Southeast Banks' Q2 Earnings Preview: FHN, ANCX, FBMS

The Q2 earnings season for the banks kick-starts today with the release of the industry behemoth JPMorgan Chase & Co.’s (NYSE:JPM) results. Like the past few quarters, earnings expectations for the sector are not encouraging.

The banking sector continues to face global growth worries, lower demand for loans, uncertainty over the timing of the next Fed rate hike, low levels of client activities and volatility in oil prices. Further, the Brexit fallout also adds to the concerns.

Driven by these worries, investors fled to safe-haven assets like Treasury bonds, thereby pushing bond yields to record lows. Hence, such an interest rates backdrop will definitely hurt the banks’ profitability by putting additional pressure on net interest margin.

Nonetheless, banks of all regions are not equally vulnerable to the multitude of perils. In fact, economies of some of the regions look favorable for their resident banks. Hence, 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. Moreover, the regional economy is showing signs of revival since the 2008 financial crisis. This placed the Southeast banks on a growth path with a rise in demand for loans.

Therefore, there might be a surprise in store for Southeast banking stocks this earnings season amid such a dismal scenario. Let’s have a look at the three Southeast banking stocks that are likely to announce their earnings tomorrow.

First Horizon National Corporation (NYSE:FHN) is slated to announce results before the market opens. The Zacks Consensus Estimate for the company witnessed upward revisions over the last 30 days. Also, our estimate of 23 cents per share for the upcoming release indicates a year-over-year rise of 3.54%.

Nonetheless, with an Earnings ESP of 0.00% and a Zacks Rank #2 (Buy) it is difficult to predict an earnings beat for First Horizon in the upcoming release. Though Zacks Rank #2 increases the predictive power of an earnings beat, we also need a positive Earnings ESP to be sure of the same.

Notably, the earnings surprise history for First Horizon has been decent.

Access National Corporation (NASDAQ:ANCX) is expected to report before the opening bell. The Zacks Consensus Estimate for the company remained stable over the last 30 days. However, our estimate of 35 cents per share for the upcoming release indicates a year-over-year decline of about 7.89%.

Further, the company has a Zacks Rank #3 (Hold) with an Earnings ESP of 0.00%, making it difficult to conclusively predict an earnings beat this quarter.

However, Access National boasts a decent surprise history as indicated by the chart below:

First Bancshares Inc. (NASDAQ:FBMS) is also expected to announce results before the market opens. Like Access National, the Zacks Consensus Estimate of 42 cents for the company has remained unchanged over the last 30 days. Notably, the estimate reflects 7.69% year-over-year growth.

Also, First Bancshares has a decent earnings surprise history, as evident from the chart given below:

Nonetheless, our quantitative model does not conclusively predict an earnings beat. The company has a Zacks Rank #3 with an Earnings ESP of 0.00%.

Irrespective of an earnings beat or miss, investors should focus on the companies’ fundamentals to make investment decisions.