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.
|
Company |
Average Estimated EPS |
Actual EPS |
Difference |
|---|---|---|---|
|
Citizens Republic Bancorp |
$0.32 | $0.47 | 46.9% |
|
Dime Community Bancshares |
$0.31 | $0.30 | (3.2%) |
|
Hancock Holding |
$0.55 | $0.47 | (14.5%) |
|
Investors Bancorp |
$0.20 | $0.18 | (10.0%) |
|
Rockville Financial |
$0.12 | $0.13 | 8.3% |
Source: Yahoo! Finance & Company Press Releases
Citizens Republic reported its fourth consecutive profitable quarter, and its share price was up as much as 10% this morning as a result. During those four quarters, nonperforming assets declined 48%, and this return to profitability has analysts hopeful for the rest of the year. After two years of losses, analysts are expecting the Michigan bank to be profitable again this year, which could help it retain its best performing regional bank crown from 2011.
Net income at Dime Community was down slightly from the previous quarter, as well as the first quarter last year. However, nonperforming assets declined 43.2% during the quarter, strengthening the bank's balance sheet going forward. As one of the worst performing thrifts in 2011, more quarters like this may lead to a much better 2012.
In contrast to Citizens Republic, shares of Hancock Holding have been down as much as 10% this morning as a result of missing earnings expectations. Nonperforming assets increased another 4% during the quarter after increasing 16% in the fourth quarter last year. In order for the bank to start performing better, this trend needs to be reversed.
Investors Bancorp first-quarter earnings were affected by $6 million in costs associated with the purchase of Brooklyn Federal Savings Bank, an acquisition that added $385.9 million in deposits and $177.5 million in loans. The bank is considered well capitalized under regulatory guidelines, which bodes well for future success.
After celebrating its one-year anniversary as a public company earlier in the week, Rockvillle Bank announced record first-quarter income, as well as an increase of 13% in its quarterly dividend. The record earnings were helped by a 20.4% increase in net interest income growth over the previous quarter, which itself was driven by loan growth and decreased funding costs.
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 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.
