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Click on individual bank names in the table below to access American Banker's coverage of each company's earnings report. Links to relevant coverage, filings, releases, and bank benchmark profile data can be found in the Related Links area of each article.
July 25 -
KeyCorp, which is still seeing expenses eat up more than two-thirds of its revenues, will cut costs and close branches in an effort to lower its efficiency ratio.
July 19 -
Second-quarter results were predictably solid, but the earnings call was anything but dull as the CEO blasted the city of Los Angeles and its motives.
July 18
Darn. Just as lending was starting to catch fire, some banking executives are already pouring cold water.
The economy is decelerating, and it will be hard to originate good loans over the rest of the year, the leaders of BB&T (BBT) and Fifth Third (FITB) said Thursday, the same day their regional banks reported strong second-quarter earnings.
Net interest margins will compress further in coming quarters, they predicted in conference calls with analysts.
There "is no question that [the economy] is slowing, and you certainly see that in the most recent jobs numbers and retail numbers," said Kelly King, BB&T's chairman and chief executive. "I've talked to a lot of businesspeople, and everybody you talk to is getting more nervous by the moment because of the uncertainty. You know we're heading towards a cliff and people are getting really focused on it now."
Kevin Kabat, the CEO of Fifth Third, described "a tone of cautiousness in the marketplace" that has to be taken into consideration.
"We are being disciplined and sensible in terms of where we are targeted and where we are focused on competing," Kabat said.
Low interest rates and fierce competition are shaping their lending decisions, executives said.
The only major
In auto lending, Fifth Third "managed volume and pricing," Dan Poston, the Cincinnati company's chief financial officer, said during its conference call. "We reduced our origination volumes for competitive reasons, where the profit potential wasn't there."
Pricing also influenced BB&T's decisions. The Winston-Salem, N.C., bank is no longer holding its 10- and 15-year mortgages, King said. "Frankly, the rates are just too low for our appetite right now," he said on the conference call. Those mortgages are being made at rates as low as 2.75%, and BB&T has no interest in having those types of assets on its books for the next five years, he said.
BB&T, however, was willing to add loans in other areas, including subprime auto lending, credit cards and corporate lending.
Economic conditions vary among the regions of the country, explained Stephen Steinour, the CEO of Huntington Bancshares (HBAN) in Columbus, Ohio, which reported 7% loan growth year over year. Huntington has more than 680 branches in Ohio, Michigan, Pennsylvania, West Virginia and Kentucky. Ohio has a better job market than most of the country, and the employment situation in Michigan has improved dramatically in the last few years, Steinour said.
"The regions we're in are for performing well relative to the country overall," he said.
Huntington's loans and leases were up 5% from the prior quarter, to $41.2 billion, on gains in commercial and industrial lending and automobile lending. Both types of loans rose 9% from the previous quarter. About $500 million of the quarter's $1.3 billion in C&I growth came from acquisitions.
Still, business loan demand appears to be tapering off because of "trepidation" over Europe's economic problems and political gridlock over U.S. economic policy, he said. Business customers in the Midwest and elsewhere that were making investments in the first quarter are "more restrained now."
Executives sought to stay upbeat. BB&T's King held firm to prior guidance that his company's loan book could grow 5%-7% this year, excluding $2 billion in loans that it will gain from its
How is that possible? By taking a larger slice of existing market share. "Some institutions have had some downgrades in ratings and other circumstances that have caused clients to seek us out."
Fifth Third can navigate the competitive landscape, Kabat said. "It continues to be competitive, although we feel … pretty good about the value we are getting for prices" on loans, he said.
Political leaders in Washington have to act to help the economy and loan demand, Steinour said.
"We need to have a fiscal plan," he said. "It doesn't even have to be a good one."
Low interest rates and other factors could keep business loans growing at a slow and steady pace, said David Dietze, the president and chief investment officer of Point View Wealth Management in Summit, N.J.
"A lot of businesses have gotten their balance sheets in order," he said. "They're looking at projects. If they wait five years they could be paying substantially more."
Business loans are "not the sexy, high-margin, newfangled product of days of yore — but it is bedrock," Dietze says.
