Wrapping up Q1 earnings, we look at the numbers and key takeaways for the thrifts & mortgage finance stocks, including Franklin BSP Realty Trust (NYSE: FBRT) and its peers.
Thrifts & Mortgage Finance institutions operate by accepting deposits and extending loans primarily for residential mortgages, earning revenue through interest rate spreads (difference between lending rates and borrowing costs) and origination fees. The industry benefits from demographic tailwinds as millennials enter prime homebuying age, technological advancements streamlining the loan approval process, and potential interest rate stabilization improving affordability. However, significant headwinds include net interest margin compression during rate volatility, increased competition from fintech disruptors offering digital-first experiences, mounting regulatory compliance costs, and potential housing market corrections that could impact loan portfolios and default rates.
The 22 thrifts & mortgage finance stocks we track reported a slower Q1. As a group, revenues missed analysts’ consensus estimates by 18.5%.
In light of this news, share prices of the companies have held steady as they are up 4.1% on average since the latest earnings results.
Franklin BSP Realty Trust (NYSE: FBRT)
Operating as a specialized real estate investment trust (REIT) with roots dating back to 2012, Franklin BSP Realty Trust (NYSE: FBRT) originates and manages a diversified portfolio of commercial real estate debt investments secured by properties in the United States and abroad.
Franklin BSP Realty Trust reported revenues of $52.01 million, up 1.8% year on year. This print fell short of analysts’ expectations by 6%. Overall, it was a disappointing quarter for the company with a significant miss of analysts’ EPS estimates.
Michael Comparato, President of FBRT, said, “Periods of enhanced market volatility often present unique opportunities. We have consistently been open for business and continue to make steady progress on recycling our legacy portfolio."
Unsurprisingly, the stock is down 5.2% since reporting and currently trades at $10.93.
Read our full report on Franklin BSP Realty Trust here, it’s free.
Best Q1: Northwest Bancshares (NASDAQ: NWBI)
Founded in 1896 and operating across Pennsylvania, New York, Ohio, and Indiana, Northwest Bancshares (NASDAQ: NWBI) is a bank holding company that operates Northwest Bank, providing personal and business banking, investment management, and trust services.
Northwest Bancshares reported revenues of $156.2 million, up 19% year on year, outperforming analysts’ expectations by 9.9%. The business had a stunning quarter with a solid beat of analysts’ EPS and net interest income estimates.
The market seems happy with the results as the stock is up 8.1% since reporting. It currently trades at $12.77.
Is now the time to buy Northwest Bancshares? Access our full analysis of the earnings results here, it’s free.
Ladder Capital (NYSE: LADR)
Founded during the 2008 financial crisis when traditional lenders retreated from commercial real estate, Ladder Capital (NYSE: LADR) is a real estate investment trust that originates commercial real estate loans, owns commercial properties, and invests in real estate securities.
Ladder Capital reported revenues of $51.28 million, down 18.9% year on year, falling short of analysts’ expectations by 7.1%. It was a disappointing quarter as it posted a significant miss of analysts’ tangible book value per share and EPS estimates.
Interestingly, the stock is up 3.5% since the results and currently trades at $11.03.
Read our full analysis of Ladder Capital’s results here.
Flagstar Financial (NYSE: FLG)
Tracing its roots back to 1859 and rebranded from New York Community Bancorp in 2024, Flagstar Financial (NYSE: FLG) is a bank holding company that offers commercial and consumer banking services, with specialties in multi-family lending, mortgage originations, and warehouse lending.
Flagstar Financial reported revenues of $490 million, down 22.6% year on year. This number came in 4% below analysts' expectations. Overall, it was a slower quarter as it also produced a significant miss of analysts’ net interest income estimates.
The stock is flat since reporting and currently trades at $11.17.
Read our full, actionable report on Flagstar Financial here, it’s free.
Walker & Dunlop (NYSE: WD)
Originating as a small mortgage banking firm during the Great Depression in 1937, Walker & Dunlop (NYSE: WD) provides commercial real estate financing, property sales, appraisal, and investment management services with a focus on multifamily properties.
Walker & Dunlop reported revenues of $237.4 million, up 4.1% year on year. This result missed analysts’ expectations by 1.8%. Taking a step back, it was a mixed quarter as it also recorded an impressive beat of analysts’ EPS estimates but a miss of analysts’ tangible book value per share estimates.
The stock is up 2.1% since reporting and currently trades at $75.36.
Read our full, actionable report on Walker & Dunlop here, it’s free.
Market Update
The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.
Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Growth Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
