Wrapping up Q3 earnings, we look at the numbers and key takeaways for the regional banks stocks, including CVB Financial (NASDAQ:CVBF) 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 94 regional banks stocks we track reported a satisfactory Q3. As a group, revenues missed analysts’ consensus estimates by 1.1%.
In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.
CVB Financial (NASDAQ:CVBF)
With roots dating back to 1974 and a focus on serving small and medium-sized businesses, CVB Financial (NASDAQ:CVBF) operates Citizens Business Bank, providing banking, lending, and trust services to businesses and individuals across California.
CVB Financial reported revenues of $128.6 million, up 1.7% year on year. This print fell short of analysts’ expectations by 1.2%. Overall, it was a slower quarter for the company with a slight miss of analysts’ revenue estimates and a narrow beat of analysts’ EPS estimates.
David Brager, President and Chief Executive Officer of Citizens Business Bank, commented, “Citizens Business Bank’s performance in the third quarter demonstrates our continued financial strength and focus on our vision of serving the comprehensive financial needs of small to medium sized businesses and their owners. Our consistent financial performance is highlighted by our 194 consecutive quarters, or more than 48 years, of profitability, and our 144 consecutive quarters of paying cash dividends. I would like to thank our customers and associates for their continuing commitment and loyalty.”
The market was likely pricing in the results, and the stock is flat since reporting. It currently trades at $18.63.
Read our full report on CVB Financial here, it’s free for active Edge members.
Best Q3: Customers Bancorp (NYSE:CUBI)
Originally founded with a "high-tech, high-touch" branch-light banking strategy, Customers Bancorp (NYSE:CUBI) is a bank holding company that provides commercial and consumer banking services through its Customers Bank subsidiary, with a focus on business lending and digital banking.
Customers Bancorp reported revenues of $232.1 million, up 38.5% year on year, outperforming analysts’ expectations by 7%. The business had a stunning quarter with an impressive beat of analysts’ net interest income estimates and a solid beat of analysts’ revenue estimates.
The market seems content with the results as the stock is up 2.3% since reporting. It currently trades at $67.07.
Is now the time to buy Customers Bancorp? Access our full analysis of the earnings results here, it’s free for active Edge members.
Weakest Q3: The Bancorp (NASDAQ:TBBK)
Operating behind the scenes of many popular fintech apps and prepaid cards you might use daily, The Bancorp (NASDAQ:TBBK) is a bank holding company that specializes in providing banking services to fintech companies and offering specialty lending products.
The Bancorp reported revenues of $174.6 million, up 38.8% year on year, falling short of analysts’ expectations by 10%. It was a disappointing quarter as it posted a significant miss of analysts’ revenue and net interest income estimates.
As expected, the stock is down 19.4% since the results and currently trades at $62.10.
Read our full analysis of The Bancorp’s results here.
United Community Banks (NYSE:UCB)
Starting as a small community bank in 1950 and expanding through strategic acquisitions across the Southeast, United Community Banks (NYSE:UCB) is a regional bank holding company that provides financial services including loans, deposits, wealth management, and merchant services across the southeastern United States.
United Community Banks reported revenues of $276.8 million, up 12.7% year on year. This print beat analysts’ expectations by 2.6%. Taking a step back, it was a satisfactory quarter as it also recorded a solid beat of analysts’ revenue estimates but net interest income in line with analysts’ estimates.
The stock is flat since reporting and currently trades at $29.97.
Read our full, actionable report on United Community Banks here, it’s free for active Edge members.
Hope Bancorp (NASDAQ:HOPE)
With roots in serving Korean-American communities and now expanded to a multi-ethnic clientele across 12 states, Hope Bancorp (NASDAQ:HOPE) operates Bank of Hope, providing commercial and retail banking services with a focus on serving multi-ethnic communities across the United States.
Hope Bancorp reported revenues of $142 million, up 21.8% year on year. This number topped analysts’ expectations by 2.3%. More broadly, it was a mixed quarter as it also produced a solid beat of analysts’ net interest income estimates but EPS in line with analysts’ estimates.
The stock is down 3% since reporting and currently trades at $10.37.
Read our full, actionable report on Hope Bancorp here, it’s free for active Edge members.
Market Update
The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.
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