SOURCE: Research Driven Investing

Research Driven Investing

January 21, 2013 08:20 ET

Loan Growth a Key Driver for Regional Banks Earnings

Research Driven Investing Provides Stocks Research on Huntington Bancshares and U.S. Bancorp

NEW YORK, NY--(Marketwire - Jan 21, 2013) -  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 Huntington Bancshares Inc. (NASDAQ: HBAN) and U.S. Bancorp (NYSE: USB).

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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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Huntington Bancshares is a $56 billion regional bank holding company headquartered in Columbus, Ohio. Huntington operates in markets in Ohio, Michigan, Pennsylvania, Indiana and West Virginia. The company reported record net income of $641 million for full year 2012, an increase of 18 percent when compared to full year 2011.

U.S. Bancorp, with $352 billion in assets as of September 30, 2012, is the parent company of U.S. Bank, the fifth-largest commercial bank in the United States. U.S. Bancorp reported record full year 2012 net income of $5.6 billion, an increase of 15.9 percent when compared to full year 2011. Shares of the company have gained over 13 percent in the past year.

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