Investment bank Keefe, Bruyette & Woods had this summary on first quarter bank earnings:
Our sample of 165 banks under research coverage posted a better-than-expected quarter as 80 [percent] of banks beat or met consensus estimates. The operating environment continues to be difficult for the banking industry as low interest rates remain a significant impediment to sustained fundamental improvement. The low-rate environment in conjunction with competitive loan pricing, increased regulation, regional economic challenges, and excess liquidity have all helped to pressure revenues and compress profitability for the banking industry. In [the first quarter of 2012], the banks were able to offset some of these challenges as well as typical 1Q seasonality. We highlight several key overarching themes of 1Q12: loan growth rates varied widely, [net interest margins] came in more stable than forecast, asset quality and capital levels continued to improve, and solid mortgage banking revenues helped offset seasonality in fee income.
About 80 [percent] of banks beat or met estimates. For our sample of 165 banks, on an operating-per-share basis versus consensus estimates, 114 banks (69 percent) beat, 18 (11 percent) met, and 33 (20 percent) missed. This compares to 4Q11 and 1Q11 when 42 percent and 26 percent of the banks missed estimates, respectively.
[Midwestern and Western] banks had the most earnings beats while [Northeastern] banks had the least. Twenty-six of 30 (87 percent) [Midwestern] banks beat estimates while 27 of 33 (82 percent) [Western] banks beat estimates. Meanwhile, only 8 of 17 (47 percent) [Northeastern] banks beat estimates.
Annual [operating earnings per share] growth continued for the 10th consecutive quarter, at 24 percent in 4Q11, improving slightly from 4Q11 but down from 30 [percent] in 1Q11. [Year over year] comparisons remain influenced by the impacts of the financial crisis when banks built reserves and de-leveraged balance sheets. [Operating earnings per share grew 4 percent quarter to quarter].
[Net interest margins or NIMs] were better than expected, with 44 [percent] and 52 [percent] of banks posting [year over year] and [quarter over quarter] NIM expansion, respectively. The median NIM was 3.73 [percent], down 1 [basis point year over year] but up 1 [basis point quarter over quarter].
Banks with strong capital and profitability continue to garner premium valuations.
Loan growth results were mixed.
Credit and asset quality improvement continues. The median [net charge off] ratio fell 22 [basis points year over year] 14 [basis points quarter over quarter] to 0.53 [percent].
2013 estimates changes were evenly distributed as 32 [percent] of banks saw estimates increase by 6 [percent] on [average], and 28 [percent] had estimates cut by 7 [percent] on [average]. Among large regionals, 40 [percent] had their '13 estimate cut by 8 [percent on average].