US bank stocks swing on varying Q2 2024 earnings results

Some individual US bank stocks swung up and down as second-quarter earnings highlighted highs and lows.

The industry lost some of the ground it gained in the broader rally seen this month, with the KBW Nasdaq Bank Index down 1.58% between July 17 and July 24 and the S&P US BMI Banks Index down 2.34%. Some banks saw bigger moves down than others as they released less-than-favorable earnings results.

Banc of California Inc. had the worst-performing bank stock of the week after executives attempted to lower expectations for its transformation following its reverse merger transaction with PacWest Bancorp in November 2023.

"Restructurings take time, and we are moving at a fairly good pace," President and CEO Jared Wolff said during the company's second-quarter earnings presentation. "It's really important that we reset the narrative about the franchise that we're creating."

The company's stock declined 10.8% between July 17 and July 24, making it the worst-performing among banks listed on major US exchanges with a market capitalization greater than $100 million, according to an S&P Global Market Intelligence analysis.

Comerica Inc. posted the second-worst return of the week at negative 10.7% after the company reported that it expects to lose the Direct Express government benefit debit card program and the $3.3 billion in average noninterest-bearing deposits that came with it.

In the long term, Comerica expects to replace the deposits with core customer deposits, CFO James Herzog said during the company's second-quarter earnings presentation. Still, the news came as a disappointment to the Street and analysts.

Texas Capital Bancshares Inc. had the third-worst stock performance with a return of negative 7.9%. The company reduced its full-year revenue guidance but bumped up its expense guidance, prompting JPMorgan analysts to note they expect headwinds for the company in the second half of the year.

Best performers

Finward Bancorp posted the highest one-week return while First United Corp. and Sierra Bancorp tied for the second-highest return of the week at 11.5%.

In a July 25 research note, Raymond James analyst Steve Moss wrote that First United's financial results for the second quarter were better than expected, citing net interest margin expansion due to higher loan yields and lower funding costs.

"We like the [First United] franchise for its strong capital position and core deposit franchise," Moss wrote. "If favorable macro developments continue, [First United] is attractively valued for those with a longer-term outlook."

Meanwhile, Sierra Bancorp reported "strong" loan growth during the quarter thanks to its mortgage warehouse strategy, D.A. Davidson analyst Gary Tenner wrote in a July 22 note. The analyst expects the strategy to continue paying off in the third quarter given new mortgage warehouse relationships and additional growth in the company's commercial and industrial business.