Weekly Regional Bank Earnings Roundup

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Following the lead of their much larger compatriots JPMorgan Chase, Citigroup, and Wells Fargo, and 35 regional banks from last week, 54 regional banks released second-quarter earnings this week. It was good news for 30 banks, decent news for nine banks, and 15 banks can be viewed as disappointments depending on how you look at them. This article will touch briefly on some of the more noteworthy earnings releases from the past week.

One-time credit equals big earnings beat
Among the bigger surprises of the week was the performance of Missouri-based bank Great Southern Bancorp (Nasdaq: GSBC  ) , which exceeded analyst expectations for the quarter by over 200%! While the consensus among analysts was a respectable $0.51 per share, Great Southern checked in with a robust $1.58 per share. When looking beyond the headline grabbing numbers, however, we see that the majority of this income was a result of the FDIC-assisted acquisition of Inter Savings Bank of Minnesota, which resulted in an immediate gain of $31.3 million. This is not to say that the bank didn't improve this quarter -- nonperforming loans continued to decrease, down $5 million from the end of 2011.

Regional bank favorites continue to impress
Regional banking favorites Synovus Financial (NYSE: SNV  ) and Regions Financial (NYSE: RF  ) both exceeded expectations to varying degrees. Despite still holding onto nearly $1 billion in TARP funds that the company has been unable to repay thus far, Synovus Financial managed to beat earnings expectations, though analysts were only expecting $0.02 per share. Synovus delivered with $0.03 per share -- not an exceedingly huge beat, but a beat nonetheless.

Regions Financial, on the other hand, looks to be a good value among other banks, and the Alabama bank saw an increase of 51% in net income from the first quarter this year and a ten-fold increase from the second quarter last year. Unlike Synovus, Regions also finished repaying the Treasury for its TARP investment, which affected its quarterly net income by $71 million, or $0.05 per share. Nevertheless, Regions still exceeded the consensus earnings estimate of $0.15 per share, reporting earnings of $0.20 per share.

One who failed to meet expectations
The biggest miss of the week belonged to United Community Banks (Nasdaq: UCBI  ) , which missed earnings expectations by over 62%. Despite this large miss, other items within the bank's earnings report point to success over the quarter. For example, nonperforming assets declined by $15.8 million from the previous quarter, and operating expenses also saw a small decline. The earnings miss could be attributed to declines in many forms of revenue for the bank, including net income revenue and fee revenue. The bank is still feeling some effects from taking an active stance on troubled assets in March 2011, but after two profitable quarters in 2012, things are heading up for the bank despite this earnings miss.

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.

Fool contributor Robert Eberhard holds no position in any company mentioned. Follow him on Twitter, or click here to see his holdings and a short bio. The Motley Fool owns shares of Citigroup and JP Morgan Chase. Motley Fool newsletter services have recommended buying shares of Wells Fargo. The Motley Fool has a disclosure policy.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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10/21/2016 2:37 PM
GSBC $41.50 Down -0.50 -1.19%
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SNV $32.95 Down -0.10 -0.30%
Synovus Financial CAPS Rating: ****
UCBI $21.00 Down -0.10 -0.47%
United Community B… CAPS Rating: No stars