As the Q2 earnings season wraps, let’s dig into this quarter’s best and worst performers in the regional banks industry, including First BanCorp (NYSE: FBP) and its peers.
Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.
The 102 regional banks stocks we track reported a satisfactory Q2. As a group, revenues were in line with analysts’ consensus estimates.
In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.
First BanCorp (NYSE: FBP)
Tracing its roots back to 1948 in San Juan, First BanCorp (NYSE: FBP) is a bank holding company that provides commercial banking, consumer financing, mortgage services, and insurance products across Puerto Rico, the U.S. mainland, and the Caribbean.
First BanCorp reported revenues of $246.8 million, up 6.5% year on year. This print fell short of analysts’ expectations by 0.7%. Overall, it was a mixed quarter for the company with an impressive beat of analysts’ tangible book value per share estimates but a miss of analysts’ net interest income estimates.
Unsurprisingly, the stock is down 1.1% since reporting and currently trades at $21.65.
Is now the time to buy First BanCorp? Access our full analysis of the earnings results here, it’s free for active Edge members.
Best Q2: UMB Financial (NASDAQ: UMBF)
With roots dating back to 1913 and a name derived from "United Missouri Bank," UMB Financial (NASDAQ: UMBF) is a financial holding company that provides banking, asset management, and fund services to commercial, institutional, and individual customers.
UMB Financial reported revenues of $689.2 million, up 76.7% year on year, outperforming analysts’ expectations by 8.6%. The business had a stunning quarter with a beat of analysts’ EPS estimates and an impressive beat of analysts’ revenue estimates.
The market seems happy with the results as the stock is up 7.9% since reporting. It currently trades at $118.39.
Is now the time to buy UMB Financial? Access our full analysis of the earnings results here, it’s free for active Edge members.
Weakest Q2: Coastal Financial (NASDAQ: CCB)
Pioneering the intersection of traditional banking and financial technology in the Pacific Northwest, Coastal Financial (NASDAQ: CCB) operates as a bank holding company that provides traditional banking services and Banking-as-a-Service (BaaS) solutions to consumers and businesses.
Coastal Financial reported revenues of $119.4 million, down 11.7% year on year, falling short of analysts’ expectations by 21.5%. It was a disappointing quarter as it posted a significant miss of analysts’ revenue and net interest income estimates.
Interestingly, the stock is up 6.5% since the results and currently trades at $108.09.
Read our full analysis of Coastal Financial’s results here.
Preferred Bank (NASDAQ: PFBC)
Founded in 1991 with a focus on serving the Pacific Rim community in Southern California, Preferred Bank (NASDAQ: PFBC) is a commercial bank that provides banking products and services to small and mid-sized businesses, entrepreneurs, real estate developers, and high net worth individuals.
Preferred Bank reported revenues of $70.65 million, up 1.6% year on year. This number was in line with analysts’ expectations. Zooming out, it was a mixed quarter, as it also recorded a narrow beat of analysts’ tangible book value per share and EPS estimates.
The stock is down 2.3% since reporting and currently trades at $90.38.
Read our full, actionable report on Preferred Bank here, it’s free for active Edge members.
City Holding (NASDAQ: CHCO)
With roots dating back to 1957 and a strategic presence along the I-64 and I-81 corridors, City Holding (NASDAQGS:CHCO) operates as a financial holding company providing banking, trust, and investment services through its subsidiary City National Bank across West Virginia, Kentucky, Virginia, and Ohio.
City Holding reported revenues of $78.16 million, up 6.4% year on year. This result topped analysts’ expectations by 3%. Overall, it was an exceptional quarter as it also recorded an impressive beat of analysts’ net interest income estimates and a beat of analysts’ EPS estimates.
The stock is down 1.1% since reporting and currently trades at $122.61.
Read our full, actionable report on City Holding here, it’s free for active Edge members.
Market Update
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
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