Analysts at Keefe, Bruyette & Woods recently released a report recapping the Q1 earnings season for bank stocks. Overall, analysts praised the banks for a solid start to 2015.
Key Takeaways
Of the 208 banks that Keefe, Bruyette & Woods looked at, 52 percent beat consensus earnings estimates in Q1. Analysts see net interest income, fee income and loan growth numbers as “solid,” falling mostly in-line with consensus expectations.
Analysts note that spending was further reined in during the quarter and efficiency ratios improved year-over-year. Overall net interest margin (NIM) compression also fell in-line with expectations.
The Numbers
The 52 percent of banks that beat consensus earnings expectations for the quarter is a slight improvement from the last two quarters of 2014, in which less than half of the banks produced earnings beats.
Small and mid-cap banks performed the best during the quarter, with 54 percent of names producing beats. Despite relatively strong earnings, small and mid-cap banks were the worst-performing bank stocks during Q1, generating a median decline of 1.7 percent.
Analysts note that credit conditions remained mostly stable during Q1. Median net charge off (NCO) ratio for the group fell by 3 bps year-over-year (Y/Y), and 2 bps quarter-over-quarter (Q/Q). The median non-performing asset (NPA) ratio fell 34 bps lower Y/Y and 5 bps Q/Q.
Stock Picks
Keefe, Bruyette & Woods has Outperform ratings on the following bank stocks following Q1 earnings season:
- Avenue Financial Holdings Inc (NASDAQ: AVNU)
- Capital City Bank Group Inc (NASDAQ: CCBG)
- Citizens Financial Group Inc (NYSE: CFG)
- Capital One Financial Corp (NYSE: COF)
- Eagle Bancorp Inc (NASDAQ: EGBN)
- Flagstar Bancorp (NYSE: FBC)
- First Business Financial Services Inc (NASDAQ: FBIZ)
- Mercantile Bank Corp (NASDAQ: MBWM)
- MidSouth Bancorp Inc (NYSE: MSL)
- M&T Bank Corp (NYSE: MTB)
- Pacific Premier Bancorp (NASDAQ: PPBI)
- Signature Bank (NASDAQ: SBNY)
- SVB Financial Group (NASDAQ: SIVB)
- Square 1 Financial (NASDAQ: SQBK)
- SunTrust Banks Inc (NYSE: STI)
- Zions Bancorporation ZION 0.69%
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