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).