For those investors who follow the financial sectors, this week provides a smorgasbord of information. JPMorgan Chase kicked things off two weeks ago, with mega-banks 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.
|Company||Average Estimated EPS||Actual EPS||Difference|
|Commerce Bancshares (Nasdaq: CBSH )||$0.70||$0.69||(1.4%)|
|FirstMerit Corporation (Nasdaq: FMER )||$0.26||$0.28||7.7%|
|Great Southern Bancorp (Nasdaq: GSBC )||$0.43||$0.85||97.7%|
|Privatebancorp (Nasdaq: PVTB )||$0.10||$0.11||10%|
|Synovus Financial (NYSE: SNV )||$0.00||$0.01||N/A|
Source: Yahoo! Finance & Company Press Releases
Some earnings highlights
Despite missing earnings for the fourth quarter, last year was a successful one for Commerce Bank. Net income was up 15.6% from 2010, to a record total of $256.3 million. Investors this morning seem to be reacting to slow loan growth from the bank, as well as to a recently paid settlement in regards to debit overdraft transactions. Nevertheless, fellow Fool Matt Koppenheffer has selected them as one of his banks to watch this year, so feel free to keep an eye on them.
FirstMerit reported a profit this morning, which was its 51st consecutive profitable quarter. That in itself is pretty impressive, and its history of conservative lending and high dividends attracted our banking expert Anand Chokkavelu to the stock. Strong loan and deposit growth helped the bank maintain its strong credit profile.
Great Southern Bank's earnings blowout was aided in part by the completion of an FDIC-assisted acquisition in October 2011, which resulted in a one-time gain of $16.5 million. This year, the focus will be a further reduction of nonperforming assets, which were down only $3.9 million from 2010.
Privatebancorp saw a sizable decrease in non-performing loans over the past year, down 15% from year-end 2010. Like at FirstMerit, strong loan and deposit growth helped clear up the bank's credit profile since last quarter, and the result was a return to profitability in 2011 after a posted loss in 2010.
When it comes to Synovus, any profit would be welcome, so its slight $0.01 per share was actually welcome news. Last year's fourth quarter saw a loss of $180 million on the way to a full-year loss of over $848 million. This year, after two consecutive profitable quarters, the loss for 2011 was only $119 million, building hope for a better 2012.
Opportunities in regional banks
I personally like the potential of regional banks, 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 brand-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.