Earnings season is here once again. We're about a week in, but we have already seen some impressive numbers from banking behemoths JPMorgan Chase, Wells Fargo, Citigroup, and Bank of America. While these results are important to those of us that follow the banking sector, my interest lies in some of the smaller banks beyond the behemoths.
With that in mind, I turn my attention to a regional bank that will be reporting earnings Friday. Here are some things I will be watching when it comes to the Synovus Financial (NYSE:SNV).
What analysts are expecting
Analysts are expecting a decrease in revenue and an increase in earnings from the same quarter last year, with $281.2 million in revenue and $0.03 in earnings per share. Synovus' second quarter came in about the same EPS, but the bank continues to owe nearly $1 billion in TARP funds, making it difficult to really start improving its earnings performance.
Balance sheet improvement
Despite still carrying these TARP obligations, the past year has been pretty stealer for Synovus, a period that saw the bank join Regions Financial (NYSE:RF) in performing better than a certain tech company out in Cupertino. For this to continue, Synovus needs to continue to shore up its balance sheet, so I'll be looking for an improvement in nonperforming assets during the quarter. With banks, the better loans you have, the more income the loans generate.
What else to look for
Synovus remains extremely cheap by numerous metrics, but its discount to book value is something I've been keeping an eye on. It currently trades at a 35% discount to book value, and three consecutive quarters of better-than-expected profitability have led the charge up to this valuation from its horrible performance last year. As long as it continues to improve its credit quality, it could be one of the best values in regional banks going forward.
Robert Eberhard has no positions in the stocks mentioned above. Follow him on Twitter to check in on regional bank earnings this week. Motley Fool owns shares of Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo. Motley Fool newsletter services recommend Wells Fargo. Try any of our Foolish newsletter services free for 30 days.