CHICAGO -- Four Midwest financial institutions posted mixed second-quarter results, with only tow improving on year-ago perfomrances.
The swing factor, said McDonald & Co. analyst Fred Cummings, was whether the units could muster sufficient loan growth to offset declines in net interest margins.
Rebounding from a year-ago merger charge, while boosting its efficiency and net interest margin, Minneapolis-based First Bank System Inc. more than doubled its earnings to $102.7 million. Provident Bancorp, Cincinnati, lifted earnings by 14%, to $14.3 million.
By contrast, Akron-based First Bancorporation of Ohio, said earnings were virtually flat at $15 million. And profits at St. Paul Bancopr., Chicago, slumped 25% to $8.6 million as the thrift's customers prepaid higher-yielding mortgages.
Of the four, only First Bank boosted return on assets.
Acquisition Helps Results
Capitalizing on improving fundamentals and an acquisition, First Bank System posted a 206.6% earnings increase. Excluding year-ago merger charges, the gain was 23%.
The $26 billion-asset banking company, based in Minneapolis, said annualized returns equaled 18.9% on equity, up 320 basis points from normalized results of a year ago, and 1.58% on assets, up 26 basis points. Profit-ability was unchanged from the first quarter of 1994.
First Bank said loan growth and the acquisition of Chicago-based Boulevard Bancorp helped boost net interest income 3.7% from a year ago. Credit card and trust growth fueled a 9.4% increase in fee income.
The quarterly loan-loss provision was down 30.5% from a year ago. A 57.8% ratio of operating expenses to revenues compared with 58% in the first quarter and 60.4% a year ago.
On July 1, First Bank signed a letter of intent to acquire Metro-politan Financial Corp., an $8 billion-asset thrift operating 211 branches in eight states. A definitive agreement on the proposed stock swap is expected by summer's end.
In Cincinnati, Provident Bancorp posted net income of $14.3 million, a 14% increase from a year ago. Annualized, returns equaled 1.27% on assets, down 4 basis points, and 16.78% on equity, up 47 basis points.
Provident, a $5 billion-asset banking company, said its net interest margin fell 14 basis points to 4.29%. But the company said average loans rose 18%, fueling a 14% increase in net interest income.
The company said it shaved its efficiency ratio by 6 basis points, to 53.8%. A loss provision of $3 million was unchanged. Fee income fell 15.6% from year ago results, which included a $1.5 million gain from the sale of loans.
In Chicago, St. Paul Bancorp posted $8.6 million in net income, a 25% drop from a year ago. Annualized, returns equaled 0.88% on assets, a 32-basis-point decline, and 9.77% on equity, a 453-basis-point decline.
Prepayments Take Toll
The $4 billion-asset thrift holding company attributed the performance slump to prepayments of higher-yielding mortgage loans.
A net interest margin of 3.11% compared with 3.58% a year ago. Gains from loan sales totaled $81,000, down sharply from $745,000 a year ago, and expenses on foreclosed properties more than doubled, to $781,000.
In Akron, the $4.5 billion-as-set First Bancorp. of Ohio late Monday reported profitability declines as equity and assets grew while earnings held constant.
Earnings of $15 million rose a scant 0.2% from a year ago, while average assets grew by 3.4% and average equity grew by 7.65%. In turn, the company's return on assets fell 5 basis points, to 1.35%, and its return on equity fell 114 basis points, to 14.10%.
Year-ago results were restated to reflect the second-quarter acquisition of Great Northern Savings Bank, Barberton, Ohio. A second-quarter net interest margin of 4.96% was down from 5.33% a year ago. As a consequence, net interest income was essentially flat despite a more than 5% increase in average net loans, to $2.7 billion.