Bank Q2 Earnings to Reflect ‘Rebound’: Sterne Agee

Pre-tax revenue should jump up at about the same rate — before accounting for any special charges or provision — to 3.4% year over year and 21% quarter over quarter, “benefiting from a pickup in revenue … and controlled expense growth … as management teams remained focused on expense reduction or at least containment,” the analysts say.

“After seasonal weakness in Q1’14, which reflected slower economic growth and a harsh winter for much of the nation, we forecast revenue to increase 2.5% year over year and 10% quarter over quarter,” they explained.

The Birmingham, Ala.-based group believes that net interest income should grow 4% year over year and 7.7% quarter over quarter. Fee income, though, is expected to decline 2.6% year over year, but improve 10.4% quarter over quarter.

“The earnings headwind created by a declining level of reserve releasing is tough to quantify given the typical variability in loan loss provisioning from one quarter to the next,” McEvoy noted. “With that said, our models would indicate that reserve levels have neared the bottom for the banks we cover as we estimate that these levels will be unchanged quarter over quarter after declining 2% in Q1’14. Less reserve releasing suggests an improvement in earnings ‘quality’ going forward.”

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Check out ThinkAdvisor’s 2014 Q2 Earnings Calendar for the Finance Sector.