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 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 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 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 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 and JPMorgan JPM were the major gainers, both returning 2.9%. Furthermore, Wells Fargo WFC moved up 2.7%.

Bank of America BAC 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 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.

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J P Morgan Chase & Co (JPM) : Free Stock Analysis Report
 
PNC Financial Services Group, Inc. (The) (PNC) : Free Stock Analysis Report
 
U.S. Bancorp (USB) : Free Stock Analysis Report
 
SunTrust Banks, Inc. (STI) : Free Stock Analysis Report
 
Fifth Third Bancorp (FITB) : Free Stock Analysis Report
 
Wells Fargo & Company (WFC) : Free Stock Analysis Report
 
Bank of America Corporation (BAC) : Free Stock Analysis Report
 
Regions Financial Corporation (RF) : Free Stock Analysis Report
 
Capital One Financial Corporation (COF) : Free Stock Analysis Report
 
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