NEW YORK, NY -- (Marketwire) -- 03/27/12 -- Regional Banking stocks have been one of the top destinations for investors this year, as gains in net income and improving loan books have renewed confidence in the sector. The SPDR S&P Regional Banking ETF (KRE) has surged nearly six percent over the last month. Five Star Equities examines investing opportunities in the Regional Banking industry and provides equity research on Synovus Financial Corporation (NYSE: SNV) and US Bancorp (NYSE: USB). Access to the full company reports can be found:
According to the Federal Deposit Insurance Corporation's (FDIC) most recent quarterly assessment of the banking industry, banks posted their tenth consecutive year-over-year gain in quarterly net income, hitting $26.3 billion during the fourth quarter as two out of every three banks reported improved net income numbers. Full-year net income also hit a five-year high in 2011, reaching $119.5 billion for an almost 40 percent increase over 2010.
The banking industry set aside only $19.5 billion in loan-loss reserves in the fourth quarter -- more than 40 percent lower compared to the same period in 2010 -- as more than half of banks cut reserves.
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Loan books throughout the industry are once again growing. According to the FDIC, loan balances are up by $130.1 billion in the final quarter of 2011, a gain of 1.8 percent from a year ago. Commercial and industrial loan balances were up 4.9 percent in the quarter, credit card balances rose by 3.2 percent and residential mortgage loans bumped up 1.4 percent, as credit started to flow again.
Sterne Agee financial services analyst Todd Hagerman told CNBC recently that several of the larger regional banks have shown they are generating a "tremendous amount of excess capital" and returning "roughly midteens on tangible common equity, which is pretty healthy" in a depressed economy.
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