Hibernia Corp., hit by two large credit problems, reported quarterly profits of $29.6 million, a 28% decline, as the first wave of regional banks reported results Monday.
Earnings at Winston-Salem, N.C.-based BB&T Corp. jumped 15%, to $138 million, helped by a 29% gain in fee income, and Milwaukee-based Marshall & Ilsley Corp. notched a 13% increase, to $86 million.
New Orleans-based Hibernia warned investors last month of its difficulties. Per-share earnings of 21 cents matched the consensus estimate.
Chief executive officer Stephen A. Hansel described the first quarter as disappointing for the $14.3 billion-asset banking company. "We expected the road in 1999 to be bumpier," Mr. Hansel said. "It is, and it will be. But we're confident we can power through this challenge."
Hibernia raised its first-quarter loan-loss provision by 150%, to $30 million, because of its exposure to two companies in bankruptcy: subprime lender United Companies Financial Corp. of Baton Rouge, La., and Forcenergy Inc. of New Orleans.
The bank holds $25 million of an unsecured syndicated loan to United Companies and a separate $9 million loan to its stock ownership plan. The Forcenergy credit totals $29 million.
Analysts said there may be other problems in the company's loan portfolio.
"They have been growing much faster than competitors, and when that happens, problems can pop up quickly and surprise you," said William R. Katz, an analyst at Merrill Lynch & Co.
R. Harold Schroeder of Keefe, Bruyette & Woods Inc. said he is concerned about Hibernia's level of nonperforming assets. The company said the total grew nearly 41% in the first quarter, to $76 million, but Mr. Schroeder said he expected an even bigger rise in the future.
"There are rumors that there are other problem credits out there, and it's not clear that they have been factored in," Mr. Schroeder said.
During a conference call Monday, Hibernia's chief credit officer, Richard G. Wright, explained that the Forcenergy loan has not been shifted to nonaccrual status, in part, because of the strength of its collateral and the fact that stockholders and other debt holders would take losses before Hibernia must do so.
"It is a secured credit, and it is very early in the process," Mr. Wright said.
The bank's first-quarter income also was eroded by $5.6 million of expenses related to its deal with MarTex Bancshares of Marshall, Tex., which was completed March 8.
Meanwhile, noninterest income also strengthened returns at BB&T. The $37.8 billion-asset banking company earned 48 cents per share, beating analysts' consensus by a penny.
BB&T took a $10 million charge related to its first-quarter acquisition of MainStreet Financial Corp., Martinsville, Va.
The company closed three deals during the period. Chairman and chief executive officer John A. Allison said the buying spree could continue. "Among our primary objectives for 1999 is the pursuit of strategic mergers and acquisitions that are advantageous to BB&T," he said.
Marshall & Ilsley reported earnings per share of 75 cents, 2 cents higher than the consensus.
The $22 billion-asset company said noninterest income grew 9%, to $195 million. This was partly driven by a rise in data processing fees, which increased 13%, to $109 million. Net interest income at the bank climbed 5%, to $179 million.