Operating a bank isn't easy, but can be a straightforward and very profitable affair over time, especially if you're not geographically challenged.
In similar fashion to the "location, location, location" mantra preached in real estate, the place a bank calls home can seriously affect its fortunes. For proof, look no further than Detroit-headquartered Comerica's (NYSE:CMA) recent decision to move command central to faster-growing Texas.
Rerooting the home office isn't the only way to gain ground in more appealing markets. Cleveland-based National City (NYSE:NCC) is staying put in the Midwest but has been snapping up bank branches in Florida. Competitors are even traveling from overseas: Banco Bilbao Vizcaya Argentaria (NYSE:BBV) of Spain will soon be acquiring Alabama bank Compass Bancshares (NASDAQ:CBSS) and its many Texas banks.
Financial institutions already based in coveted Sun Belt states have a competitive advantage. Regions Financial (NYSE:RF) is based in Alabama and recently snapped up in-town rival AmSouth and its many Florida locations. It also acquired Union Planters in 2004, taking out another sizable regional rival. As it stands currently, close to half of Regions' business occurs in Alabama and Florida, with decent exposure to Georgia, Tennessee, and Louisiana.
First-quarter earnings at Regions included a number of merger integration charges. It also decided to sell off Equifirst and most of its exposure to the "non-conforming mortgage origination business." As a result, the financials are in flux, but the company is expected to cut costs and enhance expansion opportunities at the newly acquired locations.
Regions has already proven adept at operating its existing Regions banks and Morgan Keegan asset management and brokering businesses, so investors can reasonably expect more of the same going forward.
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Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.
