Another quarter has ended, and with that comes earnings releases. For those investors who follow the financial sector, earnings might have started when JPMorgan Chase and Wells Fargo posted their results. However, a handful of smaller banks followed their much larger cousins, with results released this week.
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.
|
Company |
Average Estimated EPS |
Actual EPS |
Difference |
|---|---|---|---|
|
Brookline Bancorp |
$0.17 | $0.09 | (47.1%) |
|
Hudson City Bancorp |
$0.15 | $0.15 | 0% |
|
Hudson Valley Holding |
$0.28 | $0.92 | 228.8% |
|
Lakeland Financial |
$0.49 | $0.52 | 6.1% |
|
UMB Financial |
$0.61 | $1.15 | 88.5% |
Sources: Yahoo! Finance and company press releases.
Brookline earnings were off after $4 million in expenses related to the acquisition of Bank Rhode Island. Organic loan growth was up 10% during the year, and total assets increased nearly 60% during the same period, aided by the acquisition of Bank Rhode Island.
During the first quarter of 2011, Hudson City posted a loss of $555.7 million because of balance-sheet restructuring costs. The bank turned it around this quarter, but it wasn't all good news. Extended foreclosure time frames have caused some nonperforming loans to linger on the balance sheet longer than in the past.
Hudson Valley turned around from a loss in the previous quarter, greatly exceeding all analysts' expectations. As a result, shares of the bank were up as much as 8.5% this morning. The bank will continue paying its quarterly dividend of $0.18 per share, keeping the stock's dividend yield around 4%.
Lakeland Financial used the release of its quarterly earnings to announce a 10% increase to its dividend, boosting the quarterly payout to $0.17 per share. The bank's net income was a record, increasing 45% from the same quarter last year, and nonperforming assets declined to only 1.31% of total assets, down from 1.45% from March 31, 2011.
UMB Financial also had an impressive quarter, with earnings up 50.2% over the same quarter last year. After exceeding $100 million in income for the first time last year, UMB is nearly halfway to that benchmark after one quarter of 2012, which bode well for the remainder of the year. The bank has seen loan growth for eight consecutive quarters, and nonperforming loans representing only 0.5% of total assets, further strengthening the bank's balance sheet.
Opportunities in regional banks
I 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 to 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.
