Increased fee income and better expense controls contributed to earnings improvements at three midsize Ohio banks last week.
Huntington Bancshares, Columbus, said last week that loan growth helped boost fourth-quarter earnings to $65.5 million, up 25% from the year- earlier period. For the year, Huntington had income of $244.5 million, a gain of $1.9 million over 1994.
Despite the gains, the $20 billion-asset bank reported lower return on equity and return on asset numbers. However, analysts said Huntington appears to be on track after it restructured a money-losing mortgage company and felt the pinch on the net interest margin due to rising interest rates. Clearly, 1995 was a rebuilding year for Huntington, they said.
"It's well on its way to restoring profitability," said Kay C. Lister of Keefe, Bruyette & Woods Inc. "The last piece of the puzzle is the margin."
Cincinnati-based Fifth Third Bancorp, one of the best performers among the mation's 50 largest banks, said income was $77.9 million in the fourth quarter, up 20% from the year-earlier period.
Boosted by these latest results, Fifth Third reported annual net income of $287.7 million in 1995, up 17.7% over 1994.
Return on assets improved slightly for the year to 1.78% from 1.77% in 1994. Return on equity was down slightly to 18.1%, compared with 18.6% a year earlier.
Meanwhile, analysts praised $17 billion-asset Fifth Third for its consistent increases in revenue, its loan growth and its high asset quality.
Catherine L. Murray, of J.P. Morgan Securities Inc., said Fifth Third's strong earnings were a result of three strengths: aggressive sales, ability to minimize risks and high efficiency.
"This is a straightforward, uncomplicated bank that continues to post strong results," Ms. Murray said.
With a ratio of expenses to revenues of 44%, Fifth Third has the best efficiency ratio among large banks, analysts said.
Moreover, Keefe Bruyette analyst Joseph Duwan believes Fifth Third has "very strong" momentum heading into 1996.
Mr. Duwan believes Fifth Third's crosstown rival Star Banc Corp. also is well positioned for the year ahead. The $9.6 billion-asset bank met his earnings expectations,
Saying it was boosted by "an increase in net interest income, higher fee income, and diligent expense control," Star reported fourth-quarter earnings of $35.9 million, up 18% from the year-earlier period. Its net income for the year was $136.6 million, up 17%.
Thomas Maier, an analyst with Everen Securities, said Star exceeded his per share estimates by 4 cents.
The bank reported an ROA of 1.47%, up 16 basis points from 1994. Its ROE improved to 17.65% from 16.68%.
Mr. Maier said net interest margin remained about the same - 4.5% compared with 4.4% in '94 - despite chargeoffs of $4.8 million in the fourth quarter.
