Slideshow Early Takeaways from the Smaller Banks' 4Q Earnings

Published
  • January 29 2015, 12:35pm EST
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Banks with $35 billion or less in assets are slowly recovering financially, as revenue and profit improved in the fourth quarter. Here is a look at how more than 240 banks tracked by American Banker finished off 2014.

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Revenue Rises

Revenue, on average, increased 10.5% at the banks evaluated by American Banker. Bottom line returns are also up, helping many banks build capital.

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Solid Loan Growth

Small and midsize banks, on average, have reported a 16% increase in their loan portfolios from a year earlier. Much of that has come from commercial lending. The ratio of loans to deposits has improved to 86.7% from 83.8% at the end of 2013.

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Margins Tighten

Competition among lenders is fierce for the best credits. The net interest margin, on average, is down 9 basis points from a year earlier, averaging 3.63%. But net interest income is on pace to rise by 11% as volume offsets margin pressure.

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Fee Income Improves

Banks are finding ways to incrementally increase fee income, which on average rose 8.7% from a year earlier. Deposit-related fees, on average, increased 2.3%.

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Costs Climb

Noninterest expenses, on average, increased 1.8%, after inching up during the third quarter. Compliance costs are offsetting cuts made in areas such as branching.

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Saving for a Rainy Day

Loan-loss provisions, on average, rose 16.5% from a year earlier, even as net chargeoffs and nonperforming assets declined, suggesting that many banks are padding reserves due to loan growth or exposure to the energy sector.

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