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North-East, Mid-Atlantic & Mid-West Regional Banks 06-30-15

Theory - If you don't know ROEs - then you don't know banks. Banks sell at P/E ratios and price to book ratios that fit their ROEs (or Returns of Equity). If that attribute is the major influence on price - then it has to also influence yields. ROEs are the metric that 'makes sense' of the other valuations. Here is the evidence to support that theory:

The Predictive Power of ROEs on Price/Book Ratios:
The following companies had ROEs in Q1-15 of less than 7.00%: ASB, FMBI, MBFI, SNV, SUSQ and VLY. Their mean price gain for the year is 8.46%. Their mean total return for the year is 9.71% - and 4 of the 6 beat the sector median yearly price gain [5.65%] and they sold at an average price/book ratio of 1.23.
The following companies had ROEs in Q1-15 of greater than 7.00% but less than 9.00%: CMA, FMER, FULT, MTB, NBTB and ONB. Their mean price gain for the year is 3.62%. Their mean total return for the year is 5.03% - and 3 of the 6 beat the sector median yearly price gain [5.65%] and they sold at an average price/book ratio of 1.25.
The following companies had ROEs of more than 9.00%: BBT, CHCO, FITB, HBAN, NTRS and USB. Their mean price gain for the year is 4.86%. Their mean total return for the year is 6.16% - and 3 of the 6 beat the sector median yearly price gain and they sold at an average price/book ratio of 1.66.

North-East, Mid-Atlantic & Mid-West Regional Banks 06-30-15

Yields below are based on the Q2-15 dividends. Price/book ratios are based on the Q1-15 book values. The change in book compares Q1-14 to Q1-15. The change in the dividend compares Q2-14 to Q2-15. SNV did a 7 to 1 reverse stock split on 5-16-14 - and that reverse is not reflected in the data.


    12-31-14 Current Dividend Current Div/EPS Pr/Bk YTD Percent Change LTM
Company Price Price /Quarter Yield Ratio Ratio Price Pr+Div 15 EPS Target Book Div

Associated Banc-Corp (NYSE:ASB) 18.42 20.27 0.10 1.97% 32.79 1.09 10.04 11.13 -3.17 3.96 5.84% 11.11%
BB&T Corporation (NYSE:BBT) 38.89 40.31 0.27 2.68% 38.43 1.34 3.65 5.04 -4.42 4.00 4.99% 12.50%
City Holding Co. (NASDAQ:CHCO) 46.53 49.25 0.42 3.41% 51.85 1.91 5.85 7.65 0.62 5.62 6.31% 5.00%
Comerica Incorporated (NYSE:CMA) 46.84 51.32 0.21 1.64% 27.91 1.24 9.56 10.46 -5.35 2.36 5.06% 5.00%
First Third Bancorp (NASDAQ:FITB) 20.38 20.82 0.13 2.50% 31.33 1.20 2.16 3.43 -4.05 -2.77 9.59% 0.00%
First Midwest Bancorp (NASDAQ:FMBI) 17.11 18.97 0.09 1.90% 31.03 1.34 10.87 11.92 -4.92 3.40 5.60% 12.50%
FirstMerit Corporation (NASDAQ:FMER) 18.89 20.83 0.16 3.07% 45.39 1.26 10.27 11.96 -4.08 4.15 5.31% 0.00%
Fulton Financial Corp. (NASDAQ:FULT) 12.36 13.06 0.09 2.76% 41.86 1.17 5.66 7.12 -3.37 3.10 4.04% 12.50%
Huntington Bancshares (NASDAQ:HBAN) 10.52 11.31 0.06 2.12% 29.63 1.55 7.51 8.65 1.25 9.43 7.29% 20.00%
MB Financial (NASDAQ:MBFI) 32.86 34.44 0.17 1.97% 33.33 1.34 4.81 5.84 -6.85 2.01 5.98% 41.67%
M&T Bank Corporation (NYSE:MTB) 125.62 124.93 0.70 2.24% 35.67 1.49 -0.55 0.57 -7.65 2.61 4.81% 0.00%
NBTB Bancorp (NASDAQ:NBTB) 26.27 26.17 0.22 3.36% 52.38 1.33 -0.38 1.29 -5.62 -1.48 4.50% 4.76%
Northern Trust Corp, (NASDAQ:NTRS) 67.40 76.46 0.38 1.99% 39.48 2.21 13.44 14.57 4.90 12.74 4.79% 15.15%
Old National Bancorp. (NYSE:ONB) 14.88 14.46 0.12 3.32% 50.53 1.15 -2.82 -1.21 -17.39 -6.39 7.09% 9.09%
Synovus Financial Corp. (NYSE:SNV) 3.87 4.40 0.01 1.27% 24.35 1.44 13.70 14.42 0.00 13.62 5.08% 40.00%
Susquehanna Bancshares (NASDAQ:SUSQ) 13.43 14.12 0.09 2.55% 49.32 0.93 5.14 6.48 -3.95 4.08 3.81% 12.50%
US Bancorp (NYSE:USB) 44.95 43.40 0.24 2.26% 30.43 2.00 -3.45 -2.36 -1.83 3.26 8.40% 0.00%
Valley National Bancorp (NASDAQ:VLY) 9.71 10.31 0.11 4.27% 75.86 1.28 6.18 8.44 -6.45 1.41 3.08% 0.00%

Average         2.52% 40.09 1.38 5.65 6.97 -4.02 3.62 5.64% 11.21%

The KBE [the Bank EFT] is up 8.08% year to date - and with dividends is up 8.84% year to date.
With the 10 Treasury at 2.35% and the sector average yield on Q2-15 dividends at 2.52% - the spread is 17 basis points.

The high and low 2015 EPS projection data was gathered this morning.

Banks Price/EPS Ratios 06-30-15


  EPS / Share % EPS Growth Price/EPS 15 EPS Range
Co. 2012 2013 2014 2015 2016 12-13 13-14 14-15 15-16 2014 2015 2016 High Low Range

ASB 0.99 1.10 1.16 1.22 1.36 11.11 5.45 5.17 11.48 17.47 16.61 14.90 1.25 1.20 4.10%
BBT 2.69 2.89 2.73 2.81 3.30 7.43 -5.54 2.93 17.44 14.77 14.35 12.22 3.01 2.67 12.10%
CHCO 2.73 3.06 3.38 3.24 3.32 12.09 10.46 -4.14 2.47 14.57 15.20 14.83 3.30 3.16 4.32%
CMA 2.66 3.00 3.16 3.01 3.46 12.78 5.33 -4.75 14.95 16.24 17.05 14.83 3.15 2.90 8.31%
FITB 1.63 2.02 1.66 1.66 1.79 23.93 -17.82 0.00 7.83 12.54 12.54 11.63 1.75 1.56 11.45%
FMBI 0.10 1.06 0.92 1.16 1.29 960.00 -13.21 26.09 11.21 20.62 16.35 14.71 1.22 1.09 11.21%
FMER 1.20 1.18 1.39 1.41 1.56 -1.67 17.80 1.44 10.64 14.99 14.77 13.35 1.45 1.39 4.26%
FULT 0.79 0.83 0.84 0.86 0.93 5.06 1.20 2.38 8.14 15.55 15.19 14.04 0.90 0.78 13.95%
HBAN 0.68 0.72 0.72 0.81 0.89 5.88 0.00 12.50 9.88 15.71 13.96 12.71 0.85 0.78 8.64%
MBFI 1.59 1.79 1.31 2.04 2.34 12.58 -26.82 55.73 14.71 26.29 16.88 14.72 2.10 2.01 4.41%
MTB 7.54 8.38 7.45 7.85 9.24 11.14 -11.10 5.37 17.71 16.77 15.91 13.52 8.56 7.38 15.03%
NBTB 1.64 1.65 1.71 1.68 1.76 0.61 3.64 -1.75 4.76 15.30 15.58 14.87 1.70 1.64 3.57%
NTRS 2.89 3.00 3.28 3.85 4.44 3.81 9.33 17.38 15.32 23.31 19.86 17.22 4.00 3.75 6.49%
ONB 0.95 1.00 0.95 0.95 1.11 5.26 -5.00 0.00 16.84 15.22 15.22 13.03 1.04 0.88 16.84%
SNV 0.10 0.14 0.19 0.23 0.27 40.00 35.71 21.05 17.39 23.16 19.13 16.30 0.24 0.22 8.70%
SUSQ 0.84 0.92 0.78 0.73 0.75 9.52 -15.22 -6.41 2.74 18.10 19.34 18.83 0.75 0.69 8.22%
USB 2.87 3.00 3.08 3.22 3.50 4.53 2.67 4.55 8.70 14.09 13.48 12.40 3.32 3.12 6.21%
VLY 0.74 0.63 0.59 0.58 0.70 -14.86 -6.35 -1.69 20.69 17.47 17.78 14.73 0.62 0.50 20.69%

Average           -0.52 7.55 11.83 17.34 16.07 13.62

Disclosure: I am/we are long USB.