SOURCE: The Bedford Report

The Bedford Report

January 26, 2011 08:46 ET

Financial Strength Comes Into Question for Some Regional Banks

The Bedford Report Provides Analyst Research on Synovus & Zions Bancorp

NEW YORK, NY--(Marketwire - January 26, 2011) - Dividend paying companies are attracting a lot of attention right now. Investors usually count on dividend paying stocks during hectic times in the market, believing in the company's security and real earnings power. Additionally, when interest rates get as low as they currently are, the return on dividends can far exceed that of bonds. Before the financial crisis, major banks were reliable source of dividends, but by mid-2009 most banks had substantially reduced, or altogether cut, their dividend payments. Hopes are that a few stronger banks could resume healthy dividend payments by March however there is concern that the new and stricter regulatory guidelines will continue to make it challenging for Regional Banks to boost their dividend payments. The Bedford Report examines the outlook for companies in the Regional Banking Sector and provides research reports on Synovus Financial Corporation (NYSE: SNV) & Zions Bancorp (NASDAQ: ZION). Access to the full company reports can be found at:

The Wall Street Journal reported this month that several banks have submitted their capital plans to the Federal Reserve, part of a stress test to figure out which banks are healthy enough to resume dividends or buy back their own stock. In November Federal Reserve issued guidelines that banks could issue dividends if they could meet capital requirements and have made their required payments under the Troubled Asset Relief Program.

Banks will also have to adhere to a new set of capital standards known as Basel III, if they hope to increase dividends. According to the Basel Committee on Banking Supervision, Basel III will set a tougher standard for the quality of capital as well as the assessment of risks on a bank's balance sheet. According to the proposals under Basel III, only if a bank operating in a steady economic environment maintains a Tier 1 capital ratio of 12% would it be allowed to pay or increase common dividends.

The Bedford Report releases regular market updates on the Regional Banking sector so investors can stay ahead of the crowd and make the best investment decisions to maximize their returns. Take a few minutes to register with us free at and get exclusive access to our numerous analyst reports and industry newsletters.

The Fed also explained that banks which have yet to repay the government bailout money received through the US Treasury Department's Troubled Assets Relief Program (TARP) will not be allowed to increase their dividend payments. This will disqualify many Regional Banks. Regional Banks have struggled to return to profitability following the financial crisis largely due to a weaker-than-expected rebound in loan demand.

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