Banks see second-quarter boost
CHARLESTON, W.Va. - A strong residential mortgage market and improvements in credit quality helped boost the bottom line at several regional banks reporting second-quarter earnings Thursday.
Fifth Third Bancorp and BB&T reported significant increases in second-quarter earnings, while Huntington Bancshares reported earnings relatively in-line with recent performance.
All three companies said good lending markets and drops in loan delinquency rates helped firm up their bottom line.
Cincinnati-based Fifth Third said its second-quarter net income rose 58 percent, thanks partly to the sale of shares of its Vantiv payment processing subsidiary.
Cincinnati-based Fifth Third on Thursday reported net income available to common shareholders of $594 million, or 66 cents per share, for the three months ended June 30. That compares with $376 million, or 40 cents per share, a year earlier.
Excluding benefits tied to the Vantiv stock sales, earnings were 44 cents per share, beating Wall Street expectations of 42 cents per share, according to FactSet.
"Fifth Third beat estimates almost entirely due to its mortgage business," said Matt McCormick, a banking analyst and portfolio manager for Bahl & Gaynor Investment Counsel in Cincinnati.
"We produced strong performance in nearly every line item," CEO Kevin Kabat told analysts in a conference call. "Corporate banking revenue, mortgage net revenue, deposit service charges and card and processing revenue were up mid-single digits."
He said that despite changes in the mortgage business, the second quarter was still strong in that area.
Net interest income, or income from loans and deposits, for the second quarter fell 1.6 percent to $885 million compared with last year.
But Kabat told analysts that Fifth Third's ability to generate loan growth and solid revenue results combined with expenses discipline and credit improvement "give us confidence that our strategies are working."
Net charge-offs of bad loans fell 62 percent to $112 million from $181 million in the same quarter last year. They were also down from $133 million in the bank's first quarter of this year.
Winston-Salem, N.C.-based BB&T said Thursday that its net income rose 7 percent in the second quarter as it made more money from fees and credit quality and loan delinquencies improved.
For the period that ended June 30, the regional banking company earned $547 million, or 77 cents per share, up from $510 million, or 72 cents per share, a year earlier. Analysts predicted earnings of 74 cents per share, according to a FactSet poll.
Revenue edged up 1 percent to $2.5 billion, topped Wall Street expectations of $2.46 billion.
Chairman and CEO Kelly King said it was the strongest quarterly earnings in BB&T Corp.'s history.
"These results reflect record performances from our insurance, investment banking and brokerage, and trust and investment advisory businesses," King said. "Improvement in credit quality accelerated this quarter and resulted in our best credit quality levels in five years."
Provision for credit losses, excluding covered loans, fell to $179 million from $247 million in the first quarter as credit quality continued to improve. Provision for credit losses is the money set aside to cover soured loans.
Net charge-offs, excluding covered loans, dropped to $215 million from $275 million in the first quarter. These charge-offs are loans written off as uncollectible. BB&T said that the net charge-offs were at the lowest point since 2008's second quarter.
Loan delinquencies also continued to improve. Non-government guaranteed loans that were 30 to 89 days past due and still accruing fell to $940 million from $956 million in the first quarter. Loans 90 days past due and still accruing declined to $123 million from $138 million in the first quarter.
Columbus, Ohio-based Huntington Bancshares reported a slight 1 percent drop in second quarter earnings.
Its net income of $150.7 million was down $2.1 million from the same quarter last year and down $1.1 million from the first quarter of this year. Earnings 17-cents a share were unchanged from the previous and year-ago quarters.
Andy Paterno, president of the company's West Virginia region, said the residential mortgage market was particularly strong in the state during the first six months of the year.
"Mortgage lending has been really good in West Virginia," Paterno said. "It's been a real bright spot for us through first six months."
The company's overall loan originations were up 15 percent during the recent quarter.
Like its counterparts, the company reported overall credit charge-offs and loan delinquencies have been declining in recent months.
On a year-over-year basis, the company reported 10.6 percent growth in its number of consumer checking accounts, with commercial accounts growing 7.4 percent.