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Handicapping Earnings From 5 Regional Banks

NEW YORK ( TheStreet) -- Today I'm going to provide my valuation analysis and trading levels for five regional banks that report this week: Zions Bancorporation (ZION - Get Report), Regions Financial (RF - Get Report), Synovus Financial (SNV - Get Report), Cullen Frost Bankers (CFR - Get Report) and First Niagara Financial (FNFG - Get Report).

Last week, 13 components of the KBW Bank Index reported earnings, and the performance of their stocks was mixed for the week.

Winners included M&T Bank (MTB) and U.S. Bancorp (USB), while Citigroup (C) and Bank of America (BAC) were among the losers.

Some of the factors weighing on the sector include uncertainty over Europe's debt crisis, pressure on revenue from low interest rates, and stronger banking regulations that are on the horizon.

The biggest banks face pressure to buy back bad mortgages that were sold to investors, and this problem could last for years. The big banks are also moving toward shutting down proprietary trading desks in preparation for the Volcker Rule.

The banks on my radar screen this week include four members of the KBW Bank Index, which is my benchmark for 24 of our nation's biggest FDIC-insured financial institutions.

The BKX declined 2.27% last week but is still up 37.8% since October 2011 and 13.9% so far this year.

Even so, the index has been moving sideways or lower since mid-March, tracking its declining 200-week simple moving average at 44.87.

The daily chart shifted to negative on Friday with declining momentum (12x3x3 daily slow Stochastic), and the index closed Friday below its 21-day simple moving average at 45.22.

The key 50-day and 200-day simple moving averages are 44.47 and 43.33, respectively.

My annual value level is 42.98 with weekly and quarterly pivots at 45.25 and 46.03, respectively. My monthly risky level is 48.61, while the March 19 high was at 50.69.

Source: Thomson Reuters

Now let's look at the five regional banks that report earnings this week.

Zions Bancorp has real estate loan exposure and a loan pipeline that are considered healthy according to the first-quarter FDIC Quarterly Banking Profile, but the stock trades at 65% of its book value.

The Treasury still holds a $700 million TARP investment in this bank. ZION has a negative daily chart pattern with the stock between its 200-day simple moving average at $18.36 and its 50-day at $18.88.
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ZION $27.51 -1.19%
CFR $63.25 1.30%
FNFG $10.64 -0.93%
SNV $31.19 -1.30%
RF $9.42 -1.77%


Chart of I:DJI
DOW 17,830.76 -210.79 -1.17%
S&P 500 2,075.81 -19.34 -0.92%
NASDAQ 4,805.2910 -57.85 -1.19%

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