Looking back on thrifts & mortgage finance stocks’ Q1 earnings, we examine this quarter’s best and worst performers, including Apollo Commercial Real Estate Finance (NYSE: ARI) 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 4.6% on average since the latest earnings results.
Apollo Commercial Real Estate Finance (NYSE: ARI)
Launched during the aftermath of the 2008 financial crisis to capitalize on disruption in commercial real estate lending, Apollo Commercial Real Estate Finance (NYSE: ARI) is a real estate investment trust that originates and invests in commercial mortgage loans and other real estate debt.
Apollo Commercial Real Estate Finance reported revenues of $65.82 million, down 18.3% year on year. This print exceeded analysts’ expectations by 5%. Overall, it was a very strong quarter for the company with a decent beat of analysts’ EPS estimates.
“ARI’s first quarter earnings reflect the impact of elevated repayments at the end of fourth quarter of 2024 and the timing of our first quarter capital deployment, which totaled $650 million,” said Stuart Rothstein, Chief Executive Officer and President of ARI.
Interestingly, the stock is up 10.8% since reporting and currently trades at $10.06.
Is now the time to buy Apollo Commercial Real Estate Finance? Access our full analysis of the earnings results 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 14.1% since reporting. It currently trades at $13.47.
Is now the time to buy Northwest Bancshares? Access our full analysis of the earnings results here, it’s free.
Weakest Q1: 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 4.8% since the results and currently trades at $11.17.
Read our full analysis of Ladder Capital’s results here.
WaFd Bank (NASDAQ: WAFD)
Founded in 1917 and rebranded from Washington Federal in 2023, WaFd (NASDAQ: WAFD) is a bank holding company that provides lending, deposit services, and insurance through its Washington Federal Bank subsidiary across eight western states.
WaFd Bank reported revenues of $179.8 million, up 3.4% year on year. This number surpassed analysts’ expectations by 3.6%. It was a very strong quarter as it also produced a decent beat of analysts’ net interest income and EPS estimates.
The stock is up 3.7% since reporting and currently trades at $31.06.
Read our full, actionable report on WaFd Bank here, it’s free.
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 came in 6% below analysts' expectations. It was a disappointing quarter as it also produced a significant miss of analysts’ EPS estimates.
The stock is down 4.2% since reporting and currently trades at $11.05.
Read our full, actionable report on Franklin BSP Realty Trust 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.
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