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By Robert Marc Gordon

Just below the level of the so called “money center” banks lie the “super regional banks”, which I would generally define as having at least $100 billion in assets and at least a three state footprint. Because these institutions do not have a nationwide customer base, they are essentially prisoners of the part of the country they are chartered in. And that has made a difference in the fortunes of these regional banks. I will look at a handful of the larger regionals, focusing again on their returns on assets and equities, their efficiency, their financial health, and future prospects. I should point out that no bank should have the return on equity levels of five and ten years ago. Banks have been pushed to increase capital levels and shareholders' equity is a key component of that. With that in mind, I will analyze some large regional banks.

Suntrust Banks, Inc. (NYSE:STI)

STI is one of the largest regionals in America with about $172 billion in assets, and an overall footprint across most southern and mid Atlantic states. STI has the bulk of its business in Florida and Georgia, and therefore took quite a hit during the recent recession as those two states were saddled with among the highest foreclosure rates in the country.

STI was recently trading at a little under $17 per share, near the low end of its 52 week range of from $33.14 to $16.41. It has a market capitalization of about $9 billion, and a P/E of 16. It pays a current annual dividend of $0.20 per share, for a yield of 1.20%.

In its third quarter of 2011, STI showed continuing signs of emerging from its two years of steady losses. In the most recent quarter, it earned a return on assets and on equity of 0.45% and 3.54% respectively. STI's Tier One capital ratio was 9.25%... Its efficiency ratio was a tragically high 71.05%.

STI possibly suffered more than any other regional bank when real estate markets in Florida and Georgia imploded in 2007 – 2009. In 2006, STI reserved $262 million for loan losses. In 2009, it reserved $4.06 billion. It sold its vaunted stake in the Coca Cola Company (NYSE:KO) for nearly $2 billion between 2008 and 2009 in an effort to raise capital. Thankfully, its reserve for loan losses at current trends will fall to about $1.7 billion this year.

A purchase of STI is little more than a bet on the economies of Florida and Georgia. I have held STI stock a long time, and view now as a buying opportunity. But I know that STI is not for everyone, and is certainly not for the risk adverse.

Fifth Third Bancorp (NASDAQ:FITB)

FITB is a large, Cincinnati based bank with about $111 billion in assets. It has large operations in both Michigan and Florida, which caused the company huge distress over the past few years. But as loan losses have fallen, so too has FITB returned to the black

In the third quarter of 2011, FITB's return on assets and equity were 1.30% and 11.9%., respectively. Its Tier One ratio was 11.9%, and its efficiency ratio was 60.4%. FITB is riding a long term, it hopes, trend of improving credit ratios.

FITB was trading recently at a little over $11 per share. Its 52 week range is from $15.95 to $9.13. Its market capitalization is about $10.5 billion, and its P/E is 9.5. It pays an annual dividend of $0.32, for a yield of 2.9%

Prior to the recession last decade, FITB was thought of as one of the most profitable of regional Midwestern banks. In the early and mid 2000's, its return on assets often approached and once exceeded 2.0%. Its profitability now is being driven by an improving credit landscape. Once it improves enough for FITB's conservative underwriters to allow revenues to grow, FITB will again become among the most profitable of banks. Now may be the time to hop aboard.

PNC Financial Services Group (NYSE:PNC).

Pittsburgh based PNC is a true super regional bank, with branches throughout the Midwest and mid Atlantic states, and some $270 billion in assets. Whereas banks such as STI and FITB dealt with a series of quarterly losses, PCN has had only quarterly loss in the last five years.

PNC was trading recently at about $51 per share. Its 52 week range is from $65.19 to $42.70. Its market capitalization is $26.7 billion, and its P/E is 8. It pays an annual dividend of $1.40, for a yield of 2.9%.

In the recently concluded third quarter of 2011, PCN return on assets and equity was 1.28% and 9.72%, respectively. Its Tier One capital ratio was 10.5%, and its efficiency ratio was 60%. All in all, a very solid set of numbers.

PNC has the financial flexibility to make acquisitions. PNC purchased assets from BankAtlantic earlier this year, and has reached agreement with Royal Bank of Canada (NYSE:RY) to purchase its United States retail assets for $3.5 billion, which would greatly expand PNC's presence in the southeast part of the country.

PNC has committed to stop its share repurchase programs, and likely will not soon be raising its dividend as a result of the RY deal. That certainly seems prudent, and analysts favor the stock with a mean rating of 1.9. I see PNC as a buy and hold candidate and encourage additional research.

US Bancorp (NYSE:USB)

Minneapolis based USB is America's fifth largest bank by assets with about $330 billion. It has a retail presence across the entire northwest half of the United States, and also does investment advisory and related services in Europe and Brazil.

USB has been trading recently for a little under $25 per share, near the midpoint of its 52 week range of from $28.94 to $20.10. Its market capitalization is about $47 billion, and its P/E is 10.9. It pays an annual dividend of $0.50, for a yield of 2.1%

In its third quarter of 2011, USB posted an outstanding 1.57% return on assets, and a return on equity of 16.1%. Its Tier One capital ratio is 10.8%. USB has a long history of being an extremely efficient bank. Its third quarter of 2011 efficiency ratio of 51.5% bears that out. Simply put, there is no more efficient or profitable bank in the country.

Unlike other banks here that have built earnings gains on the backs of lowered or recaptured loss reserves, USB is actually growing its business. New lending activity, for instance, was up nearly $60 billion in the third quarter of 2011 versus 2010.

I like USB, and am not alone. The mean analyst rating is a somewhat strong 2.1. Uber investor Warren Buffett has a long term stake now at 69 million shares, worth about $1.7 billion. USB is a top quality, buy and hold type of situation.



Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: 4 'Super Regional' Banks To Consider