Earnings season for the third quarter kicks off this week, and with it, many investors eagerly await to hear about the performance of their favorite companies. Unfortunately, not many analysts are looking to the financial sector for blockbuster earnings reports.
U.S. banks have consistently been reporting disappointing earnings quarter after quarter, and many investors have had enough, selling their stakes en masse. Shares of Bank of America are down over 50% YTD, and shares of Citigroup are down over 40%.
According to the New York Times, analysts expect bank revenues from the third quarter to fall 4% (back to 2005 levels), and earnings are expected to be where they were in late 2002.
The reasons cited for this poor performance are the third quarter's volatility in market trading, new federal regulations putting pressure on growth, and government-mandated cuts in debit-card swipe fees that were once very lucrative.
Reasons aside, it seems that many have simply had it with bank management. With the impending threat of balance-sheet contagion from a potential Greek default, U.S. banks say they are hardly exposed, yet many investors are not quick to trust their numbers. And another bad earnings season will just put salt in the wound.
Of course, with all the doom and gloom surrounding bank earnings, short-sellers are paying close attention. Below, we've listed 10 banking stocks that have seen a sharp increase in shares shorted over the last month (i.e., increased bets that these investments will fall in value).
Short-sellers seem to think these banks stocks are vulnerable ahead of earnings season -- do you?
Use this list as a starting point for your own analysis. (Click here to access free, interactive tools to analyze.)
List compiled by Eben Esterhuizen:
1. City Holding (Nasdaq: CHCO ) : Operates as the bank holding company for City National Bank of West Virginia that offers community banking services to consumers and local businesses. Shares shorted have increased from 1.87M to 2.10M over the last month, an increase which represents about 1.61% of the company's float of 14.32M shares.
2. United Bankshares (Nasdaq: UBSI ) : Provides commercial and retail banking services and products in the United States. Shares shorted have increased from 6.52M to 6.97M over the last month, an increase which represents about 1.04% of the company's float of 43.36M shares.
3. United Community Banks (Nasdaq: UCBI ) : Operates as the bank holding company for United Community Bank that provides retail and corporate banking services. Shares shorted have increased from 2.13M to 3.34M over the last month, an increase which represents about 3.22% of the company's float of 37.52M shares.
4. Park National (NYSE: PRK ) : Operates as a bank holding company that engages in the commercial banking and trust business. Shares shorted have increased from 1.51M to 1.67M over the last month, an increase which represents about 1.58% of the company's float of 10.12M shares.
5. 1st Source (Nasdaq: SRCE ) : Operates as the holding company for 1st Source Bank that offers commercial and consumer banking services to individuals and businesses in Indiana and Michigan. Shares shorted have increased from 470.44K to 542.64K over the last month, an increase which represents about 1.24% of the company's float of 5.81M shares.
6. Oritani Financial (Nasdaq: ORIT ) : Operates as the holding company for Oritani Bank that provides retail and commercial banking services to individual and business customers in New Jersey. Shares shorted have increased from 2.60M to 3.25M over the last month, an increase which represents about 1.35% of the company's float of 48.12M shares.
7. Community Trust Bancorp (Nasdaq: CTBI ) : Operates as the holding company for Community Trust Bank, Shares shorted have increased from 629.99K to 831.36K over the last month, an increase which represents about 1.58% of the company's float of 12.78M shares.
8. IberiaBank (Nasdaq: IBKC ) : Operates as a holding company for IBERIABANK that provides commercial and retail banking products and services in the United States. Shares shorted have increased from 2.75M to 3.12M over the last month, an increase which represents about 1.26% of the company's float of 29.43M shares.
9. Brookline Bancorp (Nasdaq: BRKL ) : Operates as the holding company for Brookline Bank that provides various banking products and services. Shares shorted have increased from 6.17M to 6.93M over the last month, an increase which represents about 1.35% of the company's float of 56.30M shares.
10. People's United Financial (Nasdaq: PBCT ) : Operates as the bank holding company for People's United Bank that provides commercial banking, retail and business banking, and wealth management services to individual, corporate, and municipal customers. Shares shorted have increased from 8.13M to 12.12M over the last month, an increase which represents about 1.16% of the company's float of 342.64M shares.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Eben Esterhuizen and Alexander Crawford do not own any of the shares mentioned above. Short data sourced from Yahoo! Finance, all other data sourced from Finviz.
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