For those investors who follow the financial sector, 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 in investment banking.
|
Company |
Average Est. EPS |
Actual EPS |
Difference |
|---|---|---|---|
|
Chemical Financial |
$0.42 | $0.41 | (2.4%) |
|
National Penn Bancshares |
$0.15 | $0.14 | (6.7%) |
|
Sandy Spring Bancorp |
$0.34 | $0.30 | (11.8%) |
|
United Community Banks |
$0.13 | $0.12 | (7.7%) |
|
Valley National Bancorp |
$0.19 | $0.15 | (21.1%) |
Source: Yahoo! Finance and company press releases.
Some earnings highlights
Chemical Financial has nearly returned to pre-financial-crisis levels of income, with annual income up to $43.1 million, from its record low of $10 million in 2009. Total nonperforming loans have gone down every quarter since reaching a high of $147.9 million on Sept. 30, 2010, down to a total of $106.3 million at year-end 2011. Its high dividend yield helps it rank among the best regional banks in the Midwest.
National Penn felt that 2011 was a success, so much so that it raised its dividend to $0.05 per share. Net income was up over 500% in 2011 over 2010, in part because of a reduction of interest expense and provision for loan losses. Total assets were down slightly from year-end 2010, but nonperforming assets were down a total of 16%.
Like National Penn, Sandy Spring saw a decrease in nonperforming assets in 2011, going from $88.1 million to $79.1 million over the year. Total loans grew for the second straight quarter based primarily on growth in the commercial loan segment. The board of directors also announced that the current $0.10-per-share dividend will remain the same.
United Community Banks had a rough year compared to its compatriots on this list. This was partially self-inflicted, as it made the decision to begin disposing of troubled assets in March 2011. However, its loss of $227 million this year is less than its loss in the previous two years, and the bank expects a return to profitability in 2012.
Investors soured slightly on Valley National this morning, no doubt due in part to an increase in nonperforming assets of nearly $45 million during the fourth quarter. Nevertheless, the year can be deemed a successful one for Valley National, and its current 5.4% yield prompted fellow Fool Matt Koppenheffer to add the bank to his list of banks to ring in the new year.
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 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.
