FBR Capital on Regional Banks: Dividend Increases Could Provide the Next Lift; Will It Last?
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Price: $7.64 -1.04%
Rating Summary:
13 Buy, 23 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
13 Buy, 23 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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FBR Capital on Regional Banks: Dividend Increases Could Provide the Next Lift; Will It Last?
FBR analyst said, "The Federal Reserve recently released the results of its Supervisory Capital Assessment Program to the nineteen financial institutions considered systemically important to the health of the U.S. economy. Most banks immediately responded to the results with increases in dividends and share buybacks or at least commented that the Fed accepted their capital plans. In the case of SunTrust (NYSE: STI) and KeyCorp (NYSE: KEY), they received approval to raise capital and pay back TARP. We generally thought the dividend and share-buyback increases were slightly more aggressive than what we expected to be announced immediately following the Fed's stress test. These announcements should draw incremental buyers into the financial space; however, we believe the rally may not last as there are few foreseeable catalysts on the horizon, apart from earnings. Overall, we remain positive on the space as credit continues to improve, earnings are moving towards more normalized levels, and capital is starting to be returned to shareholders in earnest. Due to the recent announcements, we are increasing our FY12E EPS for KEY to $0.85, from $0.80, and USB to $2.35, from $2.25; for STI, we are increasing our FY11E EPS to $1.08, from $1.00, and FY12E EPS to $2.25, from $2.00."
FBR analyst said, "The Federal Reserve recently released the results of its Supervisory Capital Assessment Program to the nineteen financial institutions considered systemically important to the health of the U.S. economy. Most banks immediately responded to the results with increases in dividends and share buybacks or at least commented that the Fed accepted their capital plans. In the case of SunTrust (NYSE: STI) and KeyCorp (NYSE: KEY), they received approval to raise capital and pay back TARP. We generally thought the dividend and share-buyback increases were slightly more aggressive than what we expected to be announced immediately following the Fed's stress test. These announcements should draw incremental buyers into the financial space; however, we believe the rally may not last as there are few foreseeable catalysts on the horizon, apart from earnings. Overall, we remain positive on the space as credit continues to improve, earnings are moving towards more normalized levels, and capital is starting to be returned to shareholders in earnest. Due to the recent announcements, we are increasing our FY12E EPS for KEY to $0.85, from $0.80, and USB to $2.35, from $2.25; for STI, we are increasing our FY11E EPS to $1.08, from $1.00, and FY12E EPS to $2.25, from $2.00."
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