BTC iShares U.S. Regional Banks ETF

The PNC Financial Services Group’s (PNC) revenue net of interest expense remained flat in 2016 and grew 8% in 2017.

To stop the economy from going into deflation, reflationary measures are sometimes necessary.

Huntington’s peers have outperformed the company based on EPS. However, Huntington Bancshares is way ahead of its peers based on forward PE and PBV.

This article focuses on SunTrust’s Consumer Banking and Private Wealth Management segment.

The Wholesale Banking segment’s net interest income increased in 2014 compared to 2013.

SunTrust’s Mortgage Banking segment reported a net loss of $56 million for 2014 compared to a net loss of $527 million for 2013.

Since 2010, the loan portfolio of SunTrust Bank (STI) has had a compound annual growth rate (or CAGR) of 3.5%. Commercial loans have had a CAGR of 8.2%.

STI’s deposit growth is clearly lagging behind the industry average. Other banks are experiencing strong growth in this area.

SunTrust Bank’s net interest income in 2014 remained stable compared to 2013 as strong loan growth offset the decline in net interest margin.

SunTrust Bank’s return on equity is 8%, which is 18% lower than the industry average.

SunTrust provides a broad range of consumer and wholesale banking, mortgage banking, and private wealth management services.

BB&T is more widely represented in ETFs focused on the banking sector. The SPDR S&P Bank ETF (KBE) has BB&T comprising ~1.6% of its portfolio.

BB&T’s loan and deposit growth is marginally below the industry average. Its ROE and price-to-book ratio are close to the peer average.

When a borrower isn’t able to pay back the loan, the loan is considered a non-performing asset (or NPA)—since the money for lending came from a depositor, the bank needs a large enough pool of capital to withstand such a shock.

Generally, the interest charged from those who took the loans is higher than the interest paid to depositors—the difference in the interest earned and interest paid is the interest income that is essentially the money made by the bank from its core operations.

There a large number of players that are each vying for share in the same market—there are a few large players who are present across the U.S., but most banks have pockets of strength.

The first challenge is that banks are highly regulated and any change in regulations has a huge impact on the valuation of a bank—the second challenge is that it’s difficult to determine cash flow for a bank because both debt and reinvestment are difficult to calculate.