Small Cap Banks Q2 Earnings Queued Up: ABCB, CNOB & More

Market sentiments lifted as some of the major banking giants beat earnings expectations in second-quarter 2016, signaling a potentially better picture for the industry as a whole this season.

Several issues including industry wide weakness and global concerns plagued the first quarter of this year, but the second quarter depicted a better environment to some extent with positives including rebound in oil prices and continued recovery of the U.S. economy. However, banks continue to face revenue growth challenges amid the persistently low environment and heightened regulatory pressure.

Per our latest Earnings Preview article, overall earnings for the Finance sector in second-quarter 2016 are expected to be down 3.3% year over year. Also, revenues are expected to be down 0.5%. Notably, during the first quarter the sector reflected a 6.9% decline in earnings while revenues improved 3.3%.

As investors and market watchers are eager to see how companies will perform in comparison with the market expectations, our model offers some insights into it.

Per our quantitative model, in order to be confident about a positive surprise call, a stock needs to have the right combination of the two key criteria – a favorable Zacks Rank – Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) – and a positive Earnings ESP.

Earnings ESP is our proprietary methodology for identifying stocks that have high chances of surprising with their upcoming earnings announcement. It shows the percentage of difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Our research shows that for stocks with this combination, the chance of a positive earnings surprise is as high as 70%.

With most of the companies set to release results, let’s have a look at what’s in store for the following firms, releasing results in the coming days:

Ameris Bancorp (NASDAQ:ABCB) : The Zacks Consensus Estimate of 52 cents for the company remained unchanged over the last 30 days. Notably, the estimate reflects 36.84% year-over-year growth.

However, the company has a Zacks Rank #3 with an Earnings ESP of 0.00%, making it difficult to conclusively predict an earnings beat this quarter. Though Zacks Rank #3 increases the predictive power of an earnings beat, we also need a positive Earnings ESP to be sure of the same.

Regarding earnings surprise history, despite recording positive earnings surprise in two out of the four trailing quarters, the average earnings surprise was a negative 0.35%.

ConnectOne Bancorp, Inc. (NASDAQ:CNOB) : The estimates remained stable ahead of the company’s quarterly results. Notably, the Zacks Consensus Estimate of 31 cents for the company reflects a year-over-year decline of 7.84%.

Also, it is not likely to beat expectations as the company has a Zacks Rank #3 with an Earnings ESP of 0.00%.

Notably, the company reported positive earnings surprise in just one of the trailing four quarters with an average positive surprise of 4.40%.

Eastern Virginia Bankshares Inc. (NASDAQ:EVBS) : The Zacks Consensus Estimate of 11 cents for the company reflects solid year-over-year growth of 57.14%. However, the company has a Zacks Rank #3 with an Earnings ESP of 0.00%, lowering the chances of an earnings beat. Notably, estimates remained unchanged over the last 30 days.

Eastern Virginia delivered positive earnings surprises in two of the trailing four quarters with an average positive surprise of 4.15%.

Bank of Commerce Holdings (NASDAQ:BOCH) : The estimates prior to the company’s quarterly results remained stable. The Zacks Consensus Estimate of 19 cents for the company reflects year-over-year growth of 5.56%.

However, the company holds a Zacks Rank #3 with an Earnings ESP of 0.00%, making it difficult to conclusively predict an earnings beat this quarter.

Bank of Commerce delivered positive earnings surprises in two of the trailing four quarters with an average positive surprise of 8.95%.

First Bancshares Inc. (NASDAQ:FBMS) : The Zacks Consensus Estimate of 42 cents for the company has remained unchanged over the last 30 days. The estimate reflects year-over-year growth of 7.69%.

The company holds a Zacks Rank #3, with an Earnings ESP of 0.00%. Hence, the probability of an earnings beat by the company is quite low.

Notably, First Bancshares delivered positive earnings surprises in all the trailing four quarters with an average positive surprise of 10.74%.

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