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Regional banks are doing their best to hold down expenses, compete for quality loans and generate more fee income, but until the Federal Reserve raises interest rates, their quarterly profits will remain sluggish, bankers and analysts say.
October 15 -
Citigroup, JPMorgan Chase and Wells Fargo kicked off third-quarter earnings by reporting mixed results. For every good thing, there was something to offset it: stronger lending, but also higher expenses, for example. That could continue for awhile.
October 14
Buoyed by interest income growth and large gains on the sales of loans and securities, First Republic Bank in San Francisco reported a 20% increase in profits in the third quarter when compared to the same period last year.
The $46.7 billion-asset bank said Thursday that net income available to shareholders in the quarter was $122 million, or 86 cents per share, up from $101 million and 74 cents per share in last year's third quarter.
Interest income climbed nearly 9% year over year, to $376.4 million on a 6% increase in loans and a 27% increase in investments. However, the bank's net interest margin fell 25 basis points year over year, to 3.25%, due to a decrease in loan yields.
Noninterest income nearly doubled in the quarter, thanks to a $13.7 million gain on the sale of home loans and a net $23.6 million gain on the sale of investment securities, compared to a $369,000 loss on investments in the same period last year. Even excluding those sales, noninterest income still increased roughly 25% year over year as a result of higher fees from brokerage and investment advisory.
