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With two consecutive interest rate hikes by the Fed, most banks that reported first-quarter 2017 results this week managed to beat estimates with their top-line strength and lower provisions. This also led to positive price movement for most stocks.

Additionally, the results demonstrated an upswing in loans, which ultimately boosted net interest income. Moreover, margin pressure eased to some extent. Further, the rise in deposit balances helped drive organic growth at the banks.

However, an overall rise in non-interest expenses owing to high spending on technology and other market development initiatives was an undermining factor. Nevertheless, legal expenses remained under control.



(Read: Bank Stock Roundup for the week ending Apr 17, 2017)

Important Earnings of the Week

1. Higher trading revenues as well as rise in interest rates drove Bank of America Corporation’s (BAC - Free Report) first-quarter 2017 earnings of 41 cents per share, which handily outpaced the Zacks Consensus Estimate of 35 cents. Further, the figure was 46% higher than the prior-year quarter. Impressive growth in fixed income trading revenues, higher equity trading and significant rise in investment banking fees supported fee income.

Further, modest loan growth and higher interest rates aided the rise in net interest income. However, mortgage banking income declined due to lower total mortgage production.

Additionally, provision for credit losses recorded a fall, driven by continued improvement in the energy sector. In addition, efficient expense management was sufficient to aid the bottom line. (Read more: BofA Q1 Earnings Beat on Trading Surge, Rate Hike)

2. KeyCorp’s (KEY - Free Report) first-quarter 2017 adjusted earnings of 32 cents per share handily surpassed the Zacks Consensus Estimate of 28 cents. The figure was up 33.3% from the prior-year quarter. Better-than-expected results were attributable to revenue synergies from the First Niagara Financial Group acquisition deal (completed in Aug 2016) and lower provision for credit losses.

However, higher operating expenses were the downside. Notably, the company witnessed marginal loan growth, while deposit balances declined. (Read more: KeyCorp's Q1 Earnings & Revenues Beat Expectations)

3. BB&T Corporation’s (BBT - Free Report) first-quarter 2017 adjusted earnings of 74 cents per share surpassed the Zacks Consensus Estimate by a penny. Better-than-expected results were primarily driven by an improvement in both net interest income and non-interest income. Deposits witnessed decent growth in the quarter. Also, credit quality improved. However, escalated expenses remained a major headwind. (Read more: BB&T Beats Q1 Earnings on Higher Revenues, Costs Rise)

4. The Bank of New York Mellon Corporation’s (BK - Free Report) first-quarter 2017 adjusted earnings per share were 80 cents, in line with the Zacks Consensus Estimate. A rise in revenues and provision benefit supported the results. Also, assets under management (AUM) reflected growth. However, a marginal increase in expenses and lower foreign exchange and other trading revenues were among the headwinds. (Read more: BNY Mellon's Q1 Earnings & Revenues Meet Expectations)

5. U.S. Bancorp (USB - Free Report) reported a positive surprise of 2.5% in first-quarter 2017. The company reported earnings per share of 82 cents, beating the Zacks Consensus Estimate of 80 cents. Results also came ahead of the prior-year quarter earnings of 76 cents. Organic growth was driven by higher revenues, aided by elevated average loans and deposits. Steady capital deployment activities reflected a strong capital position. However, escalating expenses and provisions were a major drag. (Read more: U.S. Bancorp Beats on Q1 Earnings, Expenses Flare Up)

6. M&T Bank Corporation (MTB - Free Report) recorded a positive earnings surprise of 10.8% in first-quarter 2017. The company reported net operating earnings of $2.15 per share which surpassed the Zacks Consensus Estimate of $1.94. Also, the bottom line improved 15% year over year.

Better-than-expected performance resulted from top-line growth, aided by consistent growth in loan and deposit balances. Further, pressure on margin eased. However, results were affected by higher expenses and provisions. (Read more: M&T Bank Beats Q1 Earnings Estimates, Revenues Up)

Price Performance

Here is how the seven major stocks performed:
 

Company

Last Week

6 months

JPM

-0.4%

25.3%

BAC

1.1%

39.3%

WFC

1.5%

19.1%

C

-1.0%

17.8%

COF

0.9%

12.4%

USB

0.3%

15.3%

PNC

0.4%

27.4%


In the last four trading sessions, Wells Fargo & Company (WFC - Free Report) and BofA were the major gainers, with their shares inching up 1.5% and 1.1%, respectively. However, Citigroup Inc. (C - Free Report) edged down 1%.

BofA and The PNC Financial Services Group, Inc. (PNC - Free Report) were the best performers over the last six months, with their shares surging a whopping 39.3% and 27.4%, respectively. Moreover, JPMorgan Chase & Co.’s (JPM - Free Report) shares jumped 25.3%.

What’s Next?

In the coming five days, earnings releases will continue to remain in focus. Some banks that are scheduled to announce results are TCF Financial Corp. TCB on Apr 24, Capital One Financial Corp. COF, Northern Trust Corp. (NTRS - Free Report) and Fifth Third Bancorp (FITB - Free Report) on Apr 25. BOK Financial Corp. BOKF is slated to release results on Apr 26.

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