As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q3. Today, we are looking at regional banks stocks, starting with Enterprise Financial Services (NASDAQ: EFSC).
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%.
While some regional banks stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 2.6% since the latest earnings results.
Enterprise Financial Services (NASDAQ: EFSC)
Starting as a single bank in Missouri in 1988 and expanding through strategic growth, Enterprise Financial Services (NASDAQ: EFSC) is a financial holding company that offers banking, lending, and wealth management services to businesses and individuals across seven states.
Enterprise Financial Services reported revenues of $204.9 million, up 24.3% year on year. This print exceeded analysts’ expectations by 17.3%. Despite the top-line beat, it was still a mixed quarter for the company with an impressive beat of analysts’ revenue estimates but a significant miss of analysts’ EPS estimates.
Enterprise Financial Services pulled off the biggest analyst estimates beat of the whole group. Still, the market seems discontent with the results. The stock is down 2.4% since reporting and currently trades at $52.20.
Is now the time to buy Enterprise Financial Services? Access our full analysis of the earnings results 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 a solid beat of analysts’ net interest income estimates and an impressive beat of analysts’ revenue estimates.
Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 2.4% since reporting. It currently trades at $63.99.
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 estimates and a significant miss of analysts’ net interest income estimates.
As expected, the stock is down 22.7% since the results and currently trades at $59.66.
Read our full analysis of The Bancorp’s results here.
Pinnacle Financial Partners (NASDAQ: PNFP)
Founded in 2000 with a focus on delivering big-bank capabilities with community bank personalization, Pinnacle Financial Partners (NASDAQ: PNFP) is a Tennessee-based financial holding company that provides banking, investment, trust, mortgage, and insurance services to businesses and individuals.
Pinnacle Financial Partners reported revenues of $544.8 million, up 13.8% year on year. This result topped analysts’ expectations by 4.3%. It was a very strong quarter as it also put up an impressive beat of analysts’ revenue estimates and a solid beat of analysts’ tangible book value per share estimates.
The stock is down 4.3% since reporting and currently trades at $86.23.
WSFS Financial (NASDAQ: WSFS)
Founded in 1832 as Wilmington Savings Fund Society and one of the oldest banks in America still operating under its original name, WSFS Financial (NASDAQ: WSFS) operates a community banking and wealth management franchise primarily serving customers in the Mid-Atlantic region through its main subsidiary, WSFS Bank.
WSFS Financial reported revenues of $270.5 million, up 1.1% year on year. This number surpassed analysts’ expectations by 0.9%. Overall, it was a very strong quarter as it also logged a solid beat of analysts’ tangible book value per share estimates and a beat of analysts’ EPS estimates.
The stock is flat since reporting and currently trades at $53.11.
Read our full, actionable report on WSFS Financial 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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