Bank Stock Roundup: Q1 Earnings in Full Swing, CMA, FITB, RF, COF Hurt by Provisions
Amid coronavirus concerns and ambiguity, banks built huge reserves in first-quarter 2020 to safeguard the apprehended loan losses in the upcoming quarters on anticipation of lingering economic impact. Thus, rising provisions hampered banks’ bottom-line growth in the first quarter.
As the Federal Reserve cut interest rates to near zero, banks’ net interest margins and net interest income were substantially hurt. Nonetheless, decent lending activities offered some support.
On the fee income front, higher trading revenues, decent investment banking and mortgage banking performance, along with steady consumer banking business offered some relief for banks. However, weak advisory business acted as a headwind. Further, overall rise in non-interest expenses, owing to high spending on technology and personnel, and other market development initiatives, was an undermining factor.
Markedly, several banks are withdrawing 2020 guidance and intend to provide updates until a clear picture emerges on the economic front.
(Read: Bank Stock Roundup for the Week Ending Apr 17, 2020)
Important Earnings of the Week
1. Comerica CMA reported first-quarter 2020 loss per share of 46 cents due to a reserve build of $900 million for the coronavirus-related crisis. The Zacks Consensus Estimate was pegged at earnings of 77 cents. The results were adversely impacted by lower net interest income. However, lower expenses and rise in deposits and loans were tailwinds.
2. Fifth Third Bancorp FITB reported first-quarter 2020 adjusted earnings of 13 cents per share, missing the Zacks Consensus Estimate of 23 cents amid the coronavirus scare. The figure also compared unfavorably with the prior-year earnings of $1.12 per share. Elevated expenses and provisions negatively impacted the company’s results. However, the increase in revenues was aided by rising net interest and fee income.
3. Truist Financial’s TFC first-quarter 2020 adjusted earnings of 87 cents per share surpassed the Zacks Consensus Estimate of 54 cents. However, the bottom line declined 22.3% from the prior quarter. The results reflect full quarter impact following the merger between BB&T and SunTrust Banks. It also depicts improvement in revenues, and rise in loan and deposit balances. However, a drastic increase in provision for credit losses, rise in expenses and lower interest rates were headwinds.
4. Regions Financial RF reported first-quarter 2020 adjusted earnings of 15 cents per share, missing the Zacks Consensus Estimate of 19 cents. The figure plummeted 59.5% year over year. The results were adversely impacted by lower revenues and elevated provisions. Yet, lower non-interest expenses, and rise in loans and deposits were the tailwinds.
5. Bank OZK’s OZK first-quarter 2020 earnings of 9 cents per share missed the Zacks Consensus Estimate of 58 cents. Further, the figure plunged 89.5% year over year. The results were adversely impacted by rise in credit costs, lower rates, decline in net interest income and higher operating expenses. However, improvement in non-interest income, and rise in loan and deposit balances offered some support.
6. Capital One’s COF first-quarter 2020 adjusted loss was $3.02 per share against the Zacks Consensus Estimate of earnings of $2.56. The figure also deteriorated from the year-ago quarterly earnings of $2.90. The results reflect a drastic surge in provisions amid coronavirus-related mayhem. Further, decline in loan balance, rise in operating expenses and lower interest rates were headwinds. However, higher interest income and improvement in deposit balance offered some support.
Price Performance
Here is how the seven major stocks performed:
Company | Last Week | 6 months |
JPM | -6.1% | -27.3% |
BAC | -6.1% | -29.6% |
WFC | -6.5% | -46.8% |
C | -6.6% | -40.6% |
COF | -3.7% | -42.8% |
USB | -4.8% | -39.9% |
PNC | -2.0% | -30.8% |
Over the past five trading days, Citigroup C and Wells Fargo have recorded the maximum decline, with their shares losing 6.6% and 6.5%, respectively. Also, shares of JPMorgan and Bank of America BAC have declined 6.1% each.
In the past six months, shares of Wells Fargo and Capital One have plummeted 46.8% and 42.8%, respectively. In addition, shares of Citigroup have depreciated 40.6%.
What’s Next?
Over the next five trading days, bank earnings will continue in full force. TCF Financial Corporation TCF is slated to release quarterly numbers on Apr 27, while Hancock Whitney Corporation and UMB Financial Corporation are scheduled to announce the same on Apr 28. Prosperity Bancshares, Inc. PB, New York Community Bancorp, Inc. (NYCB) and BankUnited, Inc. are set to announce quarterly numbers on Apr 29, while Hilltop Holdings Inc. HTH is scheduled to announce results on Apr 30.
Moreover, FOMC meeting is scheduled to be held on Apr 28-29. Although no further changes in rates are likely, investors will keep an eye on what the Federal officials think about coronavirus-induced economic slowdown, oil price crash and the future course of action.
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Regions Financial Corporation (RF) : Free Stock Analysis Report
Comerica Incorporated (CMA) : Free Stock Analysis Report
Bank of America Corporation (BAC) : Free Stock Analysis Report
Citigroup Inc. (C) : Free Stock Analysis Report
Fifth Third Bancorp (FITB) : Free Stock Analysis Report
Capital One Financial Corporation (COF) : Free Stock Analysis Report
Hilltop Holdings Inc. (HTH) : Free Stock Analysis Report
Prosperity Bancshares, Inc. (PB) : Free Stock Analysis Report
TCF Financial Corporation (TCF) : Free Stock Analysis Report
Bank OZK (OZK) : Free Stock Analysis Report
Truist Financial Corporation (TFC) : Free Stock Analysis Report
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