While big banks like JPMorgan Chase (JPM) continue to trade at huge discounts to book value, balance sheets are recovering among the regionals and traders are starting to notice.

An example can be seen in my nearest regional, SunTrust (STI). (Full disclosure: I live in Atlanta. You might want to consider doing the following exercise with a regional bank near you. Most will stack up favorably.)

STI's moves to strengthen its balance sheet have drawn another 4% pop in the stock today, which now trades at 71% of book value. (JPM, by contrast, trades at 48% of book.) STI's two-day gain, its price increase just since Wednesday, now stands at about 10%.

The reason can be seen in what for banks is blocking and tackling -- the cash flow. Positive cash flow was over $2.2 billion for the quarter ending in June and speculators are betting on another increase, bidding shares up to a P/E of 18.69, double that of JPM.

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