The earnings season has gotten off to a decent start with banks reporting modest improvement in earnings and revenues despite a tough operating backdrop.
Results so far indicate slightly higher net interest income (NII) on the back of decent loan demand (mainly in real estate and consumer loan portfolios). Further, fee income showed strength, driven by improvement in mortgage banking business, strong capital markets performance and resilient U.S. consumers.
Nonetheless, as expected, net interest margin – one of the major indicators of banks’ profitability – was subdued in the quarter largely due to lower interest rates and flattening of the yield curve. Also, increased investments in technology to boost digital offerings, business streamlining efforts and initiatives to expand into newer areas resulted in marginally higher operating expenses.
Per the latest Earnings Outlook, overall earnings for the finance sector, of which banks constitute a major part, are projected to rise 12.6% year over year. This compares favorably with the third-quarter growth of 3.2%. Revenues are expected to climb 8.3%.
Let’s take a look at four banks that are scheduled to announce fourth-quarter results on Jan 27.
TCF Financial (TCF - Free Report) , slated to announce results after market close, is expected to have witnessed growth in revenues, while earnings are likely to have declined. The Zacks Consensus Estimate for revenues of $557.1 billion implies a substantial jump of 185% from the year-ago reported number. The merger deal (completed in August 2019) between Legacy TCF Financial and Chemical Financial is likely to have supported the top line.
However, the consensus estimate for earnings is 98 cents per share, indicating 3% fall.
Nonetheless, the chances of TCF Financial beating the Zacks Consensus Estimate are high this time, as it has the right combination of two key ingredients — a positive Earnings ESP and 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 +1.91%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Bank of Hawaii (BOH - Free Report) is set to report results before the opening bell. The Zacks Consensus Estimate for earnings is pegged at $1.36 per share, indicating 4.6% rise from the year-ago reported figure.
Also, the consensus estimate for sales of $173 million suggests 4.2% growth. Estimates for NII of $124 million indicate 1.6% rise and the same for non-interest income of $49 million implies 16.4% jump.
Similar to TCF Financial, the chances of the company surpassing the Zacks Consensus Estimate for earnings is high as it has a Zacks Rank #2 (Buy) and Earnings ESP of +0.37%.
CenterState Bank Corporation (CSFL - Free Report) is slated to announce results after market close. The company is expected to have recorded a fall in earnings, while revenues are likely to have increased.
The Zacks Consensus Estimate for earnings of 52 cents suggests a decline of 3.7%. The consensus estimate for sales of $196.8 million indicates 32.9% rise.
We can’t conclusively predict whether CenterState Bank will be able to beat the Zacks Consensus Estimate for earnings this time. It has a Zacks Rank #2 and Earnings ESP of 0.00%.
South State Corporation (SSB - Free Report) , set to announce results after market close, is expected to have witnessed growth in earnings and revenues in the to-be-reported quarter. The Zacks Consensus Estimate for earnings of $1.43 per share suggests growth of 5.9% from the year-ago reported number.
The consensus estimate for sales of $162.2 million indicates a slight rise. Specifically, estimates for NII of $127 million suggest nearly 1% rise, while the same of $35.4 million for non-interest income indicates 0.7% fall.
We can’t conclusively predict whether South State Corporation will beat the Zacks Consensus Estimate for earnings this time. It has a Zacks Rank #3 and Earnings ESP of -0.70%.
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