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Bank Stock Roundup: PNC, BK, KEY, CMA & FITB in Focus on Q1 Earnings Beat

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Performance of majority of banks that reported this week was stellar. The banks beat first-quarter 2021 earnings estimates on solid fee income and reserve releases. Their performance during the quarter was largely driven by impressive capital markets and mortgage banking.

Also, consumer banking operations provided some support to banks’ fee income growth. Higher consumer sentiment on a low unemployment level during the first quarter and $1.9 trillion stimulus package mainly drove the performance. Further, reserve releases by banks (as economy gradually rebounded) supported the results. Overall, banks’ balance sheet and liquidity positions remained robust.

However, concerns related to weak lending scenario (that has been plaguing banks since the start of coronavirus pandemic last year) continued to weigh on investors’ sentiments. This, along with not so impressive management guidance for the second quarter, dragged down bank stocks in the past five trading sessions.

During the first quarter, low interest rates and muted loan demand resulted in a fall in net interest income and contraction of banks’ net interest margins, despite steepening of the yield curve. Also, as banks continued to spend heavily on technology upgrades and undertook efforts to streamline operations, expenses rose.

(Read: Bank Stock Roundup for the Week Ending Apr 16, 2021)
 

Important Earnings of the Week

1. PNC Financial’s (PNC - Free Report) earnings per share of $4.10 in the first quarter of 2021 surpassed the Zacks Consensus Estimate of $2.75. Also, the bottom line compared favorably with $1.59 in the prior-year quarter. Recapture of provisions and fee income growth on higher asset management revenues came as tailwinds. However, higher expenses, decline in revenues on lower interest income and fall in loan balance were the undermining factors.

2. Bank of New York Mellon Corporation’s (BK - Free Report) first-quarter 2021 earnings per share of 97 cents surpassed the Zacks Consensus Estimate of 87 cents. However, the figure represents a decline of 7.6% from the prior-year quarter’s level. The company recorded a provision benefit, which was a major positive. Also, growth in asset balances was a tailwind. However, a decline in revenues and higher expenses were the undermining factors.

3. KeyCorp’s (KEY - Free Report) first-quarter 2021 earnings of 61 cents per share easily outpaced the Zacks Consensus Estimate of 49 cents. Also, the bottom line improved substantially from 12 cents earned in the prior-year quarter. Results benefited from a rise in revenues, robust loan and deposit balances, and provision benefit. However, lower rates and a rise in operating expenses were the headwinds.

4. Comerica’s (CMA - Free Report) first-quarter 2021 earnings per share of $2.43 easily surpassed the Zacks Consensus Estimate of $1.38. Further, the bottom line witnessed a significant improvement from a loss of 46 cents reported in the prior-year quarter. Results were supported by significant fall in provisions and fee income growth. Nevertheless, reduction in net interest income, higher expenses and reduced loans balance were major drags.

5. Fifth Third Bancorp’s (FITB - Free Report) first-quarter 2021 earnings of 93 cents per share, surpassed the Zacks Consensus Estimate of 69 cents. Results also compared favorably with the prior-year quarter’s earnings of 13 cents. Rising revenues, aided by fee income growth, benefit from credit losses and a solid capital position were the major tailwinds. However, marginally higher expenses, and flat loan and deposit growth played spoilsport.

Price Performance

Here is how the seven major stocks performed:
 

Company

Last Week

6 months

JPM

-3.9%

45.1%

BAC

-2.0%

56.0%

WFC

-2.5%

85.3%

C

-3.6%

62.2%

COF

-2.7%

74.1%

USB

-2.9%

41.1%

PNC

-2.8%

52.8%



Over the past five trading days, JPMorgan and Citigroup recorded maximum loses, with their shares falling 3.9% and 3.6%, respectively. Also, shares of U.S. Bancorp have lost 2.9% during the same period.

Over the past six months, Wells Fargo shares of have jumped 85.3%, while Capital One and Citigroup have surged 74.1% and 62.2%, respectively.

What’s Next?

Over the next five trading days, the focus will largely be on earnings releases as several banks are scheduled to report first-quarter numbers. Bank of Hawaii Corporation is slated to announce results on Apr 26, while Capital One will report on Apr 27.

Further, Prosperity Bancshares, Inc. and New York Community Bancorp, Inc. are scheduled to come out with quarterly numbers Apr 28, while Valley National Bancorp and Cullen/Frost Bankers, Inc. will announce on Apr 29.

Also, investors will keep a watch on central bank’s two day FOMC meeting on Apr 27-28, though there is no chance of any change in the monetary policy.

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