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The second-quarter earnings season has been solid, with banks reporting a notable rise in earnings, backed by reserve release and fee income growth. While an additional day in the quarter and continued forgiveness under the paycheck protection program have aided net interest income (NII), the continued low interest rates and muted loan growth have been hurdles.
Correspondingly, higher balance sheet liquidity has resulted in net interest margin contraction. Normalization of trading and mortgage operations has impacted fee income. Particularly, stiff competition for loan productions and pricing pressures have led to lower gains-on-sale margin and limited mortgage banking revenues.
Nonetheless, decent equity issuance and strong deal-making activities have been the saving grace for banks’ fee income growth in the second quarter. A decline in provisions for loan losses, supported by reserve releases, was also a common theme this earnings season as the economy recovers and government stimulus boosts consumer liquidity.
Per the latest Earnings Preview, overall earnings for the finance sector, of which banks constitute a major part, are projected to surge 132.9% year over year in the second quarter on revenue growth of 5.2%. The sector’s earnings improved 98.3% in first-quarter 2021 and 13.6% in fourth-quarter 2020.
Let’s take a look at five banks that are expected to announce the June-end quarter’s results tomorrow.
Huntington Bancshares HBAN is slated to report second-quarter 2021 results before the opening bell. The company’s revenues and earnings are expected to have improved year over year.
The Zacks Consensus Estimate for non-interest income of $425 million indicates 8.7% year-over-year growth. The consensus estimate for NII (on a tax-equivalent basis) indicates an 11.2% rise to $892 million.
The consensus mark for second-quarter earnings of 32 cents indicates substantial growth from the year-ago reported number. The consensus estimate for revenues of $1.32 billion suggests a year-over-year rise of 10.8%. (Read more: Is a Beat in the Cards for Huntington in Q2 Earnings?)
Huntington has the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The company currently has a Zacks Rank #3 and an Earnings ESP of +1.98%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Huntington Bancshares Incorporated Price and EPS Surprise
Huntington Bancshares Incorporated price-eps-surprise | Huntington Bancshares Incorporated Quote
Cullen/Frost Bankers, Inc. CFR is slated to report June-end results before market open. It is expected to have recorded a rise in both quarterly earnings and revenues in the to-be-reported quarter.
The Zacks Consensus Estimate for earnings of $1.60 per share suggests a rise of 8.8% from the prior-year reported number. The consensus mark for revenues of $358 million indicates an increase of 3.1%.
The consensus mark for NII of $250 million suggests a marginal rise from the prior-year quarter’s $246 million.
It has a Zacks Rank #3 and an Earnings ESP of +0.39% at present.
CullenFrost Bankers, Inc. Price and EPS Surprise
CullenFrost Bankers, Inc. price-eps-surprise | CullenFrost Bankers, Inc. Quote
TFS Financial Corporation TFSL is expected to have witnessed a decline in both quarterly earnings and revenues in the second quarter.
The Zacks Consensus Estimate for earnings of 6 cents per share suggests a fall of 40% from the prior-year reported number. The consensus mark for revenues of $68.3 million indicates a decrease of 12.7%.
The consensus mark for NII of $57 million suggests a marginal decline from the prior quarter’s $58 million.
It currently has a Zacks Rank #3 and an Earnings ESP of 0.00%.
TFS Financial Corporation Price and EPS Surprise
TFS Financial Corporation price-eps-surprise | TFS Financial Corporation Quote
Eastern Bankshares, Inc. EBC is slated to announce second-quarter results after the market close. The stock holding company for Eastern Bank is expected to report revenues of $148.7 million.
The company’s activities during the quarter were inadequate to gain adequate analyst confidence. The Zacks Consensus Estimate for second-quarter earnings has been unchanged at 21 cents over the past month.
In first-quarter 2021, the company released loan loss reserves of $0.6 million. Given the widespread economy reopening and government stimulus, this is likely to have continued in the second quarter as well. However, amid a low interest rate environment, asset yields are likely to have been affected, thereby, limiting the company’s NII growth.
It has a Zacks Rank #3 and an Earnings ESP of 0.00% at present.
Columbia Banking System, Inc. COLB is scheduled to announce quarterly results before the opening bell. While the company’s earnings are anticipated to have witnessed year-over-year growth, revenues are likely to have declined.
In June, the company announced a merger deal with Sacramento, CA-based Bank of Commerce Holdings BOCH, the holding company for Merchants Bank of Commerce.
The Zacks Consensus Estimate for earnings of 67 cents per share suggests a rise of 28.9% from the prior-year reported number. The consensus mark for revenues of $145.4 million indicates a year-over-year decrease of 8.7%.
The consensus mark for NII is pegged at $122 million and remains flat year over year.
It has a Zacks Rank #3 and Earnings ESP of 0.00% at present.
Columbia Banking System, Inc. Price and EPS Surprise
Columbia Banking System, Inc. price-eps-surprise | Columbia Banking System, Inc. Quote
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Huntington Bancshares Incorporated (HBAN) : Free Stock Analysis Report
CullenFrost Bankers, Inc. (CFR) : Free Stock Analysis Report
TFS Financial Corporation (TFSL) : Free Stock Analysis Report
Columbia Banking System, Inc. (COLB) : Free Stock Analysis Report
Bank of Commerce Holdings CA (BOCH) : Free Stock Analysis Report
Eastern Bankshares, Inc. (EBC) : Free Stock Analysis Report
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