Another quarter has ended, and with that come earnings releases. For those investors who follow the financial sector, earnings might have started when JPMorgan Chase and Wells Fargo posted their results Friday. However, a handful of smaller banks got a head start on their much larger cousins with earnings results released Thursday.

Not to be forgotten, regional banks and savings and loans tend to limit operations to smaller regions of the country but are generally less exposed to the risky and exotic activities of some of their larger brethren. Their results can often be an indicator of what has been happening in smaller segments of the economy.

Company

Average Estimated EPS

Actual EPS

Difference

Commerce Bancshares (NAS: CBSH) $0.67 $0.74 10.4%
Independent Bank (NAS: INDB) $0.50 $0.56 12%
Bank of the Ozarks (NAS: OZRK) $0.51 $0.52 2%
Washington Federal (NAS: WAFD) $0.31 $0.32 3.2%

Sources: Yahoo! Finance and company press releases.


After missing on estimates during the fourth quarter, Commerce Bancshares started 2012 off with record earnings for the quarter. Earnings were up 12.1% from the same quarter last year, driven primarily by a decline in the bank's provision for loan losses of $7.6 million, as well as a $6.3 million decline in nonperforming assets during the quarter.

Independent Bank was also looking to turn around an earnings miss from last quarter, and managed to do so. President and CEO Christopher Oddleifson stated that "starting the year with a terrific quarter provides momentum for the rest of 2012," boding well for the bank going forward. The bank is also helped by an above-average dividend yield of around 3%.

Bank of the Ozarks has now beat earnings expectations for the last six quarters, posting income for the quarter that was up 23.1% from the same quarter last year. The bank has also increased its dividend for nine of the past 10 quarters, including the past seven consecutive quarters, pushing its yield to a modest 1.6%.

Savings and loan Washington Federal saw earnings increase 31.9% over the same period last year. The bank has also worked diligently to reduce its nonperforming assets. Since its peak in June 2009, they have decreased by 52.7%. Finally, it has paid a quarterly dividend for 117 consecutive quarters, or nearly 30 years.

Opportunities in regional banks
I like the potential of regional banks personally, 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 to a much larger puzzle. In fact, a 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.

At the time this article was published Fool contributor Robert Eberhard holds no position in any company mentioned. Follow him on Twitter @GuruEbby, or click here to see his holdings and a short bio. The Motley Fool owns shares of Wells Fargo and JPMorgan Chase, and has created a covered strangle position in Wells Fargo. Motley Fool newsletter services have recommended buying shares of Wells Fargo. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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