Regional Banks Get Loan Pleasure, Durbin Pain
Updated with late morning stock price action.
NEW YORK (TheStreet) — Huntington Bancshares and BBT on Thursday both reported strong fourth-quarter loan growth, but suffered major declines in fee income following the Federal Reserve’s implementation of the Durbin Amendment on Oct. 1.
Huntington reported fourth-quarter earnings applicable to common shareholders of $119.2 million, or 14 cents a share, declining from $135.7 million, or 16 cents a share, the previous quarter, but increasing from $39.1 million a year earlier, mainly from a decline in credit expenses.
The Columbus, Ohio lender’s fourth-quarter results met the analyst consensus EPS estimate of 14 cents, according to Zacks.
Huntington’s earnings declined from the third quarter reflected an 11% decline in noninterest income, with electronic banking revenue declining 44% to $18.2 million as the Durbin Amendment’s limitations to interchange fee revenue from debit card purchase transactions took effect.
The decline in noninterest income also reflected $19.1 million in gains on the sale of loans in the third quarter, when Huntington securitized $1 billion in automobile loan, for a $15.5 million gain. Fourth-quarter gains on loan sales totaled $2.9 million.
Huntington Bancshares CEO Stephen D. Steinour
On Dec. 31, Huntington “reclassified $1.3 billion of automobile loans to loans held for sale in anticipation of completing another securitization in the first half of 2012.
Huntington CEO Stephen Steinour said that said the company would be doing auto loan securitizations “once or twice a year,” as part of the company’s strategy to “have a limited exposure, frankly, to everything,” adding that auto loan securitization “generates a significant return for u, and it comes with a very low cost of funding right now.”
Partially offsetting the noninterest income decline in the fourth quarter was an increase in mortgage banking income to $24.1 million from $12.8 million in the third quarter, although it was still way down from $53.2 million in the fourth quarter of 2010.
Bottom-line results for the fourth quarter were boosted by a $45 million release of loan loss reserves.
Huntington’s net interest margin — the difference between a bank’s average yield on loans and investments and its average cost for deposits and wholesale borrowings — expanded to 3.38% during the fourth quarter from 3.34% in the third quarter and 3.37% in the fourth quarter of 2010, which Stienour said reflected a “continued focus on fundamentally changing our deposit mix and driving down the overall cost of funds.” The CEO added that Huntington’s auto loan originations had expanded into Minnesota and Wisconsin.
Article source: http://www.thestreet.com/story/11379704/1/regional-banks-get-loan-pleasure-durbin-pain.html
Did you enjoy this post? Why not leave a comment below and continue the conversation, or subscribe to my feed and get articles like this delivered automatically to your feed reader.
Comments
No comments yet.
Leave a comment