As the Q3 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the diversified banks industry, including U.S. Bancorp (NYSE: USB) and its peers.
At their core, diversified banks take in deposits and engage in various forms of lending, which means revenue is generated through interest rate spreads (difference between loan and deposit rates) and fees. Other revenue comes from adjacent services such as wealth management, card and account fees, and products such as annuities. These institutions benefit from rising interest rates that improve NIMs (net interest margins), digital transformation reducing operational costs, and expanding wealth management services as populations age. However, they face headwinds including fintech competition disrupting traditional models (how disruptive is crypto?), stringent regulatory requirements increasing compliance costs, and cybersecurity threats requiring substantial technology investments. Economic downturns also pose risks through potential loan defaults and compressed margins during accommodative monetary policy periods.
The 7 diversified banks stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 2.4%.
In light of this news, share prices of the companies have held steady as they are up 2.5% on average since the latest earnings results.
U.S. Bancorp (NYSE: USB)
With roots dating back to 1863 and a presence across 26 states primarily in the Midwest and West, U.S. Bancorp (NYSE: USB) is one of America's largest banks providing lending, deposit services, wealth management, payment processing, and merchant services to individuals and businesses.
U.S. Bancorp reported revenues of $7.3 billion, up 6.8% year on year. This print exceeded analysts’ expectations by 2.1%. Overall, it was a strong quarter for the company with a solid beat of analysts’ net interest income estimates and an impressive beat of analysts’ revenue estimates.
Interestingly, the stock is up 1.5% since reporting and currently trades at $47.17.
Is now the time to buy U.S. Bancorp? Access our full analysis of the earnings results here, it’s free for active Edge members.
Best Q3: Citigroup (NYSE: C)
With operations in nearly 160 countries and a history dating back to 1812, Citigroup (NYSE: C) is a global financial services company that provides banking, investment, wealth management, and payment solutions to consumers, corporations, and governments.
Citigroup reported revenues of $22.09 billion, up 9.3% year on year, outperforming analysts’ expectations by 4.6%. The business had an exceptional quarter with an impressive beat of analysts’ revenue and EPS estimates.
Citigroup scored the biggest analyst estimates beat among its peers. The market seems content with the results as the stock is up 3.5% since reporting. It currently trades at $99.47.
Is now the time to buy Citigroup? Access our full analysis of the earnings results here, it’s free for active Edge members.
Slowest Q3: Truist Financial (NYSE: TFC)
Born from the 2019 merger of BB&T and SunTrust in one of the largest banking combinations since the 2008 financial crisis, Truist Financial (NYSE: TFC) is a bank holding company that offers a wide range of financial services including consumer and commercial banking, wealth management, insurance, and lending solutions.
Truist Financial reported revenues of $5.19 billion, flat year on year, exceeding analysts’ expectations by 0.7%. Still, it was a mixed quarter as it posted a slight miss of analysts’ net interest income estimates.
Truist Financial delivered the weakest performance against analyst estimates and slowest revenue growth in the group. Interestingly, the stock is up 5% since the results and currently trades at $43.14.
Read our full analysis of Truist Financial’s results here.
PNC Financial Services Group (NYSE: PNC)
Tracing its roots back to 1852 when Pittsburgh's industrial boom demanded stronger financial institutions, PNC (NYSE: PNC) is a diversified financial institution that provides retail banking, corporate banking, and asset management services through a coast-to-coast branch network.
PNC Financial Services Group reported revenues of $5.92 billion, up 8.9% year on year. This print beat analysts’ expectations by 1.8%. Overall, it was a strong quarter as it also logged an impressive beat of analysts’ tangible book value per share estimates and a decent beat of analysts’ revenue estimates.
The stock is down 4.4% since reporting and currently trades at $181.50.
JPMorgan Chase (NYSE: JPM)
Tracing its roots back to 1799 when its earliest predecessor was founded by Aaron Burr, JPMorgan Chase (NYSE: JPM) is a leading financial services company offering investment banking, consumer banking, commercial banking, and asset management services globally.
JPMorgan Chase reported revenues of $47.12 billion, up 8.8% year on year. This result topped analysts’ expectations by 4.1%. Taking a step back, it was a satisfactory quarter as it also recorded a solid beat of analysts’ revenue estimates but a slight miss of analysts’ net interest income estimates.
The stock is down 1.5% since reporting and currently trades at $303.25.
Read our full, actionable report on JPMorgan Chase here, it’s free for active Edge members.
Market Update
Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.
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