The earnings season has gotten off to a relatively solid start, with banks reporting a decent rise in earnings, mainly driven by lower credit costs and some support from fee income. Similar to the first three quarters of 2020, low interest rates, soft loan demand and economic slowdown were major concerns in the October-December period.
Results so far reflect lower net interest income (NII) due to near-zero interest rates and subdued lending scenario. Also, as expected, net interest margin contracted during the quarter.
On the other hand, fee income showed significant strength, driven by improvement in the mortgage banking business and strong trading performance. Also, solid M&As and IPO activities, along with steady equity and debt issuances, aided investment banking business.
On the cost front, increased investments in technology to boost digital offerings, business streamlining efforts and initiatives to expand into newer areas resulted in slightly higher but manageable operating expenses.
Per the latest Earnings Preview, overall earnings for the finance sector, of which banks constitute a major part, are projected to grow 10.9% year over year in the fourth quarter. The sector earnings had declined 11.7% in the third quarter, 45.3% in the second and 32.6% in the first.
Let’s take a look at three mid-sized banks that are scheduled to announce fourth-quarter results tomorrow.
Synovus Financial Corp. SNV, scheduled to announce results before market open, is expected to have recorded a decline in both earnings and revenues in the fourth quarter. The Zacks Consensus Estimate for earnings of 82 cents per share implies a fall of 12.8% from the year-ago reported number.
Similarly, the consensus estimate for sales of $482 billion indicates 3.1% fall from a year ago.
The consensus mark for NII of $380 million suggests 4.8% fall from the prior-year quarter. Nonetheless, the Zacks Consensus Estimate for total non-interest income is $103 million, implying a rise of 5.1%.
The chances of Synovus 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 a 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 #1 (Strong Buy) and an Earnings ESP of +2.18%.
Synovus Financial Corp. Price and EPS Surprise
Synovus Financial Corp. price-eps-surprise | Synovus Financial Corp. Quote
You can see the complete list of today’s Zacks #1 Rank stocks here.
UMB Financial Corporation UMBF is slated to report after market close. It is expected to have recorded a rise in both quarterly earnings and revenues in the to-be-reported quarter.
The Zacks Consensus Estimate for earnings of $1.79 cents per share suggests a surge of 31.6% from the prior-year reported number. The consensus estimate for sales of $313.3 indicates an increase of 10.8%.
The consensus mark for NII of $187 million suggests 8.7% rise from the prior-year quarter. Also, the Zacks Consensus Estimate for total non-interest income is $118 million, implying growth of 7.3%.
It has a Zacks Rank #2 (Buy) and Earnings ESP of -25.04%.
UMB Financial Corporation Price and EPS Surprise
UMB Financial Corporation price-eps-surprise | UMB Financial Corporation Quote
Pacific Premier Bancorp Inc PPBI, slated to announce results before the market open, is expected to have recorded a decline in quarterly earnings, while revenues are expected to have risen. In June 2020, the company acquired Irvine, CA-based Opus Bank.
The Zacks Consensus Estimate for earnings of 56 cents per share implies a fall of 18.8% from the year-ago reported number. The consensus estimate for sales of $177 billion indicates a jump of 44.2%.
The consensus mark for NII of $160 million suggests 41.6% surge from the prior-year quarter. Also, the Zacks Consensus Estimate for total non-interest income is $17.1 million, implying a jump of 74.8%.
It has a Zacks Rank #3 and Earnings ESP of 0.00%.
Pacific Premier Bancorp Inc Price and EPS Surprise
Pacific Premier Bancorp Inc price-eps-surprise | Pacific Premier Bancorp Inc Quote
Simmons First National Corporation SFNC will report fourth-quarter results before market open. The company’s quarterly earnings and revenues are expected to have declined on a year-over-year basis.
The Zacks Consensus Estimate for earnings of 40 cents per share implies a plunge of 39.4% from the year-ago reported number. Likewise, the consensus estimate for sales of $199.4 billion indicates 6.3% fall from a year ago.
The consensus estimate for NII of $153 million suggests 8.9% fall from the prior-year quarter. The Zacks Consensus Estimate for total non-interest income is $45 million, implying a marginal rise.
It has a Zacks Rank #3 and Earnings ESP of +5.00%.
Simmons First National Corporation Price and EPS Surprise
Simmons First National Corporation price-eps-surprise | Simmons First National Corporation Quote
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Synovus Financial Corp. (SNV) : Free Stock Analysis Report
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