Buying Branches Hits Top Banks' EPS, But Loan Growth And Deposits Grow

Includes: BBT, COF, JPM, STI, USB, WFC
by: Christopher Menkin

In data analyzed by SNL Financial for 319 major banks and thrifts, 71% reported an earnings per share year-over-year increase. Forty five percent saw earnings per share increase over the third quarter.

The 17 largest reported a decline, and as noted in many were buying distressed banks and their branches, while others still had high problem mortgages. With recent settlements with the top five banks with

many of the state attorneys general, the bottom line will be effected also hitting the earnings per share

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SNL Financial reported, "U.S. Bancorp (NYSE:USB), BB&T Corp. (NYSE:BBT) and Wells Fargo & Co. (NYSE:WFC) were the only banks in the top 20 to grow EPS from the prior quarter. Earnings per share increased 5 cents, 3 cents and 1 cent, respectively.

"Earning trends looked more impressive for banks with assets less than $1 billion. Of these banks, 56% saw their EPS increase over the third quarter of 2011," according to SNL Financial. "Less than half of banks between $1 billion and $10 billion in assets grew earnings per share from the prior quarter. To date, about 93% of companies have been profitable."

"Despite earnings being poorer than prior quarters for most of the largest 20 banks and thrifts, 14 were able to grow loan portfolios. Capital One Financial Corp. (NYSE:COF), JPMorgan Chase & Co. (NYSE:JPM) and SunTrust Banks Inc. (NYSE:STI) all posted strong quarterly growth of more than 4%. It should be noted Capital One mentioned in its earnings release that most of its growth occurred in the last few weeks of the year.

FDIC records indicate banks and thrifts with at least $10 billion in assets, 71% saw loan growth from the prior quarter. Only 59% of midsize and 44% of small banks were able to grow loans in the fourth quarter of 2011. They will need to look for new products to market

to improve their growth.

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