Performance of U.S. banks is not likely to improve in the near-term as  global growth concerns and low client activities continue to hamper profitability. But the picture doesn’t look extremely gloomy as there are many small regional banks which are performing well. Also, with the odds of an interest rate hike in June, the banks’ top lines are poised to benefit.
Notably, small banks are expected to benefit more than the large banks in a rising rate environment, as the primary source of revenues for small regional banks is interest income.
However, banks in all regions are not equally susceptible to a multitude of hazards. In fact, economies of some of the regions look favorable for their resident banks. So these banks might be able to deal with the broader issues better than others. One such region is the Southeast.
The economy of the Southeast region is dependent on tourism, automobile industry, technology firms and financial services. The regional economy is showing signs of revival since the 2008 financial crisis. According to the Bureau of Labor Statistics, the Southeast region’s unemployment rate was 5.2% in Apr 2016, substantially improving from nearly 9% witnessed during the height of financial crisis in 2008.
The economic revival has placed the Southeast region’s banks on a growth path with a rise in demand for loans. Further, the Federal Reserve’s projection of two rate hikes this year will definitely increase the banks’ top line. Also, their financials will get a boost from the improving asset quality and decreases in delinquent loans.
Here is the list of five Southeast banks that have witnessed year-over-year increase in profitability in the last concluded quarter. Further, these banks are expected to witness an earnings growth of 5% or more in 2016. All these banks hold a Zacks Rank #1 (Strong Buy), indicating the possibility of a solid performance in the near future.
First Bancorp (FBP - Snapshot Report) is the bank holding company for FirstBank Puerto Rico. The company provides a range of financial products and services to retail, commercial, and institutional clients.
In the first quarter 2016, First Bancorp earnings surpassed the Zacks Consensus Estimate driven by lower provisions. The company’s earnings are projected to surge 320% year over year in 2016.
Additionally, over the last 30 days, the Zacks Consensus Estimate for 2016 increased 23.5% to 42 cents and it rose 7.5% to 43 cents for 2017. Moreover, the shares of First Bancorp have appreciated more than 58% over the last three months.
Cardinal Financial Corp. (CFNL - Snapshot Report) provides various banking products and services to commercial and retail customers in Northern Virginia, Maryland and Washington, D.C.
