Marine Midland Banks Inc. announced a second-quarter profit of $41 million, reversing a loss of $37 million in the second quarter last year.

Marine's first-half profit was $43.6 million, compared with a loss of $109.3 million a year ago.

The Buffalo-based subsidiary of HSBC Holdings PLC of London had predicted a considerable improvement in earnings this year on the basis of a strong capital position, good liquidity, and elimination of its exposure to lesser develop countries.

"Our second-quarter results were enhanced by nonrecurring recoveries on our loan portfolio and sales of foreclosed real estate," said John Bond, Marine's president and chief executive officer. "However, the quality of recurring profits is improving."

Interest Income Rises

He added that the economy "continues to provide a difficult environment" that demands improved products and customer service.

Net interest margins and reductions in expenses contributed to Marine Midland's turnaround, the company said.

Net interest income was $178.9 million for the second quarter, against $168.3 million for the first quarter on a larger book.

Assets Decline

Second-quarter operating expenses, excluding restructuring and credit-related costs, amounted to $173.8 million, down from $179.7 million in the first quarter and $185.1 million a year earlier.

Marine Midland's assets were down 3% in the year ended June 30, to $16.36 billion.

The Tier 1 risk-weighted capital ratio was 8.67% on June 30, and the total capital ratio 16.21%.

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