Profits tumble for several parent banking firms

Illustrating how dicey the banking business is this year, several publicly traded banking companies recently reported second-quarter earnings that were lower than last year's.

The parent companies of Chase Bank, PNC Bank, MainSource Bank, First Midwest Bank and Busey Bank all saw drops in second-quarter net income this year.

Bucking the trend were the parent companies of Regions Bank, Commerce Bank, First Financial Bank and First Mid-Illinois Bank & Trust.

In comments released with the results, several banks noted that today's low interest rates mean the margin between what they earn on loans and what they pay out on deposits is thin.

In the words of First Mid-Illinois Bancshares CEO William Rowland, the interest rate environment has been "difficult" for banks and shows no sign of improvement.

Rowland also warned that crop yields this year will be below historical averages, affecting farm customers.

The economy is soft enough that demand for loans hasn't been strong. But there are grounds for hope, based on second-quarter results.

Archie Brown Jr., the CEO of MainSource Financial Group, said it was the first time in more than three years that the bank had experienced loan growth.

Terre Haute, Ind.-based First Financial Corp. said its total loans as of June 30 increased to $1.88 billion, up from $1.65 billion a year earlier, and total deposits increased to $2.25 billion, up by $360 million.

But those increases were primarily driven by the acquisition of Freestar Bank, First Financial noted.

Here's a snapshot of bank performance in the quarter that ended June 30 and how it compared to the same quarter a year ago:

JPMorgan Chase: Net income of $4.96 billion, down from $5.43 billion; diluted earnings of $1.21 a share, down from $1.27 a share.

PNC Financial Services Group: Net income of $546 million, down from $912 million; diluted earnings of 98 cents a share, down from $1.67 a share.

Regions Financial: Net income of $355 million, up from $109 million; diluted earnings of 20 cents a share, up from 4 cents a share.

Commerce Bancshares: Net income of $74.8 million, up from $69.6 million; diluted earnings of 84 cents a share, up from 75 cents a share.

First Financial Corp.: Net income of $8.7 million, up from $8.4 million; diluted earnings of 66 cents a share, up from 64 cents a share.

MainSource Financial Group: Net income of $6.98 million, down from $7.63 million; diluted earnings of 32 cents a share, down from 35 cents a share.

First Midwest Bancorp: Net income of $6.37 million, down from $10.65 million; diluted earnings of 9 cents a share, down from 11 cents a share.

First Busey Corp.: Net income of $4.9 million, down from $7.45 million; diluted earnings of 5 cents a share, down from 7 cents a share.

First Mid-Illinois Bancshares: Net income of $3.48 million, up from $2.58 million; diluted earnings of 39 cents a share, up from 26 cents a share.

Regions Financial attributed its gains partly to completing the sale of the Morgan Keegan investment services firm to Raymond James, and partly to an increase in mortgage lending.

PNC said its results were hurt by a $438 million provision for residential mortgage loan repurchase obligations. The bank said it expects to continue to see elevated levels of repurchase demands from the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corp. (Freddie Mac).

Sections (2):News, Business
Topics (1):Economy
Categories (4):News, Banking, Economy, Business

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