Top Bank Stocks To Buy Following Earnings Season

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 AVNU
Capital City Bank Group Inc CCBG
Citizens Financial Group Inc CFG
Capital One Financial Corp COF
Eagle Bancorp Inc EGBN
Flagstar Bancorp FBC
First Business Financial Services Inc FBIZ
Mercantile Bank Corp MBWM
MidSouth Bancorp Inc MSL
M&T Bank Corp MTB
Pacific Premier Bancorp PPBI
Signature Bank SBNY
SVB Financial Group SIVB
Square 1 Financial SQBK
SunTrust Banks Inc STI
Zions Bancorporation ZION

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Posted In: Analyst ColorEarningsLong IdeasNewsAnalyst RatingsTrading IdeasFinancialsRegional Banks
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