NEW YORK (TheStreet) -- The initial public offering for Citizens Bank  (CFG) , a spinoff of Royal Bank of Scotland (RBS) , was being described Wednesday as the "anti-Alibaba." (BABA) But after a weak start, and commentary that it was a flop, the stock closed up over 7% for the day.

CFG opened for trading a little after 10 a.m. Wednesday at $21.50 a share, lower than initial indications that it would price at $23 to $25. By 1 p.m., the company was trading for $22.70. The IPO has left some, including TheStreet's Jim Cramer, disappointed. But Citizens ended up closing above $23 a share.

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Citizens is coming to market just as regional banks, which have been rising steadily since 2009, have started to turn down. The SPDR KBW Regional Banking ETF (KRE) , which tracks regional banks, is up over 70% over the last five years but down 5% so far this year.

The same trends are evident among banks in New England, where Citizens is based.

United Financial (UBNK) in Connecticut, for instance, is up almost 27% since mid-2011, but hit its low for the year earlier this month. Berkshire Hills Bancorp (BHLB) in New Hampshire is up 35% from its 2011 low, but has fallen about 4% in the last week.

And the story is similar when you look at Citizens' regional banking peers. Cullen/Frost Bankers (CFR) in Texas, with a market cap of $4.92 billion, is up over 35% over five years but hit a 2% downdraft in the last week. BancorpSouth (BXS) , a $2 billion regional based in Tupelo, Miss., has doubled in value since its 2011 trough but has dropped nearly 10% since last Friday.

Royal Bank of Scotland, which will sell the rest of its shares in Citizens over the next two years, is down 25% over the last five years, and has suffered accelerating operating losses -- 588 million pounds for 2010 and almost 9 billion pounds in 2013, although it has made a profit of nearly 2 billion pounds through the first six months of this year.

Citizens CEO Bruce Van Saun said in a TV interview today that the overhang of RBS' remaining stake may be inhibiting other buyers of the stock.

In addition to operating in New England, Citizens has offices in the mid-Atlantic and upper Midwest. It has assets of $130 billion, with 13.3% of its capital classified as Tier 1 in June, more than twice the 6% regulators require. It was hit by a suit over overdraft fees, which it settled in 2012. Before coming public, the bank sold operations in Chicago to US Bancorp (USB) , having acquired them with Charter One in 2004. 

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Analyst Terry McEvoy of Sterne Agee said that to justify investor faith, Citizens needs to raise its return on tangible common equity (ROTCE) from the current 6% to 10% by 2016, mainly by improvements in its "consumer platform." In short, it needs to exhibit good old-fashioned banking skills to prosper.

Good old-fashioned banking, as opposed to trading by banks, has been a pretty good business since 2009. But the recovery is now middle-aged, and analysts are starting to question it.

Citizens may be a good bank with bad timing.

At the time of publication, the author held no positions in any of the stocks mentioned.

Follow @danablankenhorn

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.


TheStreet Ratings team rates ROYAL BANK OF SCOTLAND GROUP as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

"We rate ROYAL BANK OF SCOTLAND GROUP (RBS) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its increase in net income, expanding profit margins and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and a generally disappointing performance in the stock itself."

You can view the full analysis from the report here: RBS Ratings Report

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