Another quarter has ended, and with that come earnings releases. For those investors who follow the financial sector, earnings may have started when JPMorgan Chase and Wells Fargo posted their results last Friday. However, a handful of smaller banks followed their big brothers with results released Tuesday morning.
Savings and loans tend to limit operations to smaller regions of the country, but regional banks are generally less exposed to the risky and exotic activities of some of their larger brethren. Their results can often be an indicator of what has been happening in smaller segments of the economy.
Average Estimated EPS
|Pinnacle Financial Partners (Nasdaq: PNFP )||$0.16||$0.21||31.2%|
|Comerica (NYSE: CMA )||$0.55||$0.66||20.0%|
|State Street Corporation (NYSE: STT )||$0.87||$0.85||(2.3%)|
|US Bancorp (NYSE: USB )||$0.64||$0.67||4.7%|
|Webster Financial (NYSE: WBS )||$0.40||$0.42||5.0%|
Sources: Yahoo! Finance and company press releases.
After missing on estimates during the fourth quarter, Pinnacle Financial started off fiscal year 2012 with a strong earnings result, with net income per share up 258% over the same quarter last year. Total nonperforming assets declined for the seventh consecutive quarter, while nonperforming loans declined for the eighth consecutive quarter.
Comerica's net income increased to $130 million, up 36% from the fourth quarter of 2011. In March, the Federal Reserve approved the bank's plan to repurchase $375 million through the first quarter of 2013, as well as a potential dividend increase that would increase the quarterly dividend to $0.15 -- a 50% boost.
Despite a 3% increase in revenue over the same quarter last year, State Street saw a 9% decline in net income from the same period. Nevertheless, the board increased the quarterly dividend to $0.24 a share, returning the dividend to its previous high. The company also approved a new stock repurchase program, authorizing up to $1.8 billion in stock repurchases through the first quarter of 2013.
Warren Buffett favorite U.S. Bank saw increases in many of its business lines during the first quarter, including $56 billion in new lending activity, deposit growth of 11.7% from the same quarter last year, and year-over-year growth in fee revenue. After passing the Federal Reserve stress tests back in March, the Minneapolis bank announced that it would increase its dividend by 56% this year, and continuing strong performance could see future increases.
Webster Financial's net income was down slightly from the previous quarter, but there are many indicators of a strong 2012. Nonperforming assets are down 36.6% from the same quarter last year, while deposits and loan activity are both up during the same period.
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.