Looking back on regional banks stocks’ Q2 earnings, we examine this quarter’s best and worst performers, including KeyCorp (NYSE:KEY) 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 98 regional banks stocks we track reported a satisfactory Q2. As a group, revenues were in line with analysts’ consensus estimates.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 5.1% since the latest earnings results.
KeyCorp (NYSE:KEY)
Tracing its roots back to 1849 during the California Gold Rush era, KeyCorp (NYSE:KEY) operates KeyBank, a full-service regional bank providing retail and commercial banking, wealth management, and investment services across 15 states.
KeyCorp reported revenues of $1.83 billion, up 20% year on year. This print exceeded analysts’ expectations by 1.5%. Despite the top-line beat, it was still a mixed quarter for the company with a narrow beat of analysts’ net interest income estimates but EPS in line with analysts’ estimates.
Unsurprisingly, the stock is down 5.2% since reporting and currently trades at $17.36.
Is now the time to buy KeyCorp? Access our full analysis of the earnings results here, it’s free.
Best Q2: UMB Financial (NASDAQ:UMBF)
With roots dating back to 1913 and a name derived from "United Missouri Bank," UMB Financial (NASDAQ:UMBF) is a financial holding company that provides banking, asset management, and fund services to commercial, institutional, and individual customers.
UMB Financial reported revenues of $689.2 million, up 76.7% year on year, outperforming analysts’ expectations by 8.6%. The business had a stunning quarter with an impressive beat of analysts’ EPS estimates and a solid beat of analysts’ tangible book value per share estimates.
However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $109.80.
Is now the time to buy UMB Financial? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: Coastal Financial (NASDAQ:CCB)
Pioneering the intersection of traditional banking and financial technology in the Pacific Northwest, Coastal Financial (NASDAQ:CCB) operates as a bank holding company that provides traditional banking services and Banking-as-a-Service (BaaS) solutions to consumers and businesses.
Coastal Financial reported revenues of $119.4 million, down 11.7% year on year, falling short of analysts’ expectations by 21.5%. It was a disappointing quarter as it posted a significant miss of analysts’ net interest income estimates and a significant miss of analysts’ EPS estimates.
As expected, the stock is down 2.9% since the results and currently trades at $98.50.
Read our full analysis of Coastal Financial’s results here.
Live Oak Bancshares (NYSE:LOB)
Founded during the 2008 financial crisis with a vision to reimagine small business banking through technology, Live Oak Bancshares (NYSE:LOB) is a bank holding company that specializes in providing online banking services and SBA-guaranteed loans to small businesses across targeted industries nationwide.
Live Oak Bancshares reported revenues of $143.7 million, up 14.6% year on year. This print beat analysts’ expectations by 2.7%. Overall, it was a strong quarter as it also put up an impressive beat of analysts’ net interest income estimates and a narrow beat of analysts’ tangible book value per share estimates.
The stock is down 1.9% since reporting and currently trades at $31.83.
Read our full, actionable report on Live Oak Bancshares here, it’s free.
Origin Bancorp (NYSE:OBK)
Founded in 1912 during the early boom days of Louisiana banking, Origin Bancorp (NYSE:OBK) is a financial holding company that provides personalized banking services to businesses, municipalities, and individuals across Texas, Louisiana, and Mississippi.
Origin Bancorp reported revenues of $83.5 million, down 13.3% year on year. This result missed analysts’ expectations by 14.5%. All in all, it was a mixed quarter for the company.
The stock is down 5.4% since reporting and currently trades at $35.61.
Read our full, actionable report on Origin Bancorp here, it’s free.
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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