For those investors who follow the financial sectors, this week provides a smorgasbord of information. JPMorgan Chase kicked things off two weeks ago, with megabanks Citigroup, Wells Fargo, and Bank of America reporting last week.
Not to be forgotten, some 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 the troubles in Europe or investment banking.
Average Est. EPS
|Bank of Hawaii (NYSE: BOH )||$0.82||$0.85||3.7%|
|Cathay General Bancorp (Nasdaq: CATY )||$0.29||$0.30||3.4%|
|F.N.B. (NYSE: FNB )||$0.19||$0.19||N/A|
|TrustCo Bank (Nasdaq: TRST )||$0.10||$0.09||(0.7%)|
|Zions Bancorp (Nasdaq: ZION )||$0.33||$0.24||(27.3%)|
Source: Yahoo! Finance and company press releases. N/A = not available.
Some earnings highlights
Bank of Hawaii is a favorite of many investors, especially because of its Pacific Ocean-sized moat. However, despite beating quarterly expectations, the stock traded down 2.7% today based on a retreat from third-quarter earnings. Another item that may have given investors pause was a slight increase in nonperforming assets over the previous quarter, primarily due to the addition of a $2.1 million construction loan. Overall, the bank deemed 2011 a success, maintaining its quarterly dividend at $0.45 a share.
Heading into its 50th year, Cathay Bank used 2011 as a springboard to future success. Net income for the quarter was up over 68% over the same quarter last year, and full-year income was up $88.6 million for the year. Net charge-offs were also decreased for the year, down 47.6% since 2010. One area where Cathay Bank may be failing shareholders, however, is in its measly $0.04 yearly dividend.
The year was also a successful year for F.N.B., with the Pennsylvania bank exceeding net income from last year by $12.3 million. F.N.B. was one of the top performers among regional banks in 2011, and is poised to continue its strong performance in 2012, no doubt helped in part by its current 3.9% dividend yield.
Despite a slight earnings miss, net income for TrustCo Bank for the quarter was up 26.2%, despite two one-time charges during the fourth quarter that reduced earnings by $1.2 million. Nonperforming assets didn't see the same reductions that some other banks have this quarter, but still ended the year down just over $2 million from Dec. 31, 2010. With an impressive 4.6% yield, TrustCo might be worth keeping an eye on.
Finally, Zions Bank was down 4% after-hours yesterday after its earnings miss. Chairman and CEO Garris Simmons stated, "Revenue growth was a challenge for us, as it was for the whole industry, in 2011." Even though Zions was one of the worst-performing regional bank stocks last year, it at least earned a profit in 2011 after experiencing a loss each year since 2008.
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, one of the banks mentioned here -- Bank of Hawaii -- is featured prominently in our brand-new free report "The Stocks Only the Smartest Investors are Buying." To find out which other regional banks made the cut, get your copy today before it's too late.