Regional Banks, Bucking Trend, Post Higher Results
Several U.S. regional banks reported better-than-expected quarterly results Tuesday, and expressed confidence they could withstand soaring credit losses as the nation's housing market and economy slump.
First-quarter profit exceeded forecasts at U.S. Bancorp, Regions Financial Corp, M&T Bank and Marshall & Ilsley.
U.S. Bancorp operates mainly west of the Mississippi River, Regions in the Southeast, M&T in mid-Atlantic states, and Marshall & Ilsley in Wisconsin and several other states.
Results contrasted with the unexpected loss posted Monday by Wachovia , the nation's fourth-largest bank.
Rising income from deposit, credit card and other fees are helping banks offset credit problems that have spread beyond subprime mortgage borrowers.
Several banks said on Tuesday a growing number of home builders and property developers are unable to stay current as the value of collateral drops and the pool of prospective home buyers shrinks.
"Anything related to the home-building starts to show stress at this point," U.S. Bancorp Chief Executive Richard Davis said on a conference call. "Let's say it's a small business that manufactures faucets: They're stressed now. Or companies that manufacture doorbells: They're stressed....It's actually quite predictable when you think about it."
Net income for Minneapolis-based U.S. Bancorp, the nation's sixth-largest bank by assets, fell 4 percent to $1.09 billion, or 62 cents per share, from $1.13 billion, or 63 cents, a year earlier.
Profit topped the average analyst forecast of 61 cents, according to Reuters Estimates, helped by increases in credit card and mortgage banking revenue.
The bank said it has "minimal" exposure to subprime mortgages, but credit losses nearly tripled to $485 million.
Regions Financial , based in Birmingham, Alabama, said profit rose 1 percent to $336.7 million, or 48 cents per share, from $333 million, or 45 cents.
Excluding several items, operating profit fell 24 percent to $383.6 million, or 55 cents per share, hurt by an increase in problem loans to home builders.
On that basis, however, analysts expected profit of 48 cents per share.
Loan losses nearly quadrupled to $181 million.
Buffalo, New York-based M&T , which counts Warren Buffett's Berkshire Hathaway among its largest shareholders, said profit rose 15 percent to $202.2 million, or $1.82 per share, from $176 million, or $1.57.
Operating profit also rose 15 percent, to $215.6 million, or $1.94 per share.
Results benefited from a 32 percent increase in fee income.
Excluding items, profit was $1.58 per share, 3 cents more than analysts expected, according to Reuters Estimates.
Credit losses more than doubled to $60 million.
Profit at Milwaukee-based Marshall & Ilsley fell 33 percent to $146.2 million, or 56 cents per share, from $216.8 million, or 83 cents.
Operating profit fell 13 percent to $146.2 million, or 56 cents per share, above the average 53 cents per share estimate.
Fee income rose 36 percent, but loan and lease losses rose more than eightfold to $146.3 million, the bank said.
Results for the four banks included one-time gains from last month's $19.7 billion initial public offering by Visa Inc , the credit card network.
Most other major U.S. banks are scheduled report results in the next week, including JPMorgan Chase and Wells Fargo on Wednesday, Citigroup on Friday, and Bank of America on April 22.