Wrapping up Q1 earnings, we look at the numbers and key takeaways for the regional banks stocks, including Merchants Bancorp (NASDAQ: MBIN) 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 105 regional banks stocks we track reported a mixed Q1. As a group, revenues missed analysts’ consensus estimates by 1.6%.
In light of this news, share prices of the companies have held steady as they are up 4.5% on average since the latest earnings results.
Merchants Bancorp (NASDAQ: MBIN)
With a strategic focus on low-risk, government-backed lending programs, Merchants Bancorp (NASDAQCM:MBIN) is an Indiana-based bank holding company specializing in multi-family mortgage banking, mortgage warehousing, and traditional banking services.
Merchants Bancorp reported revenues of $145.9 million, down 13.1% year on year. This print fell short of analysts’ expectations by 12.7%. Overall, it was a disappointing quarter for the company with a significant miss of analysts’ net interest income and EPS estimates.
"Despite some challenges this quarter, we remain confident in our strategic direction and outlook for future performance. The lower gain on sale of loans and recent deterioration in asset quality are temporary setbacks. Our ongoing efforts to optimize loan workouts and to invest in growth opportunities position us for a stronger and more resilient future. Our loan pipeline remains strong, and we are well-positioned to execute when the uncertain interest rate environment becomes clearer for our borrowers," said Michael F. Petrie, Chairman and CEO of Merchants.
The stock is down 4.7% since reporting and currently trades at $32.03.
Is now the time to buy Merchants Bancorp? Access our full analysis of the earnings results here, it’s free.
Best Q1: Butterfield Bank (NYSE: NTB)
Founded in 1784 as one of the oldest banks in the Western Hemisphere, Butterfield Bank (NYSE: NTB) provides banking, wealth management, and trust services to individuals and businesses in select offshore financial centers including Bermuda, Cayman Islands, and the Channel Islands.
Butterfield Bank reported revenues of $147.8 million, up 3.7% year on year, outperforming analysts’ expectations by 4.4%. The business had a stunning quarter with an impressive beat of analysts’ net interest income estimates and a solid beat of analysts’ EPS estimates.
The market seems content with the results as the stock is up 3.2% since reporting. It currently trades at $43.76.
Is now the time to buy Butterfield Bank? Access our full analysis of the earnings results here, it’s free.
Weakest Q1: Triumph Financial (NASDAQ: TFIN)
Originally focused on traditional banking before pivoting to serve the transportation sector, Triumph Financial (NASDAQ: TFIN) provides specialized financial services to the trucking industry, including payments processing, factoring, banking, and data intelligence solutions.
Triumph Financial reported revenues of $100.8 million, flat year on year, falling short of analysts’ expectations by 3.8%. It was a disappointing quarter as it posted a significant miss of analysts’ tangible book value per share and net interest income estimates.
Interestingly, the stock is up 11.6% since the results and currently trades at $55.62.
Read our full analysis of Triumph Financial’s results here.
SouthState (NYSE: SSB)
With roots dating back to the Great Depression era of 1933, SouthState (NYSE: SSB) is a financial holding company that provides banking services, wealth management, and correspondent banking services across six southeastern states.
SouthState reported revenues of $630.6 million, up 51.8% year on year. This print beat analysts’ expectations by 3.8%. It was an exceptional quarter as it also produced a solid beat of analysts’ EPS and net interest income estimates.
The stock is down 1.8% since reporting and currently trades at $88.21.
Read our full, actionable report on SouthState here, it’s free.
First Financial Bankshares (NASDAQ: FFIN)
With roots dating back to 1890 and a network spanning over 70 locations across the Lone Star State, First Financial Bankshares (NASDAQ: FFIN) is a Texas-focused regional bank providing commercial banking, trust services, and wealth management across numerous communities throughout the state.
First Financial Bankshares reported revenues of $149 million, up 12.7% year on year. This number topped analysts’ expectations by 1.7%. Zooming out, it was a mixed quarter as it also recorded an impressive beat of analysts’ tangible book value per share estimates but EPS in line with analysts’ estimates.
The stock is up 9.2% since reporting and currently trades at $35.67.
Read our full, actionable report on First Financial Bankshares here, it’s free.
Market Update
In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.
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