BB&T Corporation BBT is slated to announce third-quarter 2018 results on Oct 18, before the market opens. Per the Fed's latest data , commercial and industrial loans recorded decent growth, with the quarter witnessing an overall modest improvement in lending activities.
Notably, BB&T anticipates total loans, on an annualized basis, to grow 2-4% sequentially in the to-be-reported quarter. Driven by loan growth, earning assets are likely to rise too. The Zacks Consensus Estimate for average interest earning assets of $1.96 trillion indicates a slight rise sequentially.
Also, management expects GAAP and core net interest margin to be improve on a sequential basis, supported by rise in interest rates. Thus, BB&T's net interest income (NII), one of the primary sources of revenues, will aid earnings growth. The Zacks Consensus Estimate for NII of $1.69 billion for the to-be-reported quarter reflects 2.1% growth from the prior quarter.
Now, let's check out some of the other factors that are likely to influence BB&T's performance: Fee income to provide support:
Given the rise in deposit balances, BB&T islikely to register a rise in service charge on deposits. The consensus estimate for service charge on deposits is $182 million, up 1.7% from the prior quarter.
Additionally, while rise in interest rates must have resulted in a fall in refinancing activity, overall mortgage originations seem to be decent in the third quarter. Thus, the Zacks Consensus Estimate for mortgage banking income of $94 million is stable sequentially.
Moreover, bankcard fees and merchant discounts are estimated to be $74 million, indicating a rise of 2.8% from the prior year.
Also, investment banking and brokerage fees and commissions are likely to support fee income growth to some extent. The consensus estimate for the same is $111 million, reflecting a rise of 1.8% sequentially.
However, BB&T is expected to witness a decline in insurance income for the to-be-reported quarter. The Zacks Consensus Estimate for insurance commission of $451 million shows 6.2% fall on a sequential basis.
Overall, total non-interest income is projected to remain relatively stablefrom the prior quarter as the consensus estimate for the to-be-reported quarter is pegged at $1.22 billion. Expenses to rise:
Excluding merger-related and restructuring charges, and other one-time items, BB&T expects expenses to increase 1-3% year over year. Asset quality is not of much support:
BB&T expects loan loss provision to match net charge-offs (NCOs) in addition to providing for loan growth. Further, management expects NCO rates to increase sequentially and be in the range of 35-45 basis points on the assumption of no deterioration in the economy.
The Zacks Consensus Estimate for non-performing assets of $620 million for the to-be-reported quarter shows a marginal decline on a sequential basis.
Here is what our quantitative model predicts:
The chances of BB&T beating the Zacks Consensus Estimate in the third quarter are low. This is because it doesn't have the right combination of the two key ingredients - a positive Earnings ESP
and Zacks Rank #3 (Hold) or higher - for increasing the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter
. Earnings ESP:
The Earnings ESP for BB&T is -0.36%. Zacks Rank:
BB&T carries a Zacks Rank #3. But we need to have a positive Earnings ESP to be sure of the earnings beat.
BB&T Corporation Price and EPS Surprise
BB&T Corporation Price and EPS Surprise | BB&T Corporation Quote
Notably, the Zacks Consensus Estimate for earnings for the quarter is $1.00, which reflects year-over-year improvement of 28.2%. Further, the consensus estimate for sales of $2.91 billion indicates 3.6% growth from the prior-year quarter.
Stocks That Warrant a Look
Here are a few bank stocks that you may want to consider, as our model shows that they have the right combination of elements to post an earnings beat in their upcoming releases.
M&T Bank Corp. MTB is slated to release results on Oct 18. The company has an Earnings ESP of +0.35% and carries a Zacks Rank of 3. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
People's United Financial, Inc. PBCT has an Earnings ESP of +0.30% and holds a Zacks Rank of 2 (Buy). It is slated to report quarterly numbers on Oct 18.
Ameris Bancorp ABCB has an Earnings ESP of +1.11% and has a Zacks Rank #3. It is scheduled to report results on Oct 19.
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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report BB&T Corporation (BBT): Free Stock Analysis Report M&T Bank Corporation (MTB): Free Stock Analysis Report Ameris Bancorp (ABCB): Free Stock Analysis Report People's United Financial, Inc. (PBCT): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research