Zions, Western Alliance stocks rise, while East West Bancorp and National Bank Holdings lose ground

By Steve Gelsi

Bank stocks mostly rise as Q2 results pile up

Western Alliance Bancorp, Zions Bancorp and KeyCorp moved higher on Thursday as bank stocks traded mixed amid a flood of second-quarter results from financial firms.

Bank stocks have been mostly in retreat in 2023 on jitters around higher interest rates and the failure of three S&P 500 component banks in March and April, but the sector as fared relatively well against Wall Street's reduced expectations for the quarter.

That's been enough to provide a lift to some bank stocks Thursday, on the heels of gains earlier in the week, although some stocks retreated.

East West Bancorp Inc. stock (EWBC), for example, retreated by 2.7% after it s second-quarter earnings of $2.20 a share fell a penny short of estimates, and its revenue of $645.4 million also missed expectations.

KeyCorp (KEY) stock rose 3.5% after its net income and revenue fell short of Wall Street estimates, though its deposits grew by $1 billion during the quarter.

KeyCorp's second-quarter profit fell to $250 million, or 27 cents a share, from $504 million, or 54 cents a share in the year-ago quarter. The results included 9 cents a share to build up allowances.

Analysts were looking for earnings of 32 cents a share, according to estimates compiled by FactSet.

Revenue fell 11% to $1.6 billion, below the analyst target of $1.62 billion.

Fifth Third Bancorp. (FITB) was up 1.9% after it said its second-quarter net income rose to $562 million, or 82 cents a share, from $1.1 billion, or 76 cents a share in the year-ago quarter.

Excluding 5 cents a share in one-time items, Fifth Third earned 87 cents a share, below the analyst estimate of 88 cents a share, as compiled by FactSet.

Second-quarter revenue of $2.19 billion fell short of the estimate of $2.23 billion. Looking ahead, Fifth Third expects third-quarter revenue to decline sequentially by 2% to 4%, but total revenue for 2023 to rise by 3% to 4% over 2022's total. Net interest income for 2023 is expected to increase by 3% to 5%.

Meanwhile Western Alliance Bancorp. WAL was up by 5.1%.

Hovde Group analysts reiterated their high-conviction outperform rating on the stock, and hiked their price target by $5 to $65 a share. "Following a remarkably strong deposit growth quarter, it is clear that the market has found confidence in WAL's balance sheet and liquidity playbook," Hovde analysts said in a research note.

PacWest Bancorp (PACW) was down by 0.4% ahead of its second-quarter financial update on July 25.

Raymond James upgraded U.S. Bancorp (USB) to market perform from underperform following second-quarter results, which included lower revenue and net interest income guidance.

"We believe the risk of future negative revenue revision guidance for USB relative to that of its peers is not materially different," analysts at Raymond James said.

U.S. Bancorp stock was down by 0.5%.

Jefferies analysts reiterated a buy rating on Webster Financial (WBS), as well as a buy rating on East West Bancorp and a hold ratings on Texas Capital Bancshares (TCBI) and Citizens Financial Group (CFG).

Webster Financial rose 2.6%, while Citizens Financial moved down by 0.7% and Texas Capital Bancshares advanced by 4.5%.

Zions Bancorp (ZION) is rallying by 10.8% after it reported net income of $175 million, or $1.11 a share, compared with $203 million, or $1.29 a share, in the same quarter last year. The bank beat the estimate of $1.08 a share.

National Bank Holdings Corp. (NBHC) dropped 6.3% after it missed its profit target of 86 cents a share, a penny short of estimates. Hovde Group analyst said the bank turned in a solid quarter, but faced "noise in the quarter as well as a likely more tepid net interest income outlook."

Among major bank indexes, the KBW Bank ETF (KBWB) rose 0.2%, the KBW Nasdaq Bank Index also rose 0.3%, while the SPDR S&P Regional Bank Index (KRE) fell 0.7% and the Financial Select SPDR ETF (XLF) rose by 0.6%.

Also read:Discover stock falls more than 13% after company discloses FDIC probe

-Steve Gelsi

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07-20-23 1212ET

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