10 Banks With Real Earnings Improvement

NEW YORK ( TheStreet) -- Blowing past the noise from the reserve releases that have padded large banks' bottom line over the past two quarters, TheStreet has identified 10 large banks that have significantly boosted their operating revenue.

For many large banks at this point in the credit cycle, it is appropriate, and even required by accounting rules, to release loan loss reserves. A case in point is Citigroup ( C), which reported third-quarter net income of $2.2 billion, boosted to a great degree by a $2 billion release of loan loss reserves, as net loan charge-offs exceeded the company's provision for loan loss reserves. A year earlier, Citigroup reported net income of just $175 million.

If we exclude loan loss provisioning activity, the story changes. Citigroup's pre-provision net revenue for the third quarter was $8.4 billion, declining from $11 billion during the third quarter of 2009, according to SNL Financial. SNL defines pre-provision net revenue as a bank's net interest income plus noninterest income, minus noninterest expenses.

While Citigroup's net interest income increased 8% year-over-year to $13.4 billion during the third quarter, the company's noninterest income (mainly commissions and fees) declined 38% to $6.75 billion. Noninterest expense declined 4% to $11.78 billion. The company's largest revenue decline was from its Local Consumer Lending unit, which is among the units Citigroup has placed into its Citi Holdings subsidiary, as part of CEO Vikram Pandit's strategy of winding-down certain business segments.

For JPMorgan Chase ( JPM), third-quarter net income was $4.4 billion and the while loan loss reserves declined by $1.675 billion, the company set aside $1 billion for mortgage purchase reserves and $1.3 billion in additional litigation reserves.

Despite the additional reserves springing from the foreclosure mess and other legal concerns, JPMorgan's net income increased 23% year-over-year, mainly because its provision for credit losses declined to $3.2 billion from $9.8 million. Pre-provision net revenue declined to $8.6 billion during the third quarter from $12.9 billion in the third quarter of 2009, as net interest income declined slightly to $12.6 billion and noninterest income declined 23% to $10.4 billion as investment banking fees declined 12%, lending and deposit fees declined 14% a credit card fee income declined 14%. The company's noninterest expenses increased 7% year-over-year, to $14.4 billion.

This is not to say that Citigroup and JPMorgan are bad choices for investors, as both companies have weathered the storm and JPMorgan is obviously strongly positioned for the years ahead. However, the numbers show that investors need to look deeper than the first paragraph of an earnings release to see the full story.

Using data provided by SNL Financial for the largest 50 U.S. bank holding companies by total assets, the following ten banks have had the largest year-over-year increases in pre-provision net revenue.

A few of the names have benefitted from purchases of failed banks from the Federal Deposit Insurance Corp. and some saw their operating earnings rise as a result of the consolidation of off-balance-sheet conduits onto their balance sheets during the first quarter, as required under new accounting rules..

Some of the other names may surprise you.

10. Regions Financial

Company Profile

Shares of Regions Financial ( RF) of Birmingham, Ala. closed at $5.54 Wednesday, returning 8% over the previous year.

Income Statement

Regions reported a third-quarter net loss to common shareholders of $209 million, or 17 cents a share, compared with a loss of $135 million, or 11 cents a share the previous quarter and a net loss to common shareholders of $437 million, or 37 cents a share, in the third quarter of 2009.

The improvement in the bottom line from a year earlier reflected a decline in the provision for loan losses to $760 million from $1 billion. Regions didn't release loan loss reserves during the third quarter, as its net charge-offs - loan losses less recoveries - matched the provision.

The good news for Regions was that third-quarter pre-provision net revenue was up 21% year-over-year to $462 million, as detailed below.

Net Interest Income totaled $876 million, increasing from $863 million the previous quarter and $853 million a year earlier, as the company's funding costs continued to decline. The third-quarter net interest margin - the difference between the average yield on loans and investments and the average cost of funds - was a tax-adjusted 2.96%, improving from 2.73% a year earlier. Non-interest bearing deposits increased 19% year-over-year to $25.3 billion as of September 30.

Noninterest Income totaled $748 million, declining 3% from a year earlier, as the company suffered a decline in fee income on deposit accounts as the changes to Regulation E -- requiring customers to opt-in for overdraft protection on ATM and debit card transactions - were implemented on August 15. Regions had previously projected that the changes would cost it $72 million in fee income for the second half of 2010, but lowered that projection to a range of $50 million to $60 million.

Noninterest Expense totaled $1.16 billion, declining 6% from a year earlier.

Balance Sheet

Total assets were $133.5 billion as of September 30 and nonperforming assets - including loans past due 90 days and nonaccrual loans (less government-guaranteed balances) and repossessed real estate - made up 3.70% of total assets, rising from 3.65% the previous quarter and 2.78% in September 2009. The annualized ratio of net loan charge-offs to average loans during the third quarter was 3.52% and loan loss reserves covered 3.77% of total loans as of September 30.

Regions Financial's Tier 1 capital ratio was 12.1% and its total risk-based capital ratio was 16.0% as of September 30, well above the 6% and 10% required for most banks to be considered well-capitalized by regulators. The company reported a tangible common equity ratio of 6.13%.

Since Regions owes the government $3.5 billion in bailout funds received through the Troubled Assets Relief Program, or TARP, shareholders face the risk of a dilutive capital raise.

During the most recent earnings conference call management was asked if the company's regulatory capital was sufficient, considering that tangible common equity was $7.8 billion while criticized assets totaled $6.2 billion. CEO David Turner said that "we feel like we are in good position from that standpoint," adding that Regions has "a robust capital planning process that we go through, including multiple scenarios, adverse scenarios."

Stock Ratios

Shares trade for 0.9 times tangible book value according to SNL Financial and 9.1 times the consensus earnings estimate of 61 cents a share in 2012 among analysts polled by Thomson Reuters.

Analyst Ratings

Analyst opinion on Regions is decidedly neutral, with just two out of 20 analysts covering the company recommending investors buy the shares, while 16 have hold ratings and two recommend investors part with the shares.

9. Capital One Financial

Company Profile

Shares of Capital One Financial of McLean, Va. closed at $38.27 Wednesday, declining 5% over the previous year.

Income Statement

Capital One reported third-quarter net income of $803 million, or $1.76 a share, increasing from $608 million, or $1.33 a share, in the second quarter and $195 million, or 43 cents a share during the third quarter of 2009.

The third-quarter provision credit losses was $867 million, increasing from $723 million the previous quarter and $144 million a year earlier. The overall earnings improvement was driven by a 22% year-over-year increase in pre-provision net revenue, to $2 billion. However, the majority of this increase came from the first-quarter consolidation of off-balance-sheet conduits as required by accounting changes.

Net Interest Income increased 55% from a year earlier, to $3.1 billion, reflecting the consolidation of off-balance-sheet trusts. Restricted loans for securitization investors on the balance sheet totaled $51.6 billion as of September 30, increasing from $15.5 billion a year earlier.

Noninterest Income, net of gains on securities and impairment losses, totaled $886 million during the third quarter according to SNL Financial, declining 37% from a year earlier, as revenue from securitizations dropped to $13 million from $721 million in the third quarter of 2009.

Noninterest Expense increased 12% year-over-year to $2 billion in the third quarter, with a large increase in marketing expenses.

Balance Sheet

Total assets were $135.6 billion as of September 30 and the nonperforming asset ratio was 3.59%, matching the previous quarter and rising from 3.36% a year earlier. The good news for asset quality was in the monthly data for credit card master trusts provided by SNL Financial. Capital One's annualized net charge-off ratio for cards in October was 6.52%, improving from 8.03% the previous month. Credit card delinquencies of 30 or more days were 4.69% at the end of October, improving for 12 straight months.

Capital One's Tier 1 leverage ratio was 7.68% and its total risk-based capital ratio was 16.40%. The tangible common equity ratio was 6.42%.

Stock Ratios

The shares trade for 1.5 times tangible book value and 8.1 times the consensus earnings estimate of $4.73 for 2011. The forward P/E drops to 7.7, based on the consensus earnings estimate of $5 a share for 2012.

Analyst Ratings

Out of 23 analysts covering Capital One, seven rate the shares a buy, 14 recommend investors hold and two recommend investors sell the shares. It would seem the majority of analysts are skeptical about the direction of the economy and/or Capital One's credit card business, as the shares are very cheaply priced relative to forward earnings projections and loan quality in the card portfolio is clearly improving.

8. Wintrust Financial

Company Profile

Shares of Wintrust Financial closed at $29.90 Wednesday, returning 8.5% over the previous year.

The company was one of five lenders featured among TheStreet's 5 Chicago Banks Poised for Long-Term Growth.

Income Statement

Third-quarter net income applicable to common shareholders was $15.2 million, or 47 cents a share, compared to $8.1 million, or 25 cents a share, the previous quarter $27.3 million, or $1.07 a share during the third quarter of 2009, when the company booked $113.1 million in gains on bargain purchases of failed banks from the FDIC.

Wintrust makes this list because of a boost to net interest income from the purchase of the failed Ravenswood Bank from the FDIC in August, after picking up the failed Wheatland Bank and Lincoln Park Savings in April.

Pre-provision net revenue for the third quarter was $42.5 million, increasing 26% year-over-year.

Net Interest Income for the third quarter was $103.4 million, increasing 17% from a year earlier, because of the acquisitions. The net interest margin was 3.22%, declining slightly from 3.25% a year earlier.

Noninterest Income for the third quarter totaled $38.8 million, increasing 2% year-over-year.

Noninterest Expense was $99.7 million during the third quarter, increasing 8% from the third quarter of 2009.

Following Wintrust's third-quarter earnings release, Howe Barnes Hoefer & Arnett analyst John Rodis cut his rating on the shares from buy to neutral and his 2011 earnings estimate to 80 cents a share from $2.71 a share, because of "lower levels of net interest income driven in part by lower net interest margin assumptions." He added that "on a more normalized basis...Wintrust can still earn in excess of $3.00 per share but it appears this will still be a few years out."

Balance Sheet

Total assets were $14.1 billion as of September 30, increasing 16% from a year earlier. The nonperforming assets ratio - again including loans past due 90 days or more, nonaccrual loans and repossessed assets - was 1.63%, declining from 1.69% in June and 2.24% in September 2009, according to data provided by SNL Financial. The third-quarter net charge-off ratio was 0.89% and loan loss reserves covered 1.09% of total loans as of September 30.

The company owes $250 million in TARP money. Its Tier 1 leverage ratio was 9.87% and its total capital ratio was 13.67% as of September 30. The tangible common equity ratio was 5.94%.

Rodis said that his firm doesn't "expect the Company to repay TARP proceeds in the near-term."

Stock Ratios

The shares trade for 1.1 times tangible book value according to SNL Financial and 18.5 times the consensus earnings estimate of $1.62 a share for 2011. Based on the consensus earnings estimate of $2.74 a share for 2012, the forward P/E would decline to 10.9.

Analyst Ratings

Out of 11 analysts covering Wintrust, two rate the shares a buy, while the other nine recommend investors hold the shares.

7. New York Community Bancorp

Company Profile

Shares of New York Community Bancorp closed at $16.69 Wednesday, and despite an increase of 52% over the previous year, still feature an attractive dividend yield of 5.99% based on a quarterly payout of 25 cents a share.

New York Community also makes this list because of a major acquisition. The company in December 2009 purchased $8 million in deposits and $11 billion in assets from the FDIC following the failure of AmTrust Bank of Cleveland. This was such a good deal for New York Community that the company booked an after-tax bargain purchase gain of $84.2 million, or 22 cents a share, during the fourth quarter of 2009.

While taking on almost no credit risk when it acquired part of AmTrust's assets - because of a loss-sharing agreement with the FDIC - New York Community acquired the failed lender's mortgage banking business, which has turned into a major profit center.

Income Statement

Third-quarter net income was $135.6 million, or 31 cents a share, compared to $136.3 million, or 31 cents a share, in the second quarter and $98.6 million, 28 cents a share, during the third quarter of 2009.

The third-quarter provision for loan loss reserves was $32 million, increasing from $22 million the previous quarter and $15 million in the third quarter of 2009. The third-quarter provision was nearly double the net loan charge-offs of $16.7 million.

Pre-provision net revenue for the third quarter was $245.1 million, increasing 53% from a year earlier.

Net Interest Income totaled $286.2 million during the third quarter, increasing 26% year-over-year. The net interest margin during the third quarter was 3.36%, compared to 3.42% the previous quarter and 3.17% in the third quarter of 2009.

Noninterest Income was $107.9 million for the third quarter, increasing from $28.3 million a year earlier, reflecting $76.5 million in mortgage banking income. In the third quarter of 2009, the bank didn't book any revenue from mortgage banking.

Noninterest Expense for the third quarter was $149 million, increasing 57% from a year earlier, but more than outweighed by the increase in noninterest expense.

The company's ratio of noninterest income to noninterest expense for the third quarter was 62.88%, increasing from 28.54% a year earlier.

Balance Sheet

Total assets were $41.7 billion as of September 30 and the nonperforming assets ratio was 1.76%, rising from 1.68% the previous quarter and 1.44% a year earlier. The company's third-quarter net charge-off ratio was a low 0.27% and loan loss reserves covered 0.53% of total loans as of September 30, according to SNL Financial.

New York Community Bancorp didn't participate in TARP. The company's Tier 1 leverage ratio was 8.87% and its total risk-based capital ratio was 14.35% as of September 30. According to SNL Financial, the tangible common equity ratio was 7.59%.

New York Community's traditional focus for its loan portfolio has been apartment buildings in the New York City area that feature below-market average rents, with many of the buildings being rent-controlled or rent-stabilized. This focus has led to a very strong track record of minimal loan losses.

Stock Ratios

The shares trade for 2.4 times tangible book value according to SNL, and 12.4 times the consensus earnings estimate of $1.35 a share for 2011. The forward P/E declines to 11.1 when based on the consensus earnings estimate of $1.50 a share for 2012.

Analyst Ratings

Out of 17 analysts covering the company, nine rate New York Community Bancorp a buy, while seven recommend holding the shares and one analyst recommends investors sell the shares.

New York Community's shareholders have benefited tremendously from the company's home-run acquisition of the most attractive parts of AmTrust's business. While it is not surprising that some analysts are cautious in light of the appreciation in the shares over the last year, new investors will still enjoy a well-supported dividend yield of close to 6%, a stable niche loan business with very strong credit quality, a mortgage banking business set to grow as the economy improves and a management team with an excellent track record.

6. First Niagara Financial

Company Profile

Shares of First Niagara Financial ( FNFG) of Buffalo New York closed at $12.31 Wednesday, down 4% over the previous year. Based on a quarterly payout of 15 cents, the shares yield 4.87%. The company raised the dividend from 14 cents a share when it announced its third-quarter results.

First Niagara acquired Harleysville National Corporation in April, bringing on 83 branches in eastern Pennsylvania and roughly $5.2 billion in assets. The company has agreed to acquire NewAlliance Bancshares of New Haven, Conn. for $1.5 billion in cash and stock, in a deal that is expected to be completed in April 2011.

First Niagara also purchased 57 National City Bank branches in Western Pennsylvania from in September 2009.

Income Statement

Third-quarter net income was $45.6 million, or 22 cents a share, increasing from $20 million, or 10 cents a share, the previous quarter and $10.9 million, or 7 cents a share in the third quarter of 2009.

The third-quarter provision for credit losses was $11 million, which was the same as the previous quarter, declining from $15 million a year earlier. Net charge-offs during the third quarter totaled $6.9 million, so the company was still building loan loss reserves.

Pre-provision net revenue totaled $83 million for the third quarter according to SNL Financial, increasing 54% year-over-year.

Net Interest Income for the third quarter was $164.2 million, increasing 64% from a year earlier, as total assets increased 48% to $20.9 billion as of September 30. The company reported a net interest margin of 3.61% for the third quarter, down slightly from 3.66% a year earlier.

Noninterest Income increased 61% year-over-year to $49.5 million in the third quarter.

Noninterest Expense totaled $130.7 million during the third quarter, increasing 69% from a year earlier.

Balance Sheet

First Niagara's nonperforming assets ratio was 0.75% as of September 30. The third-quarter net charge-off ratio was a low 0.27% and loan loss reserves covered 0.93% of total loans.

First Niagara fully repaid $184 million in TARP money in May 2009. As of September 30, 2010, the company's Tier 1 leverage ratio was 8.37% and its total risk-based capital ratio was 15.10%. The tangible common equity ratio was 8.63% as of September 30, according to SNL Financial.

Stock Ratios

The shares trade for 1.5 times tangible book value according to SNL and 12.1 times the consensus 2011 earnings estimate of $1.02 a share. The forward P/E drops to 10.7 based on the consensus 2012 earnings estimate of $1.15 a share.

Analyst Ratings

Out of 10 analysts covering First Niagara, six rate the shares a buy while four recommend investors hold.

5. SunTrust Banks

Company Profile

Shares of SunTrust ( STI) of Atlanta closed at $24.12 Wednesday, returning 11% over the previous year.

The company was one of 10 Regional Banks in the M&A Crosshairs, identified by analysts for TheSteet.

Income Statement

SunTrust was profitable for the first time in two years, reporting net income available to common shareholders of $84 million, or 17 cents a share, compared to a net losses to common shareholders of $56 million, or 11 cents a share, during the second quarter and $377 million, or 76 cents a share during the third quarter of 2009.

The third-quarter provision for credit losses was $615 million, declining from $662 million during the second quarter and $1.1 billion a year earlier. Since net charge-offs totaled $690 million during the third quarter, the company released $75 million in loan loss reserves.

Pre-provision net revenue for the third quarter was $749.7 million, increasing 60% from a year earlier.

Net Interest Income totaled $1.3 billion, increasing 8% year-over-year. The third-quarter net interest margin was 3.41%, increasing from 3.10% a year earlier.

Noninterest Income was $977.6 million, increasing 34% from a year earlier, as income from mortgage production increased to $133.3 million from $28.1 million in the third quarter of 2009. This increase more than offset the decline in service charges on deposit accounts to $183.9 million from $219.1 million the prior year.

Noninterest Expense totaled $1.5 billion and increased 5% year-over-year.

Balance Sheet

SunTrust had $174.7 billion in total assets as of September 30, and a nonperforming assets ratio - including loans past due 90 days or more, nonaccrual loans and repossessed assets - of 3.09%, improving from 3.34% in June and 3.76% in September 2009.

The company owes $4.85 billion in TARP money, and CEO Jim Wells expressed confidence during the company's third-quarter conference call that SunTrust was "well positioned to repay TARP" and that it would "repay at the appropriate time and in a fashion that makes the most sense from both our shareholder and regulatory perspectives." SunTrust is one of the 19 holding companies the Federal Reserve is requiring to submit capital plans including stress tests, by January 7.

SunTrust's Tier 1 leverage ratio was 11.03% and its total risk-based capital ratio was 16.42% as of September 30. The tangible common equity ratio was 7.10% according to SNL Financial.

Stock Ratios

The shares trade just above book value according to SNL and for 10.5 times the consensus 2012 earnings estimate of $2.30 a share.

Analyst Ratings

Out of 29 analysts covering SunTrust, six rate the shares a buy, 19 have hold ratings and four analysts recommend investors sell the shares.

4. East West Bancorp

Company Profile

Shares of East West Bancorp ( EWBC) of Pasadena, Calif. closed at $17.06 Wednesday, returning 19% over the previous year.

The company acquired the failed Washington First International Bank of Seattle in June - a move that greatly increased its business in the U.S. and in China -- and United Commercial Bank of San Francisco in November , 2009.

Income Statement

The company reported third-quarter income available to common shareholders of $40.2 million, or 27 cents a share, compared to $30.2 million, or 21 cents a share, the previous quarter and a net loss to common shareholders of $79.2 million, or 91 cents a share, during the third quarter of 2009.

The provision for loan losses during the third quarter was $38.6 million, declining from $55.3 million in the second quarter and $159.2 million in the third quarter of 2009.

Pre-provision net revenue for the third quarter was $110.3 million, increasing 84% year-over-year.

Net Interest Income totaled $182.8 million, increasing 90% from a year earlier, with East West Bancorp's growth in assets from its acquisitions.

Noninterest Income totaled $27.4 million, increasing from $10.2 million a year earlier, as income from service fees and loan sales increased, and the company booked $5.8 million in receivables from the FDIC.

Noninterest Expense was $99.9 million, increasing from $46 million a year earlier, which isn't surprising in light of the company's significant expansion from the acquisitions.

Balance Sheet

Total assets were $20.4 billion as of September 30, increasing 64% from a year earlier. The nonperforming assets ratio was 1.69% and the third-quarter net charge-off ratio was 1.33%. Loan loss reserves covered 1.80% of total loans as of September 30.

The company owes $306.5 million in TARP money. CEO Dominic Ng said during the company's third-quarter conference call that East West Bancorp's plan was to "pay back TARP in the fourth quarter," and that the bank was "the process of just basically waiting for the regulators" for approval to do so.

The Tier 1 leverage ratio was 10.75% and the total risk-based capital ratio was 19.70% as of September 30. According to SNL Financial, the tangible common equity ratio was 7.97%.

Stock Ratios

The shares trade for 1.6 times tangible book value according to SNL and 12.6 times the consensus 2011 earnings estimate of $1.35 a share. The forward P/E is 10 based on the consensus 2012 earnings estimate of $1.70 a share.

Analyst Ratings

Out of 14 analysts covering East West Bancorp, nine have buy ratings and the other five recommend investors hold.

3. First Citizens BancShares

Company Profile

Shares of First Citizens BancShares of Raleigh, N.C. closed at $184.09 Wednesday, returning 20% over the previous year.

Following the acquisition of the failed Temecula Valley Bank of Temecula, Calif. in July 2009 and Venture Bank of Lacey, Wash. in September 2009, the company has made two acquisitions of failed institutions this year, including First Regional Bank of Los Angeles in January and Sun American Bank of Boca Raton, Fla. in March.

Income Statement

First Citizens reported third-quarter net income of $27.7 million, or $2.66 a share, declining from $28.6 million, or 2.74 a share, in the second quarter and $82.5 million, or $7.90 a share, in the third quarter of 2009, when the company booked $104.4 million in gains on acquisitions.

The third-quarter provision for loan losses increased to $59.9 million from $31.8 million the previous quarter and $18.3 million a year earlier. The provision exceeded net charge-offs of $40.6 million.

Pre-provision net revenue for the third quarter was $110.3 million according to SNL Financial, increasing 84% year-over-year.

Net Interest Income totaled $231 million and increased 69% year-over-year on a tax adjusted basis according to SNL Financial, mainly because of "$74.9 million of fair value discount accretion" from "large unscheduled loan payments received through the third quarter 2010," according to chairman Frank Holding, Jr.

Noninterest Income was $49 million according to SNL, declining from $76.6 million in the third quarter of 2009, reflecting the prior-year gains on acquisitions and "$28.7 million of charges resulting from adjustments to the FDIC receivable for assets covered by loss share agreements."

Noninterest Expense totaled $176.9 million, increasing from $160 million a year earlier, mainly from increases in staffing and expenses related to the acquisitions.

Balance Sheet

Total assets were $21 billion as of September 30 and the nonperforming assets ratio was 1.76%. The third-quarter net charge-off ratio was 0.86% and reserves covered 1.57% of total loans as of September 30.

First Citizens didn't participate in TARP. The Tier 1 leverage ratio was 9.05% and the total risk-based capital ratio was 16.62% as of September 30. According to SNL Financial, the tangible common equity ratio was 7.66%.

Stock Ratios

Shares trade for 1.2 times tangible book value according to SNL and 13.1 times the consensus earnings estimate for 2011.

Analyst Ratings

According to Thomson Reuters, the only analyst covering First Citizens is Brett Scheiner of FBR Capital Markets. He has an "outperform" or buy rating on the shares, with a $230 price target.

2. Synovus Financial

Company Profile

Shares of Synovus Financial ( SNV) of Columbus, Ga. closed at $2.06 Wednesday, returning 16% over the previous year.

Synovus was another of the 10 Regional Banks in the M&A Crosshairs, identified by analysts for TheSteet

While the company is still feeling the pain as it works through problem loans, its credit-rated expenses have declined significantly.

Income Statement

The third-quarter net loss to common shareholders was $195.8 million, or 25 cents a share, improving from a loss of $242.6 million, or 36 cents a share, the previous quarter and a loss of $453.8 million, or $1.32 a share, a year earlier.

The provision for loan losses declined to $239 million in the third quarter, from $298.9 million the previous quarter and $496.5 million a year earlier.

Synovus's pre-provision net revenue for the third quarter increased to $56.4 million from $12.9 million a year earlier.

Net Interest Income declined 4% year-over-year to $246.5 million.

Noninterest Income increased slightly to $72.7 million.

Noninterest Expense declined 16% to $269 million, mainly because expenses tied to repossessed real estate were cut in half, to $50.9 million.

Balance Sheet

Synovus had total assets of $31 billion as of September 30, and a nonperforming assets ratio -- including loans past due 90 days or more, nonaccrual loans and repossessed assets - of 5.08%, up slightly from 4.90% in June but down from 5.17% a year earlier. The third-quarter net charge-off ratio was 4.07% and reserves covered 3.66% of total loans as of September 30.

Stock Ratios

Shares trade for 0.7 times tangible book value according to SNL Financial and 10.8 times the consensus 2012 earnings estimate of 19 cents a share.

Analyst Ratings

Out of 24 analysts covering the company, three rate Synovus a buy, while 17 have hold ratings and four analysts recommend investors sell the shares.

1. KeyCorp

Company Profile

Shares of KeyCorp ( KEY) of Cleveland closed at $7.85 Wednesday, returning 33% over the previous year.

KeyCorp had the best year-over-year improvement in pre-provision operating earnings among this group of banks, and the improvements didn't result from acquisitions, but came across the board, as the company improved its margin, saw an increase in investment banking income and reduced expenses.

Income Statement

Third-quarter net income attributable to common shareholders was $178 million, or 20 cents a share, improving from $29 million, or 3 cents a share, the previous quarter and a net loss to common shareholders of $1.36 billion, or $2.14 a share during, the third quarter of 2009, which included a $2.4 billion provision for loan loss reserves and a non-cash impairment charges on intangible assets of $241 million.

The third-quarter provision for loan losses was $94 million, while net charge-offs totaled $357 million.

While the bottom-line results were driven by a $263 million release of loan loss reserves and credit expenses continued to drag on earnings, KeyCorp made remarkable strides in operating revenue.

Pre-provision net revenue totaled $378 million during the third quarter, rising from $85 million a year earlier.

Net Interest Income totaled $647 million, increasing 8% year-over-year, as the company improved its funding mix. Part of this was a 17% year-over-year increase in non-interest bearing deposit accounts, while the balance sheet contracted 3%. The net interest margin improved to 3.35% from 2.80% a year earlier.

Noninterest Income increased 21% year-over-year to $467 million, with the biggest improvement coming from investment banking and capital markets revenue, which was $42 million in the third quarter, compared to a $26 million loss a year earlier.

Noninterest Expense declined 18% year-over-year to $736 million, with most improvement coming from expenses on repossessed real estate, which declined to $4 million from $51 million and personnel expenses, which declined to $359 million from $380 million, as the company reduced expenses for employee benefits.

Balance Sheet

Total assets were $94.1 billion as of September 30, and nonperforming assets - including loans past due 90 days or more, nonaccrual loans and repossessed assets - made up 2.13% of total assets. The net charge-off ratio for the third quarter was 2.54% and reserves covered 3.55% of total loans as of September 30.

While KeyCorp owes $2.5 billion in TARP money, its capital ratios are strong. The Tier 1 leverage ratio was 12.53% and the total risk-based capital ratio was 18.22%. According to SNL Financial, the tangible common equity ratio was 8.00%.

Stock Ratios

The shares trade for 0.9 times tangible book value according to SNL and 14.8 times the 2012 consensus earnings estimate of 53 cents a share. The forward P/E drops to 11.1 based on the 2012 consensus earnings estimate of 71 cents a share.

Analyst Ratings

Out of 24 analysts covering KeyCorp, three rate the shares a buy, 17 have hold ratings and four analysts recommend investors sell the shares.

>To see these stocks in action, visit the 10 Banks With Real Earnings Improvement portfolio on Stockpickr.

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-- Written by Philip van Doorn in Jupiter, Fla.

To contact the writer, click here: Philip van Doorn.

To follow the writer on Twitter, go to http://twitter.com/PhilipvanDoorn.

To submit a news tip, send an email to: tips@thestreet.com.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

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Trump's 'Space Force' Could Launch a $1 Trillion Industry, Morgan Stanley Says