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 |
|---|---|---|---|
|
Associated Banc-Corp |
$0.23 | $0.23 | 0% |
|
City National |
$0.82 | $0.82 | 0% |
|
East West Bancorp |
$0.41 | $0.43 | 4.9% |
|
Independent Bank |
$0.54 | $0.52 | (3.7%) |
|
Westamerica Bancorp |
$0.79 | $0.77 | (2.5%) |
| Western Alliance Bancorporation | $0.09 | $0.07 | (22.2%) |
Source: Yahoo! Finance & Company Press Releases
Some earnings highlights
Wisconsin-based Associated met expectations, and recovered from a $0.18-per-share loss in 2010, posting $0.66 per share for 2011. This was helped by a decrease in non-performing loans of 38% from last year, down to a total of $357 million.
City National met expectations as well, but also announced it will be raising its quarterly dividend to $0.25, pushing its yield to around 2%. The year 2011 also marked the 19th consecutive profitable year for the California bank.
East West Bancorp joined City National in raising its dividend, increasing its annual dividend to $0.40 a share on the strength of record profits for 2011. Nonperforming assets have represented less than 1% of total assets for nine consecutive quarters, further reflecting the company's strong balance sheet.
Independent's slight earnings miss can be attributed to a one-time charge during the fourth quarter amounting to $0.02 a share. Net income was up 12.9% over 2010, driven primarily by an increase in non-interest income, which itself was up 12.4%.
Westamerica also missed expectations, but unlike Independent, its net income was down for the year. As a result, the stock has been down as much as 5% off Wednesday's close. Positive signs from the bank include a decline in non-performing assets over the past year and a recently increased dividend.
After experiencing a loss in 2010, Western Alliance recovered this year, thanks in part to a growth in both its loan portfolio and deposits. Chairman and CEO Robert Sarver noted, "Fourth-quarter results will position the company for growth in 2012 by riding the momentum of higher loan growth, along with a stable net-interest margin, expense management, and continued improvement in asset quality."
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 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.
