NEW YORK — A slew of regional banks reporting third-quarter results early Thursday booked generally modest loan growth and further reduced their credit costs, yet continued low interest rates remained a pressure on their top-line growth.
Industrywide, lenders have hugely benefited from improving credit quality among their borrowers. More favorable credit conditions have allowed banks to reduce funds set aside to cover potentially risky loans, a move that continues to prop up profits across the industry.
Focus has now turned to loan growth, a greater challenge for lenders as shaky economic conditions have diminished borrowing demand, notably among consumers. Banks have felt all the more pressure to build loan books as interest rates remain near record lows, trimming the profitability of lent funds.
Huntington Bancshares Inc., one of the largest regional banks in the nation, has built its loan book at a rate that has lately outpaced many competitors. In the third quarter, Huntington's total loans and leases grew 4% from the prior year, helped by 5.3% growth in consumer loans.
Huntington's loan-loss provisions declined to $43.6 million from $119.2 million a year earlier. Net charge-offs, or loans lenders don't think are collectible, were down at 0.92% of average loans from 1.98% a year ago.
The bank reported a profit of $143.4 million, up from $100.9 million a year earlier. On a per-share basis, which reflects payment of preferred dividends, earnings rose to 16 cents from 10 cents, matching the 16 cents expected by analysts polled by Thomson Reuters. Revenue slipped 1.8% to $665 million, below the $666 million analysts expected.
Meanwhile, BB&T Corp. has angled for commercial and industrial customers, while at the same time reducing its exposure to higher-risk commercial real estate loans. In the third quarter, BB&T's total loans and leases edged up 0.9% from a year earlier, led by continued growth in commercial and industrial loans. BB&T's loan-loss provisions declined sharply to $250 million from $770 million a year earlier.
The bank reported a profit of $366 million, or 52 cents a share, up from $210 million, or 30 cents a share, a year earlier. Revenue declined 13% to $2.11 billion. Analysts expected 50 cents and $2.19 billion, respectively.
At Fifth Third Bancorp, reduced credit costs helped drive an 60% jump in profit from a year earlier. The Cincinnati-based lender set aside $87 million for troubled loans in the third quarter, down significantly from $457 million a year earlier.
Fifth Third reported a profit of $381 million, up from $238 million a year earlier. Earnings per share, reflecting payment of preferred dividends, rose to 40 cents from 22 cents, topping the 33 cents expected by analysts.
Revenue declined 10% to $1.57 billion, ahead of the $1.5 billion expected by analysts.
At Ohio-based KeyCorp, commercial financial and agricultural loans rose 8.5% from the prior year and 5.7% from the second quarter, marking the second sequential increase in average balances since 2008.
Commercial real estate loans declined 24% from a year earlier. The bank has worked down commercial real-estate loans created before the financial crisis that later turned sour at rapid rates.
KeyCorp reported a profit of $217 million, down slightly from $219 million a year earlier. Earnings per share rose to 22 cents from 20 cents a year earlier, reflecting the payment of preferred dividends. Revenue slipped 1% to $1.02 billion amid a 1.3% decline in net interest income. Analysts expected 21 cents and $1.01 billion, respectively.
The bank recorded a $10 million provision for loan losses, down from $94 million a year earlier.