SOURCE: Research Driven Investing

Research Driven Investing

January 25, 2013 08:20 ET

Regional Banks Fourth Quarter Earnings Driven by Loan Growth

Research Driven Investing Provides Stocks Research on Firstmerit and KeyCorp

NEW YORK, NY--(Marketwire - Jan 25, 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 2.4 percent in the past week, while the broader SPDR KBW Bank ETF (KBE) has gained 1.9 percent over the same period. Research Driven Investing examines investing opportunities in the Regional Banking Industry and provides equity research on Firstmerit Corp. (NASDAQ: FMER) and KeyCorp (NYSE: KEY).

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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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FirstMerit is a diversified financial services company with assets of $14.6 billion as of September 30, 2012 and 196 banking offices and 204 ATM locations in Ohio, Western Pennsylvania, and Chicago, Illinois areas. The company reported a net income of $38.2 million in the fourth quarter of 2012, compared to a net income of $30.5 million in the fourth quarter of 2011.

As one of the nation's largest bank-based financial services companies, Key has assets of approximately $87 billion. "We had a good finish to 2012," said Chairman and CEO Beth E. Mooney. "Our full-year results reflect success in executing on our strategies to grow loans, add additional payment capabilities to our product line in the form of credit cards and improved mobile banking, and moving forward on our efficiency initiative."

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