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. 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 a small indicator of what has been happening in smaller segments of the economy.
Average Estimated EPS
|Boston Private Financial Holdings (Nasdaq: BPFH )||$0.14||$0.11||(21.4%)|
|First Interstate Bancsystem (Nasdaq: FIBK )||$0.28||$0.26||(7.1%)|
|Provident New York Bancorp (NYSE: PBNY )||$0.13||$0.15||15.4%|
|Sterling Financial (Nasdaq: STSA )||$0.28||$0.21||(25.0%)|
|Texas Capital BancShares (Nasdaq: TCBI )||$0.62||$0.70||12.9%|
Source: Yahoo! Finance and company press releases.
Boston Private Financial may have missed on earnings expectations, but it did recover from a small loss during the same quarter last year. While net interest income remained nearly flat, a 6% increase in assets under management helped build momentum for the rest of the year.
Montana-based First Interstate reported a 31% increase in net income from the same quarter last year, driven by a dramatic increase in revenue from the origination and sale of loans. Nonperforming assets declined 5.1% over the same period, further strengthening the bank's balance sheet.
Net income at Provident New York increased 58.3% from the same quarter last year. Nonperforming loans increased during the quarter, but were outpaced by the increase in total deposits, which were up 4.1% from the previous quarter. The bank was recently named one of America's most trustworthy companies by GovernanceMetrics International, which bodes well for it in an industry plagued by suspicion.
Sterling Financial earnings were off after $10 million in one-time charges during the quarter. However the acquisition of First Independent Bank resulted in the addition of $350 million in loans and nearly $700 million in deposits, as well as 14 branches in the Vancouver/Portland metro area.
Texas Capital more than doubled net income from the same quarter last year. Nonperforming assets were down 42% during the same period, strengthening the bank's balance sheet. After such a great quarter, CEO George Jones is "optimistic about the bank's ability to continue to perform for shareholders."
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.