Banks: It's the Regionals' Turn!

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Yesterday, I wrote that the financial crisis was over at the nation's largest banks. Earnings at major regional banks now appear to confirm that trend on a broader level.



Fifth Third Bancorp (Nasdaq: FITB  )


SunTrust Financial (NYSE: STI  )

Q4 EPS: Consensus Estimate/ Actual

$0.26/ $0.30

$0.24/ $0.33

$1.38/ $1.50

$0.23/ $0.07

Total Loan Growth vs. Q3 (Ann.)





Tier 1 Common Equity Ratio/ Improvement vs. Q4 2009


+60 bps


+51 bps


+380 bps


+41 bps

Source: Company press releases, Yahoo! Finance. Bps = basis points.

Four solid earnings beats -- not a bad result!

The same trends at work
Behind these numbers are the same drivers that banks like JPMorgan Chase (NYSE: JPM  ) , US Bancorp (NYSE: USB  ) and Wells Fargo (NYSE: WFC  ) highlighted in their quarters. Of the four banks in our table, only one – PNC – didn't generate sequential loan growth in the fourth quarter. Meanwhile, improved credit quality is also chipping in, with declining non-performing loans across the board.

So long, Uncle Sam!
Another sign of the improved health of the banking sector: The continued repeal of the government's involvement as a shareholder. On Wednesday, Fifth Third announced that it will repay the government's TARP funds on the back of a $1.7 billion share offering. While the top banks have all repaid TARP monies, regional banks have been slower to do so. However, the four institutions above look reasonably well-capitalized at this stage; of the four, SunTrust is the only other bank not to have repaid TARP, and it said today that this is a priority.

I still prefer megabanks
The businesses of regional banks is much improved, and their shares don't look expensive on the basis of book value multiples. Still, they lack the diversification and dominant franchises of the top four banks, which is why I prefer that basket. Either way, these results are further evidence that the U.S. economic recovery is finally finding its footing, which can only be good for investors.

The economy is improving, and investors are finally starting to come back into the market. You can get in front of that trend with the Motley Fool's free report, "3 Profit Plays for the Resurgence of Individual Investors."

Fool contributor Alex Dumortier, CFA has no beneficial interest in any of the stocks mentioned in this article. You can follow him on Twitter. The Fool owns shares of JPMorgan Chase & and 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.

Read/Post Comments (0) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1427145, ~/Articles/ArticleHandler.aspx, 10/26/2016 11:21:44 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 2 hours ago Sponsored by:
DOW 18,199.33 30.06 0.17%
S&P 500 2,139.43 -3.73 -0.17%
NASD 5,250.27 -33.13 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/26/2016 4:01 PM
BBT $39.06 Up +0.18 +0.46%
BB and T CAPS Rating: ****
FITB $21.67 Up +0.39 +1.83%
Fifth Third Bancor… CAPS Rating: *****
JPM $69.13 Up +0.33 +0.48%
JPMorgan Chase CAPS Rating: ****
PNC $94.28 Up +1.14 +1.22%
PNC Financial Serv… CAPS Rating: ****
STI $45.55 Up +0.38 +0.84%
SunTrust Banks CAPS Rating: ****
USB $44.23 Up +0.39 +0.89%
US Bancorp CAPS Rating: ****
WFC $46.15 Up +0.43 +0.94%
Wells Fargo CAPS Rating: ****