The earnings season is back, and with most of the market focusing on tech stocks, some of us may have missed the stellar results from other sectors. One sector that has started to show some exciting results is the financial sector. Mixed in with all the noise, some of these companies have begun to outpace their peers regarding recovery, resiliency, and growth. At the same time, others have been straight-up abysmal. In this article, we will look at three financial stocks to buy.
First BanCorp. (FBP)
First BanCorp. is a financial holding company that operates in six segments. This includes commercial and corporate banking for its lending and other services; retail/consumer banking for deposit and lending activities; treasury and investments segment for investment and management functions; mortgage banking for residential mortgage services and related activities; United States and Virgin Islands operations for its commercial and retail banking activities in both areas. The company recently announced its appointment of Adam Curie as President of First Bank to help execute its strategic vision for the future.
First Bancorp’s latest report highlighted the company’s strength and resilience despite the continued challenges the banking industry is facing. According to their financials, total assets grew by $207.5 million to $2.95 billion, with total loans and deposits increasing by 11.2% and 9.3% on a YoY basis. While net income slowed down by 24.3%, its asset quality ratio on non-performing assets to total assets maintained strong at 0.07%, estimated total risk-based capital ratio at 13.66%, liquidity on uninsured deposits of 150%, and an efficiency ratio of 52.43% highlighting its financial strength. This latest report underscores the company’s strong bullish case as a banking play for investors looking to add finance stocks to their portfolio.
Bread Financial Holdings, Inc. (BFH)
Bread Financial Holdings, Inc. is a payment, savings, and lending solutions financial service company that offers private label, split-pay products, and co-brand credit cards via its comprehensive product suite. It also provides wholesale deposits, done by various financial counterparties and through contractual arrangements, and direct-to-consumer retail deposits. The company has recently announced its new chief technology officer, Ms. Alegra Discroll, whose understanding of financial tech services will help boost the BFH’s tech modernizations.
The company’s latest financials revealed solid results, with net income growing by $177.0 million, tier 1 capital ratio growing 350 basis points, and tangible book value per share (BVPS) surging by 49%. Despite its decrease in revenue by 2%, the company’s expense discipline led to a 6% decrease in expenses YoY.
Bread Financial also reported a stronger balance sheet with its 18% growth in direct-to-consumer deposit balances and a completed offering of $600 million in senior unsecured notes due in 2029. Despite some of its challenges in some metrics, the company’s strengthening balance sheet, expense discipline, 49% tangible book value per share, and 12.2% equity tier 1 capital ratio make a compelling buy case for the company.
QCR Holdings (QCRH)
QCR Holdings, Inc. is a multi-bank holding firm that operates its subsidiaries in Cedar Rapids Bank & Trust (CRBT) in Cedar Rapids, Quad City Bank & Trust (QCBT) in the Quad Cities, and its other banks in Waterloo/Cedar Falls, Des Moines/Ankeny, and Springfield communities for its full-service consumer and full-service commercial trust and asset management services. Its primary operations focus on attracting depositors and investing them in securities, loans, or leases. The company also offers direct and equipment leasing contracts through QCBT’s subsidiary, m2 Equipment Finance, LLC.
QCR Holdings’ latest financial results reported a record-breaking fourth quarter and full year 2023. Net income reached $32.9 million for the quarter, a 6.30% YoY growth, and $113.6 million for the year, a 14.63% YoY growth. Some of the noteworthy highlights of the company are its substantial rise in tangible BVPS (book value per share) by $3.48, a 35% annualized growth, an increase in TCE/TA ratio by 70 basis points, an 8.75% YoY growth, and a 123% YoY increase in its Capital Markets Revenue. In addition, its loan and lease grew 11% annually, and deposits rose by 9%. The company also stated increased liquidity, improving asset quality, and stable core deposits. Despite the negative dynamics of the sector, the company’s strong performance emphasizes its strength.
Earnings have been one of the most important sources of financial information, and earnings surprises usually result in immediate stock price hikes. They can also be a leading indicator for future price growth over time. That said, relying on the latest quarters’ earnings along isn’t enough. Investors should look at the big picture, past, present, and future, before making any investment decisions.
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On the date of publication, Rick Orford did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.