Bank Earnings Versus Actual Book Values (CMA, NYB, NTRS, RF, SBIB, STT, USB)

We are seeing several key bank earnings now that our two DJIA component-banks have already reported earnings.  We have briefly given note of the earnings report on each bank this morning, but our focus right now is on book value.  We have evaluated Comerica Incorporated (NYSE: CMA), New York Community Bancorp, Inc. (NYSE: NYB), Northern Trust Corporation (NASDAQ: NTRS), Regions Financial Corp. (NYSE: RF), Sterling Bancshares, Inc. (NASDAQ: SBIB), State Street Corporation (NYSE: STT), and U.S. Bancorp (NYSE: USB).

Comerica Incorporated (NYSE: CMA) beat earnings estimates with 8% growth this morning at $0.57 EPS versus Thomson Reuters consensus estimates of $0.48 EPS. The bank cited reduced credit costs, expense controls, corporate loan growth, and more. Book value per common shares was listed as $33.25 as of March 31 and shares closed at $37.46 on Monday with a 52-week trading range of $33.11 to $45.85.

New York Community Bancorp, Inc. (NYSE: NYB) missed earnings estimates by $0.03 EPS at $0.28 EPS versus estimates of $0.31 from Thomson Reuters.  The bank’s margin was 17 basis points wider from a year ago but three basis points narrower sequentially.  The bank said its interest rate spread and net interest margins were hit by the same factors affecting interest income.  Book value per share fell $0.02 sequentially to $12.67 per share, while tangible book value grew $0.03 sequentially to $6.94 per share.  Shares closed at $17.08 yesterday and the 52-week trading range is $14.40 to $19.33.

Northern Trust Corporation (NASDAQ: NTRS) posted earnings of $0.61 EPS, down from $0.64 last quarter.  Net income was slightly lower sequentially and year over year at $151 million.  Return on average common equity was 8.9% versus 9.9% a year earlier and 9.1% a quarter earlier.  Northern Trust is often treated more like an asset manager than as a bank as you will see in book value comparisons: book value was $28.65 at the end of March, versus a close of $51.40 yesterday and versus a 52-week trading range of $45.30 to $58.37.

Regions Financial Corp. (NYSE: RF) is not deemed as being of the same quality as many banks. The earnings were $0.01 EPS versus -$0.10 EPS expected as a loss at Thomson Reuters. The bank noted that delinquencies declined again, criticized and classified fell again, non-performing loans declined by 23%, charge-offs fell by 29%, net interest margin improved again, and non-interest expenses fell 8%.  Regions showed that its tangible book value per common share was $6.00 per share.  Shares closed at $6.98 on Monday and the 52-week trading range is $5.12 to $9.33.

Sterling Bancshares, Inc. (NASDAQ: SBIB) reported a net loss of $370 thousand, which rounds up to $0.00 EPS.  That as $0.02 shy of the Thomson Reuters estimate of $0.02 EPS.  As this has a pending merger with Comerica it doesn’t really matter.  Book value per common shares was listed as $6.10 per share, well under its $8.76 price.

State Street Corporation (NYSE: STT) managed to beat earnings by $0.02 with $0.88 EPS versus $0.86 expected from Thomson Reuters as revenues from operations grew about 10%.  The return on average common equity was 9.9% versus 10.0% in Q1-2010.  Tier 1 common was 17.5%, assets under management grew by more than 5% to $2.12 trillion; assets under custody and administration grew about 5% to $22.6 trillion. State Street is also treated differently than other banks due to its asset management and custodial role.

U.S. Bancorp (NYSE: USB) beat earnings by $0.03 at $0.52 EPS versus the $0.55 estimate from Thomson Reuters.  Revenues rose over 4% to $4.52 billion, short of the $4.56 billion expected.  The bank saw a reduction in the provision for credit losses and it saw a small gain in the buy of First Community Bank of New Mexico. Average loan growth was 2.4% or 1.1% excluding acquisitions; non-performing assets fell 4.7%.  Book value rose by $0.47 to $14.83 per common share.  Shares closed at $25.56 Monday and the 52-week range is $20.44 to $28.94.

Book value comparisons are often a help, sometimes thay are not.  Some are trading relatively tight to book value while others are at substantial premiums.

 JON C. OGG