Regional Banks’ P/E Multiples Expanded Despite Lower Revisions

Regional banks' stocks have gained in tune with market trends, while their EPS estimates, on average, remained unchanged.

Josh Levin of Citi Research, in a recent research report, analyzed the 3Q13 earnings of regional banks and points out how their 2014 and 2015 consensus EPS estimates have changed after the earnings season.

Closer look into internals

Citi analyst points out how internals of consensus estimates comprising NII, fees, non-interest expenses and provision changes have changed and their effect on the revised estimates.

For instance, the analyst points out 2014 downward revenue revisions were offset by lower provisions made by the regional banks. Levin notes that all banks across Citi’s regional banks coverage benefited from lower...