4 Regional Banks With Upside: U.S. Bancorp (USB) and More

With an average daily volume of 1.13 million, FirstMerit has a book value of $15 per share at the end of the fourth quarter of 2012. Currently the stock is trading at 3% premium to its book value. Analysts covering the stock have a consensus outperform recommendation for FirstMerit, with 25% of them recommending their investors buy the stock, while another 19% rate the stock outperform. A majority, i.e., 50% of the analysts rate the stock hold. The consensus mean target price for the stock is $16.58, representing an upside of 7.5%.

Regions Financial Corporation (NYSE:RF)

Driven by continued growth in middle market commercial and industrial and indirect auto lending, Regions Financial reported a bottom line of $261 million at the end of the fourth quarter. The improvement in results was partially offset by declines in other loan portfolios. During the quarter, the bank’s asset quality improved as its non-performing assets declined $296 million, or 13% over the linked quarter, while net charge-offs decreased 31% over the same time period. The bank reported a tier 1 capital ratio of 12% at the end of the most recent quarter.

Analysts covering the stock have a consensus outperform recommendation for Regions Financial, with 14% of them recommending their investors buy the stock, while another 31% rate the stock outperform. A majority, i.e., 48% of the analysts rate the stock hold. The consensus mean target price for the stock is $8.25, representing an upside of 5.1%. The of Regions Financial has an average daily volume of 17.2 million, while according to its fourth quarter book value of $10.63, its share are trading at 26% discount.

Conclusion

The aforementioned banks have continued to show strength in their results, which is why a majority of analysts rate them outperform. These banks, besides providing an upside potential, possess strong balance sheets, coupled with improving capital positions. Therefore, I recommend investors invest in them.

The article 4 Regional Banks With Upside originally appeared on Fool.com and is written by Adnan Khan.

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