The earnings season has gotten off to a relatively decent start, with banks reporting a modest rise in earnings and revenues despite low interest rates, soft loan demand and economic slowdown. Further, unlike the prior two quarters, there has been a marked decline in additional reserve build.
Results so far reflect lower net interest income (NII) on the back of near-zero interest rates and subdued lending scenario. Also, as expected, net interest margin — one of the major indicators of banks’ profitability — contracted during the quarter.
On the other hand, fee income showed significant strength, driven by improvement in the mortgage banking business and strong trading performance. Also, rebound in M&As and IPO activities, along with steady equity and debt issuances, aided investment banking business.
On the cost front, increased investments in technology to boost digital offerings, business streamlining efforts and initiatives to expand into newer areas resulted in slightly higher but still manageable operating expenses.
Per the latest Earnings Outlook, overall earnings for the finance sector, in which banks constitute a major part, are projected to decline 8.8% year over year in the third quarter. The sector earnings had plunged 45.3% in the second quarter and 32.6% in the first.
Let’s take a look at three mid-sized banks that are scheduled to announce third-quarter results tomorrow before market open.
First Hawaiian, Inc. FHB is expected to have recorded a decline in both earnings and revenues. The Zacks Consensus Estimate for earnings of 31 cents per share implies a plunge of 45.6% from the year-ago reported number.
Similarly, the consensus estimate for sales of $177.3 billion indicates 8.2% fall from a year ago.
The chances of First Hawaiian beating the Zacks Consensus Estimate are low this time, as it doesn’t have the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
It has a Zacks Rank #3 and an Earnings ESP of -4.92%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
First Hawaiian, Inc. Price, Consensus and EPS Surprise
First Hawaiian, Inc. price-consensus-eps-surprise-chart | First Hawaiian, Inc. Quote
First Horizon National Corporation FHN is expected to have recorded a decline in earnings, while revenues are likely to have improved in the to-be-reported quarter. During the third quarter, the company completed the acquisition of IBERIABANK Corporation.
The Zacks Consensus Estimate for earnings of 17 cents per share suggests a plunge of 60.5% from the prior-year reported number. The consensus estimate for sales of $789.3 indicates a jump of 67.1% year over year.
The consensus mark for NII of $522 million suggests 73.4% surge from the prior-year quarter. Also, the Zacks Consensus Estimate for total non-interest income is $311 million, implying a jump of 80.8%.
It has a Zacks Rank #3 and Earnings ESP of -6.42%.
First Horizon National Corporation Price, Consensus and EPS Surprise
First Horizon National Corporation price-consensus-eps-surprise-chart | First Horizon National Corporation Quote
Independent Bank Corp. INDB is expected to have recorded a decline in both earnings and revenues. The Zacks Consensus Estimate for earnings of 89 cents per share implies a plunge of 40.7% from the year-ago reported number.
Similarly, the consensus estimate for sales of $124 billion indicates 9.1% fall.
It has a Zacks Rank #3 and Earnings ESP of +2.25%.
Independent Bank Corp. Price, Consensus and EPS Surprise
Independent Bank Corp. price-consensus-eps-surprise-chart | Independent Bank Corp. Quote
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