As the Q3 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the regional banks industry, including Hilltop Holdings (NYSE: HTH) and its peers.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

The 98 regional banks stocks we track reported a satisfactory Q3. As a group, revenues beat analysts’ consensus estimates by 1.3%.

Thankfully, share prices of the companies have been resilient as they are up 8.7% on average since the latest earnings results.

Hilltop Holdings (NYSE: HTH)

Transformed from a residential communities business to a financial services powerhouse in 2007, Hilltop Holdings (NYSE: HTH) is a Texas-based financial holding company that provides banking, broker-dealer, and mortgage origination services.

Hilltop Holdings reported revenues of $331.1 million, up 7.8% year on year. This print exceeded analysts’ expectations by 6.6%. Overall, it was an exceptional quarter for the company with a beat of analysts’ EPS and revenue estimates.

Jeremy B. Ford, Chairman, President and CEO of Hilltop, said, “Hilltop delivered a 1.2% return on average assets during the third quarter on net income of $46 million. Within PlainsCapital Bank, strong core loan and deposit growth on a linked-quarter basis, along with healthy net interest margin expansion, generated $55 million in pre-tax income during the third quarter. A dampened summer home-buying market weighed down PrimeLending’s operating results as the company produced a pre-tax loss of $7 million on flat year-over-year origination volumes and depressed origination fees. We continue to actively manage down fixed expenses within our mortgage origination business. Additionally, robust results within all business lines at HilltopSecurities resulted in a pre-tax margin of 18% on net revenues of $144 million.

Interestingly, the stock is up 6.9% since reporting and currently trades at $34.68.

Is now the time to buy Hilltop Holdings? Access our full analysis of the earnings results here, it’s free for active Edge members.

Best Q3: Customers Bancorp (NYSE: CUBI)

Originally founded with a "high-tech, high-touch" branch-light banking strategy, Customers Bancorp (NYSE: CUBI) is a bank holding company that provides commercial and consumer banking services through its Customers Bank subsidiary, with a focus on business lending and digital banking.

Customers Bancorp reported revenues of $231.8 million, up 38.3% year on year, outperforming analysts’ expectations by 6.9%. The business had a stunning quarter with an impressive beat of analysts’ net interest income estimates and a solid beat of analysts’ revenue estimates.

The market seems happy with the results as the stock is up 16.7% since reporting. It currently trades at $76.47.

Is now the time to buy Customers Bancorp? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q3: The Bancorp (NASDAQ: TBBK)

Operating behind the scenes of many popular fintech apps and prepaid cards you might use daily, The Bancorp (NASDAQ: TBBK) is a bank holding company that specializes in providing banking services to fintech companies and offering specialty lending products.

The Bancorp reported revenues of $174.7 million, up 38.8% year on year, falling short of analysts’ expectations by 9.9%. It was a disappointing quarter as it posted a significant miss of analysts’ revenue estimates and a significant miss of analysts’ net interest income estimates.

The Bancorp delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 8.7% since the results and currently trades at $70.52.

Read our full analysis of The Bancorp’s results here.

Preferred Bank (NASDAQ: PFBC)

Founded in 1991 with a focus on serving the Pacific Rim community in Southern California, Preferred Bank (NASDAQ: PFBC) is a commercial bank that provides banking products and services to small and mid-sized businesses, entrepreneurs, real estate developers, and high net worth individuals.

Preferred Bank reported revenues of $74.98 million, up 3.7% year on year. This result beat analysts’ expectations by 3.5%. It was a very strong quarter as it also produced a solid beat of analysts’ revenue estimates and an impressive beat of analysts’ net interest income estimates.

The stock is up 14.6% since reporting and currently trades at $99.25.

Read our full, actionable report on Preferred Bank here, it’s free for active Edge members.

Peoples Bancorp (NASDAQ: PEBO)

Founded in 1902 in Ohio and expanding through both organic growth and acquisitions, Peoples Bancorp (NASDAQ: PEBO) is a financial holding company that provides banking, insurance, equipment leasing, and investment services to consumers and businesses.

Peoples Bancorp reported revenues of $118.5 million, up 3.2% year on year. This number surpassed analysts’ expectations by 1.3%. Overall, it was a strong quarter as it also logged an impressive beat of analysts’ tangible book value per share estimates and a beat of analysts’ EPS estimates.

The stock is up 7.3% since reporting and currently trades at $30.81.

Read our full, actionable report on Peoples Bancorp here, it’s free for active Edge members.

Market Update

As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.

Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Quality Compounder Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.