Despite rising card chargeoffs, profits of southeastern regionals grew at double-digit rates in the second quarter, helped by the region's robust economy and extra fee income.
"The industry has been pretty consistent this quarter in terms of better-than-expected revenue growth," said John Coffey of Robinson-Humphrey Co. "But credit costs are certainly on the rise, particularly on the consumer side."
Mr. Coffey said some larger banks - such as Southern National Corp., Amsouth Bancorp, Crestar Financial Corp. and Regions Financial Corp. - benefited from merger-related cost savings.
Southern National, formed from a merger of equals last year, exemplified many of the trends. The bank earned $73.9 million in the quarter, 28% more than it earned a year earlier.
"They're executing extremely well, getting efficiencies from their merger, which is coming through in their numbers," said David West, with Davenport & Co. of Virginia.
Southern National, with $20.6 billion of assets, reported strong fee income growth, up 7% to $71.8 million from $67.4 million a year earlier. Such revenue growth helped the bank overcome the drag of a 71% jump in its loan-loss provision, to $12 million.
Earnings at Crestar, which recently integrated a large thrift acquisition, rose 10% from a year earlier to $56.7 million. Revenues of the $18.5 billion-asset bank rose 8%, fueled by an 18% jump in fee income, to $86.1 million.
Crestar's fast-growing card portfolio, 14% of loans, had been a source of concern going into the quarter. The company did report a higher card chargeoff ratio, 5.23% compared with 4.42% in the first quarter. But analysts gained comfort from Crestar's announcement that "delinquency trends suggest chargeoffs in that portfolio may be at or near a peak."
Birmingham, Alabama-based Amsouth boosted its earnings in the quarter by 19% to $48.7 million. Analysts said Amsouth, which has $18 billion of assets, has improved in cross-selling banking products to customers of a thrift it acquired in Florida.
Regions, also based in Birmingham, earned $61.5 million in the quarter, up 23% from a year earlier. Regions, with $18 billion of assets, controlled expenses and minimized loan losses despite a heavy pace of recent acquisitions.
In Tennessee, Union Planters Corp. had net income of $40.6 million, 12% more than in 1995's second quarter. But the Memphis-based bank's loan-loss provision more than tripled, to $7.9 million from $2.3 million for the same period in 1995, mainly because of credit card chargeoffs.
Union Planters, a latecomer to the credit card game, had aggressively built up its portfolio in 1995. Union Planters has $11.4 billion of assets.
First American Corp. in Nashville earned $30.9 million, up 20% from the second quarter of 1995. First American, which has $10 billion of assets, cited an improved net interest margin and the effect of recent acquisitions, which boosted loan growth and fee income.
Reflecting an improved Louisiana economy, New Orleans-based First Commerce Corp. earned $31.7 million, 16.5% more than in the second quarter of 1995. First Commerce has $8.4 billion of assets.