The big banks have reported earnings already, but there are a few smaller institutions we're keeping a close eye on.
In this week's "One to Watch" segment from Industry Focus: Financials, host Jason Moser and Fool.com contributor Matt Frankel, CFP, discuss why Synchrony Financial (NYSE:SYF) and Ameris Bancorp (NASDAQ:ABCB) are on their radar, and what they're looking for when both companies report earnings.
A full transcript follows the video.
This video was recorded on Oct. 15, 2018.
Jason Moser: Matt, we're going to wrap it up here real quick here with One to Watch earning season in full tilt, so there will be plenty to choose from. What is your One to Watch for this coming week?
Matt Frankel: I keep my eye on Synchrony Financial. They are one of the big issuers of stored credit cards and they are an online bank. They report earnings on Friday and there are some couple of things I'm watching for. No. 1, they announced recently that they lost their partnership with Walmart, which is a big deal. This is like when American Express lost its Costco partnership. This is the big thing in this business. So, I'm interested to see how are they planning to rebound from that. They said at the time of the announcement that they we'll be able to replace all that lost revenue within a couple of years. So, I want to know how. They're a credit card business, so they're going to be a big beneficiary of rising interest rates. Because the big banks surprised us with, their default rates dropped, their credit quality is improving. I want to see if Synchrony is trending the same way. It could be a big profitability boost for the company.
Moser: And the ticker?
Moser: OK, good deal! I'm going to be watching Ameris Bancorp, ticker ABCB. They are a little community bank based out of Moultrie, Georgia. Folks who have followed me for any period of time know I've been following this bank for quite some time. They have earnings coming out on Friday. It's always been a story of growing their assets under management. Growth from the financial crisis was a neat part of the story early on with a lot of those failed institutions from the Great Recession. They essentially had these FDIC-aided acquisitions, which pretty much protected them from any downside while helping them grow out the actual customer base and asset base there. This is a very well-run bank that has seen a little bit of a pullback recently with the market volatility. Still, I think, a lot of things to like about what they're doing. Still just a small cap, you know, and we talk about big banks. So, it's just a $2 million market cap bank here.
But, earnings out on Friday. I'll be interested to see what they have to tell us. Also, just to note, we have PayPal earnings coming out this week, as well, on Thursday. We'll certainly cover that on next week's show.