Bank Stock Roundup: Q3 Earnings In Full Swing; RF, FITB, COF Post Decent Numbers

Performance of major banks remained bullish over the last five trading days as quarterly numbers revealed that banks were able overcome the challenging operating backdrop to some extent. Also, management commentary for the quarters ahead was fairly positive.

Banks reported decent third-quarter numbers on the back of rise in non-interest income, manageable expense levels (despite undertaking technology upgrades) and modest loan growth. Also, rebound in mortgage banking business was a major positive.

On the other hand, net interest income and margins remained under pressure owing to lower interest rates and flattening/inversion of the yield curve in the July-September quarter. Further, banks witnessed an increase in credit costs.

(Read: Bank Stock Roundup for the Week Ending Oct 18, 2019)

Major Earnings Releases of the Week

1. Regions Financial (NYSE:RF) reported third-quarter 2019 adjusted earnings of 39 cents per share, in line with the Zacks Consensus Estimate. Lower expenses and higher non-interest income were the driving factors. However, lower net interest income due to reduced market-interest rates, and elevated provisions were major drags. (Read more: Regions Financial's Q3 Earnings in Line, Revenues Up)

2. Driven by higher mortgage banking revenues, Fifth Third Bancorp (NASDAQ:FITB) delivered third-quarter 2019 positive earnings surprise of 2.7%. Adjusted earnings per share of 75 cents surpassed the Zacks Consensus Estimate of 73 cents. Increase in revenues, aided by expansion of margin and fee income growth, was a key positive. However, escalating expenses and provisions, along with fall in loans, were the undermining factors. (Read more: Fifth Third Q3 Earnings Top Estimates, Revenues Rise)

3. Capital One’s (NYSE:C) third-quarter adjusted earnings of $3.32 per share easily surpassed the Zacks Consensus Estimate of $2.87. Results benefited from rise in non-interest income, improving loan and deposit balances, and strength in card business. However, a rise in credit cost, lower net interest income and higher operating expenses were the undermining factors. (Read more: Capital One Stock Down 2.6% Despite Q3 Earnings Beat)

Price Performance

Here is how the seven major stocks performed:

Over the last five trading sessions, JPMorgan (NYSE:JPM) and Citigroup (NYSE:C) were the major gainers, with both their shares gaining 3.7%. Moreover, shares of Bank of America (NYSE:BAC) rallied 3.3%.

In the past six months, shares of JPMorgan and U.S. Bancorp (NYSE:USB) have jumped 11.8% and 10.6%, respectively. In addition, shares of PNC Financial (NYSE:PNC) have gained 10.3%.

What’s Next?

In the coming week, the focus will majorly be on the two-day FOMC meeting. Per the CME FedWatch tool, chances of another rate cut are as high as 93.5%. Thus, banks, which majorly benefit from higher rates, are likely to be adversely impacted.

Notably, some banks scheduled to report quarterly numbers in the next five trading days are Bank of Hawaii Corporation and TCF Financial Corporation on Oct 28, and UMB Financial Corporation on Oct 29. Hilltop Holdings Inc. and Cullen/Frost Bankers, Inc. are slated to announce results on Oct 31.

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