Regional Banks Fourth Quarter Earnings Driven by Loan Growth

NEW YORK, NY -- (Marketwire) -- 01/23/13 -- Strong earnings from regional banks have helped them outperform their larger counterparts in recent weeks. The SPDR KBW Regional Banking ETF (KRE) has gained 2.25 percent in the past week, while the broader SPDR KBW Bank ETF (KBE) has gained 1.45 percent over the same period. Research Driven Investing examines investing opportunities in the Regional Banking Industry and provides equity research on Regions Financial Corporation (NYSE: RF) and Synovus Financial Corp. (NYSE: SNV).

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Loan growth has been a key driver for regional banks' earnings in recent quarters. An increased number of smaller business loans helped regional banks offset the low spreads and profit margins the larger banks face. Another key factor for growth has been the recent refinancing boom.

"We've benefited from a refinancing boom and that has augmented our results fairly significantly," said Dan Poston, Fifth Third's chief financial officer. "The bigger banks have more onerous regulatory concerns, whether that's the capital they are required to hold, or new regulations that impact their trading or derivatives books."

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Regions Financial, with $122 billion in assets, is a member of the S&P 500 Index and is one of the nation's largest full-service providers of consumer and commercial banking, wealth management, mortgage, and insurance products and services. The company reported a net income of $1.1 billion, or $0.19 per diluted share, for the full year 2012.

Synovus is a financial services company with $26 billion in assets based in Columbus, Georgia. For the fourth quarter of 2012, the company reported a net income of $712.8 million, compared to a net income of $12.8 million in the fourth quarter of 2011. Net loan growth was roughly $345 million sequentially, compared to $240 million in the previous quarter.

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