Growth in fee income and efforts to cut costs helped Midwestern banks meet consensus estimates in the first quarter, analysts said.
"There was good expense control, modest revenue growth, and most banks have done well on the fee side," said Michael Ancell, a bank analyst with Edward Jones in St. Louis.
With the exception of Magna Group of St. Louis-which added $12.5 million to its loan provision for a potential large commercial loan loss-the companies he covers were in line with projections, Mr. Ancell said.
Analyst Michael Moran of Roney & Co., Detroit, warned that companies benefiting from cost-cutting and capital management must find revenue growth if they want to be long-term survivors. Other analysts agreed.
"Some companies have good revenue growth, while others don't," said Fred Cummings of McDonald & Co. Securities in Cleveland. "We're seeing some clear differentiation for top-line growth."
Chicago-based Northern Trust Corp. reported income of $72 million, a 17% increase over a year earlier, driven by trust revenues. Earnings per share of 62 cents beat analysts' consensus estimates by 2 cents. Northern Trust, with $22.4 billion of assets, said trust fees grew 10% to $158 million.
Huntington Bancshares, with $21.6 billion of assets, posted earnings per share of 47 cents, shy of analysts' estimates by 1 cent. Net income rose 6% to $66.5 million. Loan growth boosted net interest income by 14.5% over a year earlier. Noninterest income was down 3.5% because of sharp declines in mortgage banking and credit card fees.
First of America Bank Corp. reported that net income rose 33% to $79.4 million, or $1.32 per share. The $21 billion-asset Kalamazoo, Mich., company reported after-tax gains from branch sales of $13.1 million and severance charges of $2.6 million in the first quarter. Excluding extraordinary items, First of America's earnings rose 21%, and its adjusted earnings per share of $1.15 were still ahead of First Call analysts' consensus estimates of $1.08. First of America cited gains in fee businesses, including trust, for improved earnings over a year earlier. Earnings per share were aided by a share buyback program.
Fifth Third Bancorp of Cincinnati said its income rose 19% from a year earlier to $94.5 million, or 89 cents per share. The $20 billion-asset Fifth Third surpassed analysts' estimates by 1 cent. Net interest income grew by 12% over the previous year, representing one of the healthiest increases among banks. Commercial lending was aided by the bank's leasing business, which posted a 31% increase over a year earlier.
Milwaukee-based Firstar Corp., with $19.5 billion of assets, reported earnings per share of 49 cents, shy of analysts' forecasts by 1 cent. Income was $72 million, compared with $37 million a year earlier. The year- earlier quarter included a $50 million pretax restructuring charge. Net interest income was up 2%, and fee income rose 5%. Expenses were 21% lower than a year earlier.
Mercantile Bancorp. of St. Louis reported income of $60.3 million, compared with earnings of $4.6 million a year earlier. Last year's quarter included $40 million in charges associated with an acquisition, a commercial loan writeoff, and a money-losing credit card program. At $1, earnings per share fell 1 cent short of analysts' projections. The $18.9 billion-asset Mercantile said net interest income improved 6% over a year earlier and fee income grew 3%.
Milwaukee's Marshall & Ilsley Corp. said quarterly income was up 19.5% to $55 million, or 56 cents per share, in line with analysts' estimates. A 38% jump in revenues from the company's data-processing business helped drive improved noninterest income at the $14.9 billion-asset company.
Charter One Financial Corp., a Cleveland thrift with $14 billion of assets, said income rose 14% to $44 million on growth in loans and fee businesses.
The $13.2 billion-asset Old Kent Financial Corp. reported income of $41 million, up 4.5% from a year earlier. Earnings per share of 89 cents met estimates. Loan growth, fee businesses, and better expense control contributed to profits.
Star Banc Corp. of Cincinnati said income rose 19% to $45 million, or 52 cents per share. Net interest income improved 14% from a year earlier to $113 million because of strong consumer loan growth, the company said. The $10.2 billion-asset company said expense control continued to improve. The noninterest expense-to-revenue ratio was 48.1%.
Commerce Bancshares, a $9.6 billion-asset Kansas City company, said income improved 8% to $29.4 million, or 78 cents per share, boosted by higher net interest income.
Minneapolis-based TCF Financial Corp. reported earnings jumped 10% to $29 million, or 83 cents per share. The company said strong consumer loan demand boosted net interest income, while fees from deposits, teller machines, and mortgage banking boosted noninterest income.
Magna Group reported a 34% earnings decline due to a $12.5 million loan provision for an anticipated commercial loan loss. Magna's per-share earnings of 31 cents were 27 cents short of consensus estimates.
