarter, and has led to speculation that the Federal Reserve will allow U.S. Bank to raise its dividend this year.
Finally, compared to its $0.06 loss in 2010's fourth quarter, Wintrust Financial recovered this year, capping off a "record year of earnings for the company," according to president and CEO Edward J. Wehmer. He went on to say that the bank is better positioned to explore growth opportunities in 2012, but that the bank will "continue to be disciplined in its approach to growth."
Opportunities in regional banks
I like the potential of regional banks personally, but they may not be for everyone. Earnings are just one thing to consider when choosing an investment, so view these results as a small piece to a much larger puzzle. To keep an eye on the latest news out of these banks, add them to My Watchlist by clicking here.
At the time this article was published Fool contributor Robert Eberhard holds no position in any company mentioned. Follow him on Twitter @GuruEbby. The Motley Fool owns shares of Citigroup, Bank of America, and JPMorgan Chase. The Fool also owns shares of and has created a covered strangle position on Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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