Mixed earnings results for US community banks in Q3 2024

Out of 57 US community banks that reported earnings by Oct. 28, 32 reported year-over-year deteriorations in their earnings per share in the third quarter while 35 reported quarter-over-quarter improvements.

Nineteen banks improved both quarter over quarter and year over year, while 16 banks posted both sequential and year-over-year declines, according to an S&P Global Market Intelligence analysis of banks with total assets between $5 billion and $10 billion that trade on a major exchange.

Earnings increases

A surge in noninterest income lifted First Internet Bancorp's EPS by double digits for the fourth straight quarter, with the metric reaching 80 cents in the third quarter, up from 67 cents in the prior quarter and 39 cents a year earlier.

The company's noninterest income rose quarter over quarter, fueled by the gain on sale of loans increasing 19.8% and the Small Business Administration loan sale volume going up 22.1%, according to an earnings presentation. Growth in loans on the balance sheet and in earning asset yields drove a net interest income increase.

"In short, the revenue side of the equation is firing on all cylinders," Chairman and CEO David Becker said in an earnings call.

Nicolet Bankshares Inc. reported EPS of $2.10 for the third quarter, up from $1.92 in the prior quarter and $1.14 a year earlier. Its net income rose during the period due to loan repricing and increases in wealth and mortgage income, as well as noncore items including a balance sheet repositioning and a change in Wisconsin state tax law in 2023, both with impacts carrying through the end of the third quarter, according to an earnings release.

Serial acquirer Equity Bancshares Inc. closed its acquisition of KansasLand Bancshares Inc. during the third quarter, leading to a gain on acquisition totaling $831,000 in noninterest income. The company's EPS rose in the quarter to $1.28 from 76 cents in the second quarter and 80 cents a year earlier. Executives said in an earnings call that the company is on the hunt for M&A again.

In preparation for the Federal Reserve's interest rate cut in September, Equity Bancshares repositioned its balance sheet, reducing hits to earnings and margins, CFO Chris Navratil said in the call.

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Earnings declines

Banks with both sequential and year-over-year EPS declines included Pathward Financial Inc., Metropolitan Bank Holding Corp. and First Bancshares Inc.

Pathward posted EPS of $1.35 for the quarter ended Sept. 30, down from $1.66 in the previous quarter and $1.36 in the same period in 2023. The sale of its insurance business was not included in earnings results. Once sold, the company plans to pay off borrowings and potentially rebalance its securities portfolio using the proceeds.

Metropolitan Bank logged EPS of $1.08 for the quarter, down from $1.50 in the prior quarter and $1.97 a year earlier. Pretax expenses on a regulatory reserve, technology costs and regulatory expenses contributed to the earnings compression.

Merger target First Bancshares reported EPS of 59 cents for the third quarter, down from 62 cents in the second quarter and 77 cents in the prior-year quarter. The company disclosed that its announced deal with Renasant Corp. came with merger fees that bumped up noninterest expenses in the quarter and that noninterest income decreased due to lower fee income.