More Regional Bank Earnings
Another quarter has ended, and with that comes earnings releases. For those investors who follow the financial sector, earnings might have started when JPMorgan Chase and Wells Fargo posted their results. However, a handful of smaller banks followed their much larger cousins with results released this week.
Not to be forgotten, regional banks and savings and loans tend to limit operations to smaller regions of the country but are generally less exposed to the risky and exotic activities of some of their larger brethren. Their results can often be a small indicator of what has been happening in smaller segments of the economy.
Average Estimated EPS
|BOK Financial (NAS: BOKF)||$1.03||$1.22||18.4%|
|First Commonwealth Financial (NYS: FCF)||$0.09||$0.11||22.2%|
|Regions Financial (NYS: RF)||$0.08||$0.11||37.5%|
|Synovus Financial (NYS: SNV)||$0.01||$0.02||100%|
|PrivateBancorp (NAS: PVTB)||$0.12||$0.15||25%|
Sources: Yahoo! Finance and company press releases.
With net income up 29% over the same quarter last year, BOK Financial started 2012 off strong. Revenues and loan balances are growing, and the bank was able to raise its quarterly dividend for the seventh consecutive year. Nonperforming assets declined nearly 6% during the quarter, further strengthening the bank's balance sheet.
First Commonwealth more than doubled net income over the same quarter last year, driven primarily by a lower provision for credit losses, as well as an increase in noninterest income. The Pennsylvania bank also increased its quarterly dividend 67% from the previous quarter, pushing its yield closer to 2.5%.
Regions Financial saw a 9% decrease in nonperforming assets over the previous first quarter, returning to profitability after a loss last quarter. The bank raised nearly $900 million in a common equity offering during the quarter, helping to ensure the company's long-term future.
Synovus Financial posted its third consecutive quarterly profit. Nonperforming assets declined 17% from the first quarter of 2011, but the bank has yet to pay back the $1 billion it borrowed as part of TARP, and also stated that the repayment was "not a near-term event." Until this expense is removed, it will be difficult for the bank to do much more than it's doing now.
Finally, PrivateBancorp reported that income increased 45% over the same quarter last year. While total loans grew 2% during the quarter, nonperforming assets declined 7% over the same period, which helped strengthen the company's balance sheet. Hopefully, further performance like this will allow the bank to repay TARP so it can raise its bare-minimum dividend, but only time will tell.
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 of a much larger puzzle. In fact, a bank similar to the ones here is featured prominently in our new free report "The Stocks Only the Smartest Investors are Buying." To find out which one it is, get your copy today before it's too late.
At the time this article was published Fool contributor Robert Eberhard holds no position in any company mentioned. Follow him on Twitter @GuruEbby, or click here to see his holdings and a short bio. The Motley Fool owns shares of JPMorgan Chase. The Fool owns shares of and has created a covered strangle position in Wells Fargo. Motley Fool newsletter services have recommended buying shares of Wells Fargo. The Motley Fool has a disclosure policy.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.