Back to top

Image: Bigstock

Lower Interest Rates to Mar First Republic's (FRC) Q1 Earnings

Read MoreHide Full Article

First Republic Bank  is scheduled to report first-quarter 2020 earnings, before the opening bell on Apr 14. While its revenues are expected to have improved year over year, earnings are likely to have declined.

In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate on an increase in NII and non-interest income. However, rise in expenses served as a headwind.

Notably, First Republic has a decent earnings surprise history. Its earnings surpassed the consensus estimate in three of the trailing four quarters, the average positive surprise being 5.1%.

First Republic Bank Price and EPS Surprise

 


Now let’s take a look at what our quantitative model predicts for the to-be-reported quarter:

Our proven model shows that First Republic does not have the right combination of the two key ingredients — positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase 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.

Earnings ESP: Earnings ESP for First Republic is -1.48%.

Zacks Rank: The company currently carries a Zacks Rank of 4 (Sell).

The Zacks Consensus Estimate for earnings for the to-be-reported quarter has been revised slightly downward over the past 30 days. The company’s earnings estimates of $1.13 per share suggest a decline of 10.3% from the year-ago reported figure.

However, the consensus estimate for sales of $872.8 million indicates an increase of 8.1% from the year-ago reported figure.

Here are the factors that are likely to have influenced First Republic’s first-quarter results:

Loan Growth: The company is likely to have witnessed a rise in loans in the first quarter, as lower interest rates might have boosted demand for mortgage loans. Also, per Fed’s latest data, pickup in commercial & industrial, and consumer loans during the quarter might have lend support.

Muted Net Interest Income (NII): Decline in interest rates to near-zero level in March due to the coronavirus outbreak is likely to have hurt First Republic’s net interest margin. However, a decent lending scenario and lower deposit costs might have provided some support to the company’s interest income.

The Zacks Consensus Estimate for NII of $724 million suggests a slight rise on a year-over-year basis.

Decline in Non-Interest Income: Outflows from the asset-management business might have been recorded on market losses. Significant declines in prices of asset values might have impacted asset-management fees. In addition, trust income is estimated to reflect disappointment due to weak markets.

The consensus estimate for fee income of $148 million indicates a 5.7% fall from the prior-year reported number.

Expense Growth: First Republic’s investments in franchise development or digital initiatives, including mobile banking applications and data analytics, might have kept costs elevated in the quarter.

Stocks That Warrant a Look

Here are some stocks that you may want to consider, as according to our model these have the right combination of elements to post an earnings beat in the first quarter.

BCB Bancorp, Inc. (BCBP - Free Report) is expected to release quarterly results soon. The company has an Earnings ESP of +4.17% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Earnings ESP for Carolina Financial Corporation is +1.43% and it carries a Zacks Rank of 3 currently. The company is expected to report quarterly numbers in the coming days.

SB ONE BANCORP is likely to report quarterly earnings soon. The company, which carries a Zacks Rank of 3 at present, has an Earnings ESP of +1.56%.

Just Released: Zacks’ 7 Best Stocks for Today

Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.5% per year.

These 7 were selected because of their superior potential for immediate breakout.

See these time-sensitive tickers now >>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


BCB Bancorp, Inc. (NJ) (BCBP) - free report >>

Published in