U.S. Regional Banks Update (FHN, KEY, FITB, STI, CMA)

Analysts Matthew H. Burnell and Herman Chan at Wells Fargo Securities have released an update on the U.S. regional banks.

Following Comerica Incorporated’s (NYSE: CMA) equity issuance, which is a signal to exit TARP, analysts at Wells Fargo have re-analyzed the regional banks in their coverage to estimate the dilution, and price/normalized EPS effect of requiring TARP banks to issue common stock to achieve a pro-forma Tier 1 Common Ratio of 8.5%, or 9%.

Analysts have concluded that average share count dilution for the four banks in their coverage, which are still under TARP, would average between 20%-25%. These banks include Market Perform rated First Horizon National Corporation (NYSE: FHN), Fifth Third Bancorp (NASDAQ: FITB), and KeyCorp (NYSE: KEY), and Underperform rated SunTrust Banks, Inc. (NYSE: STI).