For those investors who follow the financial sectors, this week provides a smorgasbord of information. JPMorgan Chase kicked things off last week, with mega-banks Citigroup, Wells Fargo, and Bank of America reporting earnings this week.
Not to be forgotten, smaller regional banks also report their quarterly results this week. As the name suggests, regional banks tend to limit operations to smaller regions of the country, and thus are not as exposed as some of their larger cousins.
| Company | Average Estimated EPS | Actual EPS | Difference |
|---|---|---|---|
| Fulton Financial (Nasdaq: FULT) | $0.20 | $0.18 | (10.0%) |
| M&T Bank (NYSE: MTB) | $1.46 | $1.04 | (28.8%) |
| Bank of the Ozarks (Nasdaq: OZRK) | $0.49 | $0.51 | 4.1% |
| Pinnacle Financial Partners (Nasdaq: PNFP) | $0.19 | $0.17 | (10.5%) |
| Renasant Corp (Nasdaq: RNST) | $0.22 | $0.23 | 4.5% |
| BancFirst Corporation | $0.73 | $0.75 | 2.7% |
Source: Yahoo! Finance & Company Press Releases
Despite just missing analyst estimates on earnings per share, other news out of Fulton Financial's release was positive. The bank announced that non-performing loans had decreased by 7.8% from the third quarter. Furthermore, Fulton's earnings for the year were up 23.7% over last year, pointing to an overall successful year for the Pennsylvania-based bank.
Buffalo, New York-based M&T Bank's earnings were hurt by a net $0.38 per share due to charges from an investment and certain mortgage-backed securities. This earnings miss pushed the stock price down as much as 5% from Friday's close. For the year, however, earnings per share were $6.35, which was up 12% from $5.69 in 2010.
Bank of the Ozarks has now beat earnings expectations for the last five quarters. The bank has also increased its dividend for eight of the past nine quarters, including the past six consecutive quarters, pushing its yield to a modest 1.4%. Overall for 2011, earnings per share for the year were a record $2.94 per share, the 11th consecutive year that the bank has experienced record income.
Pinnacle Financial Partners was also looking to beat earnings expectations for the fifth straight quarter but fell just short. Despite the miss, revenue for the Tennessee-based bank was up 9.6% over the same period last year, and non-performing loans declined for the seventh consecutive quarter.
Southeast region favorite Renasant slightly exceeded analysts' expectations, and also reported a dramatic reduction in non-performing loans, dropping to $34.9 million from $49.0 million at the end of the previous quarter. Though it did not increase the dividend like Bank of the Ozarks did, it recently announced that its dividend will continue at $0.17 per quarter, keeping its yield right around 4.6%.
Finally, BancFirst, recently recognized by Forbes as the 19th-strongest bank amongst the largest publicly traded banks, saw a 14% increase in its net income over the same period last year. The Oklahoma bank has a history of increasing dividends as well, increasing its dividend every year since 1993.
Opportunities in regional banks
I personally 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 of a much larger puzzle. To keep an eye on the latest news out of these banks, add them to My Watchlist by clicking here.
