For those investors who follow the financial sectors, this week provides a smorgasbord of information. JPMorgan Chase kicked things off last week, and mega-banks Citigroup and Wells Fargo reported Tuesday. Bank of America joined in with its release Wednesday.
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 to the troubles in Europe or investment banking.
| Company | Average Estimated EPS | Actual EPS | Difference |
|---|---|---|---|
| Comerica (NYSE: CMA) | $0.45 | $0.48 | 6.7% |
| First Horizon National (NYSE: FHN) | $0.14 | $0.13 | (7.1%) |
| Fifth Third Bancorp (Nasdaq: FITB) | $0.36 | $0.33 | (8.3%) |
| Prosperity Bancshares (NYSE: PB) | $0.76 | $0.77 | 1.3% |
Source: Yahoo! Finance & Company Press Releases
Some earnings highlights
Comerica rode $47.8 billion in deposits, a record, to an early 5% gain today after releasing earnings. Between dividends and share buybacks, the bank returned 47% of net income to shareholders during 2011, according to chairman and CEO Ralph W. Babb, Jr.
First Horizon was one of many regional banks that experienced a loss in 2010, but recovered nicely this year, posting net income of $131.2 million for 2011, compared to a loss of $57.8 million the year before. The bank was aided by a decline in total non-performing assets, which were down 38% from year-end 2010.
Fifth Third Bancorp had been down as much as 5.7% today after missing earnings expectations by $0.02 per share. It wasn't all bad news out of the Cincinnati-based bank, however: Non-performing assets have fallen to the lowest levels since the first quarter of 2008. Fifth Third is also a favorite of our resident banking expert Anand Chokkavelu, with the stock returning over 36% since he added it to his real-money portfolio in August.
Fresh off being ranked as the "best bank" by Forbes, Prosperity Bancshares saw increases in many key metrics over the past year. Total deposits and loans are both up 8.1% over last year, and net income reached record levels as well. The bank is beginning 2012 by further growing outside its Houston base by acquiring the Bank of Arlington's office in Dallas-Fort Worth, an acquisition that will add $40.3 million in assets to Prosperity's balance sheet.
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. In fact, a regional bank similar to the ones here is featured prominently in our brand-new report "The Stocks Only the Smartest Investors are Buying." To find out which one it is, get your free copy today before it's too late.
