Another quarter has ended, and with that comes earnings releases. For those investors that follow the financial sector, earnings might have started when JPMorgan Chase and Wells Fargo posted their results last Friday. However, a handful of smaller banks followed their much larger cousins with results released Tuesday morning.
Not to be forgotten, regional banks and savings and loans tend to limit operations to smaller regions of the country but 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
|BB&T (NYSE: BBT )||$0.59||$0.61||3.4%|
|First Horizon National (NYSE: FHN )||$0.13||$0.12||(7.7%)|
|Fifth Third Bancorp (Nasdaq: FITB )||$0.37||$0.45||21.6%|
|Home BancShares (Nasdaq: HOMB )||$0.48||$0.51||6.3%|
|KeyCorp (NYSE: KEY )||$0.19||$0.21||10.5%|
Sources: Yahoo! Finance and company press releases.
BB&T nearly doubled income from the same quarter last year, with net income reaching $431 million. Investors will be getting a little more from the bank as well, with the company increasing its dividend by 25% last month after holding up well against regulator stress tests. In addition, nonperforming assets declined for the eighth consecutive quarter, further strengthening the bank's balance sheet.
First Horizon missed on estimates for the second quarter in a row, and the stock has been affected this morning, down as much as 7%. Net income was down from the same quarter last year, but the board also approved a $200 million share buyback program, as well as reaffirming its $0.01-per-share quarterly dividend.
Net income at Fifth Third for the quarter was $421 million, up nearly 400% over the same quarter last year. However, $115 million of the income during the quarter was a result of a successful IPO of Vantiv, inflating EPS by about $0.09 and causing the stock to be down lightly this morning. Nevertheless, nonperforming assets were down 8% from the previous quarter, reaching the lowest level since the first quarter of 2008.
Home BancShares reported record earnings of $14.5 million for the quarter, helped by record interest income of $36.5 million. The bank was busy during the quarter, acquiring numerous branch locations through the acquisition of Vision Bank and purchasing back shares as part of a share repurchase program.
KeyCorp passed the Federal Reserve's stress test in March, prompting the board of directors to implement a $344 million stock repurchase plan during the upcoming year. The board is also evaluating whether or not to raise the bank's quarterly dividend to $0.05 per share, an increase of 67%. As Key is one of the cheaper regional banks, an increased dividend would make it even more attractive to investors.
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.