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Bank Stock Roundup: Q4 Earnings at Tail End, FITB, STI & RF Top Estimates
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Most banks that reported fourth-quarter 2017 results last week managed to record bottom-line improvement on top-line strength. This also led to positive price movement for most bank stocks over the last six trading days.
In addition to the benefits from higher interest rates, the results mirrored a marginal upswing in loans driven primarily by consumer loans. Moreover, eased margin pressure acted favorably. Further, the rise in deposit balances helped steer the banks’ organic growth.
However, mortgage banking business remained weak. Also, though banks recorded significant one-time charge related to the tax overhaul, legal expenses remained under control. Additionally, expected future benefits of the tax reform kept investors optimistic.
1. SunTrust Banks' (STI - Free Report) fourth-quarter 2017 adjusted earnings of $1.09 per share outpaced the Zacks Consensus Estimate of $1.05. Also, the figure was up 21% year over year. Results were primarily driven by a rise in revenues (supported by higher interest rates), stable adjusted expenses and lower provision for credit losses. In addition, improving asset quality was a tailwind.
Nevertheless, a decline in loan and deposit balances was the undermining factor. After considering one-time discrete gains, including tax reform-related benefit, net income available to common shareholders was $710 million, up 58% from the prior-year quarter. (Read more: SunTrust Beats on Q4 Earnings as Revenues Improve)
2. Capital One’s (COF - Free Report) fourth-quarter adjusted earnings of $1.62 per share missed the Zacks Consensus Estimate of $1.83. However, the figure compared favorably with the year-ago quarter’s earnings of $1.58. Results benefited from a rise in revenues and easing margin pressure. Also, the quarter witnessed a rise in loan and deposit balances.
An increase in provisions and expenses were the undermining factors. After taking into consideration charges related to the tax act and other non-recurring items, net loss for the quarter was $971 million or $2.17 per share. (Read more: Capital One Q4 Earnings Miss, Costs Up)
3. Fifth Third Bancorp (FITB - Free Report) reported fourth-quarter 2017 adjusted earnings per share of 52 cents, beating the Zacks Consensus Estimate of 47 cents. The adjusted figure excludes the impact of tax legislation, gain on the sale of Vantiv shares and charge related to the valuation of the Visa total return swap. Results reflect increase in net interest income with strong capital position as a tailwind.
However, lower non-interest income and increase in provisions for loan losses were the undermining factors. After considering the impact of Tax Cuts and Jobs Act and non-recurring items, net income available to common shareholders came in at $486 million or 67 cents per share. (Read more: Fifth Third Beats on Q4 Earnings, Fee Income Declines)
4. Driven by top-line strength, Regions Financial (RF - Free Report) recorded an impressive earnings surprise of 3.8% in fourth-quarter 2017. Reported earnings of 27 cents per share outpaced the Zacks Consensus Estimate of 26 cents. Furthermore, results compared favorably with the year-earlier quarter’s earnings of 23 cents. Results included certain one-time items of 7 cents per share. Easing margin pressure and higher revenues were the positive factors. Moreover, credit quality recorded significant improvement.
In the last six trading sessions, U.S. Bancorp (USB - Free Report) and JPMorgan (JPM - Free Report) were the major gainers, both returning 2.9%. Furthermore, Wells Fargo (WFC - Free Report) moved up 2.7%.
Bank of America (BAC - Free Report) and JPMorgan were the best performers over the last six months, with the stock prices jumping 34.3% and 27.9%, respectively. Also, shares of PNC Financial (PNC - Free Report) climbed 25.9%.
What’s Next?
Over the next five trading days, banking stocks are expected to continue performing in a similar manner unless any unforeseen incident crops up.
Zacks Top 10 Stocks for 2018
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2018?
Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp. and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Bank Stock Roundup: Q4 Earnings at Tail End, FITB, STI & RF Top Estimates
Most banks that reported fourth-quarter 2017 results last week managed to record bottom-line improvement on top-line strength. This also led to positive price movement for most bank stocks over the last six trading days.
In addition to the benefits from higher interest rates, the results mirrored a marginal upswing in loans driven primarily by consumer loans. Moreover, eased margin pressure acted favorably. Further, the rise in deposit balances helped steer the banks’ organic growth.
However, mortgage banking business remained weak. Also, though banks recorded significant one-time charge related to the tax overhaul, legal expenses remained under control. Additionally, expected future benefits of the tax reform kept investors optimistic.
(Read: Bank Stock Roundup for the week ending Jan 19, 2018)
Important Earnings of the Week
1. SunTrust Banks' (STI - Free Report) fourth-quarter 2017 adjusted earnings of $1.09 per share outpaced the Zacks Consensus Estimate of $1.05. Also, the figure was up 21% year over year. Results were primarily driven by a rise in revenues (supported by higher interest rates), stable adjusted expenses and lower provision for credit losses. In addition, improving asset quality was a tailwind.
Nevertheless, a decline in loan and deposit balances was the undermining factor. After considering one-time discrete gains, including tax reform-related benefit, net income available to common shareholders was $710 million, up 58% from the prior-year quarter. (Read more: SunTrust Beats on Q4 Earnings as Revenues Improve)
2. Capital One’s (COF - Free Report) fourth-quarter adjusted earnings of $1.62 per share missed the Zacks Consensus Estimate of $1.83. However, the figure compared favorably with the year-ago quarter’s earnings of $1.58. Results benefited from a rise in revenues and easing margin pressure. Also, the quarter witnessed a rise in loan and deposit balances.
An increase in provisions and expenses were the undermining factors. After taking into consideration charges related to the tax act and other non-recurring items, net loss for the quarter was $971 million or $2.17 per share. (Read more: Capital One Q4 Earnings Miss, Costs Up)
3. Fifth Third Bancorp (FITB - Free Report) reported fourth-quarter 2017 adjusted earnings per share of 52 cents, beating the Zacks Consensus Estimate of 47 cents. The adjusted figure excludes the impact of tax legislation, gain on the sale of Vantiv shares and charge related to the valuation of the Visa total return swap. Results reflect increase in net interest income with strong capital position as a tailwind.
However, lower non-interest income and increase in provisions for loan losses were the undermining factors. After considering the impact of Tax Cuts and Jobs Act and non-recurring items, net income available to common shareholders came in at $486 million or 67 cents per share. (Read more: Fifth Third Beats on Q4 Earnings, Fee Income Declines)
4. Driven by top-line strength, Regions Financial (RF - Free Report) recorded an impressive earnings surprise of 3.8% in fourth-quarter 2017. Reported earnings of 27 cents per share outpaced the Zacks Consensus Estimate of 26 cents. Furthermore, results compared favorably with the year-earlier quarter’s earnings of 23 cents. Results included certain one-time items of 7 cents per share. Easing margin pressure and higher revenues were the positive factors. Moreover, credit quality recorded significant improvement.
Nevertheless, lower loans and deposits balance were the undermining factors. In addition, expenses escalated. (Read more: Regions Financial's Q4 Earnings Beat on High Revenues)
Price Performance
Here is how the seven major stocks performed:
Company
Last 6 Days
6 months
JPM
2.9%
27.9%
BAC
1.5%
34.3%
WFC
2.7%
21.8%
C
2.3%
18.8%
COF
0.5%
23.5%
USB
2.9%
12.1%
PNC
2.2%
25.9%
In the last six trading sessions, U.S. Bancorp (USB - Free Report) and JPMorgan (JPM - Free Report) were the major gainers, both returning 2.9%. Furthermore, Wells Fargo (WFC - Free Report) moved up 2.7%.
Bank of America (BAC - Free Report) and JPMorgan were the best performers over the last six months, with the stock prices jumping 34.3% and 27.9%, respectively. Also, shares of PNC Financial (PNC - Free Report) climbed 25.9%.
What’s Next?
Over the next five trading days, banking stocks are expected to continue performing in a similar manner unless any unforeseen incident crops up.
Zacks Top 10 Stocks for 2018
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2018?
Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp. and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2018 today >>