Regional Banks Post Strong Earnings Amid Economic Growth

Strategic Insights -

The six largest regional banks in the US have reported positive earnings results, driven by improved capital markets and fees from the acquisitions of regional investment banks. According to analysts, a strengthening economy with low inflation has contributed to higher loan growth at regional banks. First Union, Keycorp, BankBoston, National City, Comerica, and Keycorp have all reported increased earnings, with First Union's profit from operations rising 4.7% and BankBoston's net income beating analyst forecasts.

Key Takeaways:

  • First Union's first-quarter profit from operations rose 4.7% to $847 million, or 88 cents a diluted share, matching estimates.
  • BankBoston's net income fell 6.3% as the bank spent more on employee compensation after the purchase of Robertson Stephens & Company.
  • National City's first-quarter operating profit rose 17% to $347.9 million, or $1.07 a diluted share, beating analyst expectations.
  • Comerica's first-quarter profit rose 10% to $159.1 million, or 98 cents a diluted share, in line with expectations.
  • Keycorp's first-quarter operating earnings rose 11% to $257 million, or 57 cents a diluted share, but was a penny short of Wall Street estimates.
  • The strong economy and low inflation have contributed to higher loan growth at regional banks.
  • Banks that provide underwriting and trading, as well as mergers and acquisitions advice, have benefited from the surging stock and bond markets.

Statistics:

  • First Union's profit from operations rose 4.7% to $847 million.
  • BankBoston's net income fell 6.3% to $223 million.
  • National City's first-quarter operating profit rose 17% to $347.9 million.
  • Comerica's first-quarter profit rose 10% to $159.1 million.
  • Keycorp's first-quarter operating earnings rose 11% to $257 million.
  • The bank's net income was $293 million, or 65 cents a share, compared to $235 million, or 53 cents a share, a year earlier.
  • The average forecast of 73 cents a share from analysts surveyed by the First Call Corporation was beaten by BankBoston's actual net income of 75 cents a share.
  • National City had a gain of $3.1 million from selling its stakes in Electronic Payment Systems and Stored Value Systems Inc.
  • The bank's net income rose to $351 million, or $1.08 a share, compared to $103.7 million, or 32 cents a share, a year earlier.

Sources:

  • Bloomberg
  • The Wall Street Journal
  • First Call Corporation
  • STI Capital Management
  • First Union Corporation
  • BankBoston Corporation
  • National City Corporation
  • Comerica Inc.
  • Keycorp