Four regional banking companies reported third-quarter earnings Tuesday that met or beat Wall Street's expectations, but only one - Mellon Financial Corp. - managed to buck the tide of rising nonperforming loans.
Mellon's net income rose 7% from the year-earlier period, to $252 million, and its per-share earnings of 51 cents met analysts' consensus estimate. The Pittsburgh company's problem credits fell 3%, to $222 million. Comerica Inc.'s profits rose 13%, to $192 million, or $1.18 a share, beating the consensus estimate by a penny, but the Detroit company reported a modest uptick in nonperformers.
Previously announced restructuring programs dampened two other banking companies' results. KeyCorp in Cleveland's profits dropped 55%, to $121 million, because of one-time charges. Amsouth Bancorp in Birmingham, Ala., reported a loss of $36.3 million, compared to a gain of $134.6 million the year earlier.
Fee-based businesses, particularly wealth management, accounted for much of the Pittsburgh company's gains. At the same time, nonperforming assets declined.
Since last year Mellon has been shedding unprofitable businesses, including credit cards and mortgages, and focusing on building its asset management and investment services lines.
Fee-based revenues, including wealth management, global investment, and global investment services, rose 15%, to $670 million. These businesses produced 60% of total revenues, which grew 10%, to $1.1 billion.
Mellon shares fell $1.25 Tuesday to close at $40.44.
Steady asset quality at the $41 billion-asset company and a strong showing from its Munder Capital Management subsidiary impressed analysts.
Comerica's loans grew 10%, to $35 billion, and nonperformers rose 4%, to $241 million. Loan-loss reserves of 1.49% were flat compared with the second quarter.
Net interest margin contracted slightly, to 4.42%, from 4.48% in the second quarter, reflecting the effects of rising interest rates. Ralph Babb, Comerica's chief financial officer, said the company is trying to avoid passing on its higher funding costs to customers.
Noninterest income on an operating basis rose 19%, to $202 million. Revenues, excluding a one-time gain from the sale of a small credit card portfolio, increased 9%, to $416 million.
Comerica shares fell $1.13 Tuesday to close at $53.57.
The company's per-share earnings of 57 cents met Wall Street expectations.
Results at $85 billion-asset company were affected by a $102 million restructuring charge and a $50 million loss related to reconfiguring its investment portfolio. Without the charges, operating net income fell 8% from last year, to $245 million.
Expenses on an operating basis declined 4%, to $672 million. The net interest margin remained stable, at 3.68%, for the third consecutive quarter.
Fee income plummeted 18.3% from the second quarter, to $405 million. Last year's third-quarter results benefited from one-time events, including the sale of its Long Island branches.
Nonperforming assets rose 7%, to $617 million.
KeyCorp shares fell 94 cents Tuesday to close at $22.82.
Excluding $259.7 million of pretax charges for a financial reorganization, earnings per share of 33 cents met analysts' consensus.
The $39.4 billion-asset company said the reorganization's full benefits would not be realized until next year. .
Excluding the one-time charges, the company's profits declined 17.5%, to $125.2 million. Fee revenues dropped 10.4%, to $201.9 million. Net interest margin narrowed, to 3.57%, from 3.95%, and core deposits were down 3.2%.
Nonperforming assets rose $28 million, to $162.7 million, or 0.66% of total loans.
Expenses dropped 6%, to $316.6 million, excluding last year's merger charges.
Amsouth shares fell 19 cents Tuesday to close at $12.38.
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