The US regional banks are showing the first signs of growth economically for the second quarter according to analysts. The nations’ biggest regional banks showed earnings that are evident of improvements in revenue and profit growth. The small business customer and retail base is what the regional banks are focused on because of the sensitivity of those to economic conditions. This data can be used as an early indicator of what’s going on. Analysts suggest that the problem with the economy is that the consumer isn’t as viable as they should be. The latest data regarding this second quarter might be an indicator that things will be improving for economic growth.
Breaking a downward trend of results, the two big regional banks US Bancorp and Huntingon Bankshares rose after eight quarters of flat earnings. This second quarter data showed an upward improvement. Reporting better than expected profit and growth in fee revenue is Hunting Bank. Their fee revenues were up 8% and their net interest margin was up 4% from 2013. It is reported that credit card fees and commercial lending was the reason that compensated for the lower mortgage banking revenues that all the other regional banks reported. As a result, Keefe, Bruette & Woods upgraded the stock to outperform thus raising its target price to $11.50 from $10 a share.
With loan and deposit growth upward by 7% and 10% every year, US Bancorp said that the revenues improved into the double digits. This second quarter data indicates that this could be the first in which core revenues start to improve. Low interest rates are why many regional banks suffer. The economic recovery is taking its toll on margins. Upto 12% was Regions Financial Corp’s profits thanks to increased lending and higher interest income. They’re one of the biggest lenders in the Southeast competing with BB&T Corp and SunTrust Banks Inc.. Regions also had been fined $51 million for misclassified loans during the earlier financial crisis by regulators.