Another quarter has ended, and with that comes earnings releases. For those investors that follow the financial sector, earnings might have started when JPMorgan Chase and Wells Fargo posted their results last Friday. However, a handful of smaller banks followed their much larger cousins with results released this week.
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.
Average Estimated EPS
|City National (NYS: CYN)||$0.83||$0.86||3.6%|
|People's United Financial (NAS: PBCT)||$0.18||$0.17||5.6%|
|Simmons First National (NAS: SFNC)||$0.36||$0.37||2.8%|
|TCF Financial (NAS: TCB)||($1.81)||($1.78)||N/A|
|Western Alliance Bancorp (NYS: WAL)||$0.12||$0.12||0%|
Sources: Yahoo! Finance and company press releases.
City National saw total assets grow to a record $24 billion, with total deposit balances up 11% from the first quarter last year. After raising its quarterly dividend to $0.25 per share with last quarter's earnings release, the board announced it will be maintaining that dividend payout, keeping its yield near 2%.
People's United may have slightly missed on earnings estimates, but that didn't prevent the Connecticut bank from announcing its 20th consecutive annual dividend increase. With its new yearly dividend of $0.64 a share, its yield now exceeds 5% at today's price. The bank will also be completing an acquisition of 56 branches from RBS Citizens during the second quarter, further expanding its presence in New York.
After slightly missing on estimates last quarter, Simmons First National beat estimates, increasing net income 25.4% over the same quarter last year. J. Thomas May, chairman and CEO, admitted to "soft loan demand as a result of the overall general economic environment," but pointed to a low ratio of nonperforming assets, as well as growth in total deposits, as a positive for the bank.
Analysts were expecting a loss from TCF Financial and they weren't disappointed, with debt restructuring costs causing a massive decline. Despite the loss, the quarter was still positive for the Minnesota bank, with loans and leases growing $1 billion from the previous quarter. Analysts are hopeful that these losses are behind the company, with most projecting a return to profitability in the next quarter.
Finally, Western Alliance met expectations with record top-line revenue and net income. The Phoenix-based bank also saw increases in both total deposits and total loans from the previous quarter, with total deposits up 4.3% and loans up 3.1%.
Opportunities in regional banks
I 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 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 JPMorgan Chase and Simmons First National. The Fool also owns shares of 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.
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