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Biz Links Current Issue Q3-02 Index Q2-02 Index Q1-02 Index Q4-01 Index Q3-01 Index Q2-01 Index Q1-01 Index Prior Financial Services Updates June 2005 May 2005 April 2005 March 2005 Feb 2005 Jan 2005 Dec 2004 Nov 2004 Oct 2004 Sept 2004 August 2004 July 2004 June 2004 May 2004 Feb 2004 Jan 2004 Dec 2003 Nov 2003 Oct 2003 |
NOTE: Please confirm through your own research any numbers on which you are to make a buy, sell or hold decision. The page is ment to be a supliment for those already getting monthly sector updates from their broker. It is the goal of this page to provide more timely data - and perhaps cover a wider array of stocks and different valuation metrics. Data entry errors sporadically happen. Monthly Sector Summary During July, large-cap banks rose 1.48% to a loss of 4.65% from June's loss of 5.96% and yields fell 4 basis point to 3.54% from June's 3.58%. The ten year treasury ended the month at 4.28% [vs 3.91% on 6-30 - a rise of 37 basis points]. During June, large-cap banks fell to a loss of 5.96% from May's loss of 5.59% and yields rose 1 basis point to 3.58% from May's 3.57%. The ten year treasury ended the month at 3.92% [vs 4.00% on 5-31 - a fall of 8 basis points]. Bank of America Buys MBNA, Beating Out Wachovia Valerie Bauerlein & Robin Sidel, WSJ 7-01 Bank of America, by reaching a deal to buy America's third-biggest issuer of general-purpose credit cards, moved to cement its position as a global powerhouse in striking distance of Citigroup as the biggest U.S. bank. The roughly $35 billion deal for MBNA is the latest step in a two-decade-long transformation of Bank of America, which only last year acquired FleetBoston in an even bigger deal. Based on current stock prices, the MBNA transaction would give Bank of America a stock-market value of approximately $218 billion -- about 10% below Citigroup's. For MBNA, the acquisition plan underscores the fading glory of stand-alone credit-card companies unaffiliated with banks. MBNA is one of a slew of such companies that took off in the 1980s when big banks were shedding card operations. But the stand-alones now are falling victim to slower growth and bitter competition. For Bank of America Chairman and CEO Kenneth Lewis, the deal caps a 36-year rise. As a relentless lieutenant of his legendary predecessor, Hugh McColl, Mr. Lewis helped his mentor buy and digest a steady diet of regional banks and other acquisitions to build the first coast-to-coast U.S. bank. In the past eight days, Mr. Lewis, 58 years old, moved with lightning speed after learning that hometown rival Wachovia was in talks to acquire MBNA. He flew to MBNA headquarters last Thursday to discuss a possible deal with Bruce Hammonds, MBNA's chief executive. Mr. Lewis said in an interview that the deal fits squarely with his strategy to leverage the bank's network of more than 5,800 branches into a chain of financial-services supermarkets providing everything from checking accounts and mortgages to investment advice and high-end private banking. The combined company would become the largest issuer of general-purpose cards in the U.S., with a 20% market share -- more than doubling Bank of America's prior heft in that business -- according to newletter Nilson Report. To Mr. Lewis, the most exciting aspect of the deal, even bigger than adding geography and customers, was to get access to MBNA's vaunted marketing operation, which fills mailboxes with offers targeted to people's income, credit rating, age and locality. "I see them as a selling machine," he said. Bank of America is paying a price equal to 2.5 times its own 2004 earnings of $14.14 billion, or $3.69 a share -- at a time when growth in the credit-card business is slowing because of a glut of cards. Still, industry analysts generally applauded the deal, even though some worried that the price leaves the acquirer little room for error as it absorbs MBNA and continues digesting Fleet. Prospects for card issuers appear a little rocky at the moment. A new federal law makes it harder for individuals to declare bankruptcy, and the result is likely to be a jump in bankruptcy filings in the next few months as some people try to beat the law's effective date in October. The result could be significant write-offs for card companies. The card industry is in the midst of a consolidation wave triggered by its slowing growth. Although consumers increasingly use cards for purchases, they have scores to choose from. There are some 900 million credit and debit cards in circulation, and the average user has more than seven, according to industry estimates. So issuers want to own more of the cards in people's wallets. Card associations such as Visa USA and MasterCard, which have thousands of card-issuing banks as members, have been courting new prospects. At the same time, U.S. financial institutions have been building up their card businesses over the past several years. The businesses are seen as good balancers against other bank operations such as lending and retail networks. Plastic was a big attraction for J.P. Morgan Chase last year when it bought Bank One, in a deal that made J.P. Morgan the nation's biggest issuer -- a position now expected to be taken by Bank of America. Last month, Citigroup agreed to acquire the credit-card businesses of Federated Department Stores and May Department Stores for about $760 million, furthering its expansion into store-brand cards. The takeover plan represents an important diversification move for Bank of America, which is pressing up against a 10% federal cap on the share any bank can have of the U.S. deposit market. But Bank of America is betting on the financial-services supermarket concept just as some others are moving away from the idea. Mr. Lewis said the bank can build on MBNA's best-known asset -- an extensive network of relationships with professionals, colleges, sports teams and other organizations, ranging from Ducks Unlimited to the American Bar Association. The company has more than 5,000 such relationships in which MBNA emblazons the organizations' logos on a card and pays them for transactions made on the cards. Mr. Lewis prizes affinity-card clients, who MBNA says have held their cards a long time and use them for an average of $7,000 in purchases a year. Bank of America sees affinity programs as a possible gateway to upper-middle-class workers with money to invest but not necessarily the expertise to do so. Those customers typically have more money than the average card applicant, a higher credit score and an annual income of roughly $84,000. Two-thirds of all dentists and three-quarters of doctors hold MBNA affinity cards. Bank of America History In 1969, Mr. Lewis joined what was then North Carolina National Bank. NCNB amassed a belt of branches stretching from Florida to California. After merging with rival C&S/Sovran Corp. in 1991 to create NationsBank, it in 1998 acquired San Francisco's BankAmerica and took the famous Bank of America name. The 2002 FleetBoston deal gave Bank of America a major presence in New England. The bank has outfoxed Wachovia, which has lost out to Bank of America at least twice on recent megadeals: In 1997 what was then NationsBank beat out Wachovia, then called First Union, for widely coveted Barnett Banks of Jacksonville, Fla. Wachovia also at least flirted with FleetBoston before Bank of America closed that deal. In recent weeks, Bank of America was the object of speculation as to whether it might try to buy Morgan Stanley. Why Buy Bank of America Shares? James Stewart, SmartMoney 7-05 B of A has a proven track record of successful acquisitions, transforming itself from obscurity to the second-largest bank in the country (by market capitalization). In the past five years, B of A shares have more than doubled. B of A is buying MBNA at a time when financial stocks are far from their peaks, and may represent bargains. B of A is offering a 31% premium to MBNA's recent share price of $21, but MBNA was trading at over $28 as recently as the beginning of the year. [MBNA jolted investors this spring by reporting a 94% drop in Q1 net income.] None of this even touches on the reason I bought Bank of America in the first place, which is its dividend yield. On June 22, B of A raised its quarterly dividend 11%, to 50 cents a share, which translates to a yield of 4.4% at a share price of $45. The company has increased its dividend for 28 consecutive years — all the years during which it was acquiring and digesting other banks. I see no reason why this would change in the wake of the MBNA deal. I find the financial services industry to be exceedingly attractive, both for its high dividend payments and for its growth potential. The U.S. — the world, for that matter — is undergoing a historic consolidation of the banking industry. Driven by the twin engines of globalization and productivity, this is likely to yield a handful of highly profitable megabanks. I want to be one of their shareholders. While traders fret about the short-term implications of rising interest rates on bank stocks, the rest of us can ride this trend to handsome capital gains and a steady income stream. Citigroup vs. Bank of America Julie Creswell, NY Times 7-02 On the surface, Citigroup and Bank of America have business models that appear to be very similar. But there are significant differences. While Citigroup chased after the higher-fee businesses from corporations in the late 1990's, Bank of America focused on the more staid, boring business of serving retail customers. That bet seems to have paid off. Today, Bank of America's operating margins, return on capital and sales growth are all better than Citigroup's. Investors have taken notice, helping to send Bank of America's shares up 11.4% in the last year while Citigroup's shares have climbed 4%. While it is still the nation's largest bank, Citigroup these days seems stuck. Since taking the reins in 2002, Citigroup's chief executive, Charles Prince, has spent a great deal of his time apologizing to regulators around the world and settling lawsuits relating to Citigroup's dealings with corporate highfliers like Enron and WorldCom. He is also undoing some of what his predecessor cobbled together. This year, Citigroup sold its Travelers Life and Annuity business to MetLife for $11.5 billion, and last week, it unloaded its asset management unit to Legg Mason in an asset swap valued at $3.7 billion. Bank of America is acting like the Citigroup of old. In the last week or so, it made a $2.5 billion investment to take a 9% stake in one of China's biggest banks and bought MBNA. Some on Wall Street are fascinated by the role reversal. "Citigroup has been so traumatized by the events of the last five years that it is no more the wild-eyed risk taker," said Richard X. Bove, an analyst at Punk Ziegel & Company. "We're seeing one company shrink while the other expands. It's only a matter of time before Bank of America is bigger than Citigroup." Without a doubt, Citigroup is a powerhouse in credit cards and home lending. But not so long ago, a great deal of its focus centered on bolstering growth by seeking closer relationships with large corporations. In exchange for cheap loans, Citigroup hoped to earn higher fees from companies for equity underwriting and advisory work. But in the aftermath of the stock market collapse in 2001, Citigroup, more so than any other bank, has faced greater regulatory scrutiny and investor wrath. It has agreed to the multibillion-dollar fines and settlements to end regulatory investigations and shareholder lawsuits. Even if Mr. Prince wanted to make an acquisition, he probably could not. Earlier this year the Federal Reserve warned the bank against deal-making until it institutes improved internal control systems. And even though Citigroup continues to win underwriting or advisory work, it is not as if investors are rewarding the bank. As its earnings momentum has slowed, its stock has lagged investment banks like Goldman Sachs as well as retail banks like Wachovia and Wells Fargo. The battle between these behemoths is far from over. Certain Wall Street investment banking businesses are picking up nicely and a lean and mean Citigroup could certainly be in a position to take advantage of that. Once it finishes atoning for its past, Citigroup could yet come back swinging. Is Wachovia Deal-Averse or Is It Just Picky? Julie Creswell, NY Times 7-12 When will Wachovia join the big dance? Two years ago, Wachovia, the nation's fourth-largest bank, considered buying FleetBoston, but balked at the price. Bank of America consummated the merger. Three weeks ago, after walking away from the credit card giant MBNA, Wachovia again watched from the sidelines as Bank of America paid a 30% for MBNA. Now investors are wondering whether Wachovia is finally poised to join the hunt and do a big acquisition. "I don't think Wachovia's interest in doing a deal has waned," said Denis Laplante, head of bank research at Keefe, Bruyette & Woods. "They could add to their mortgage business, they could go after a regional bank or a small insurance brokerage. They have a lot of businesses they could fill in." There is reason to believe Wachovia is interested in diving into a deal. It's chief executive, Ken Thompson, has telegraphed to Wall Street in recent months his interest in getting into the credit card business or extending Wachovia's reach in Texas or the Northeast. Several analysts say it makes sense for Wachovia to acquire a credit card issuer to fill a gaping hole in the bank's product line. After Bank of America announced plans in late June to buy MBNA for $35 billion, Wachovia found itself in a bit of a quandary. In 2000, when credit cards were out of favor, Wachovia sold its operations to MBNA. Today, MBNA holds about $6.5 billion in credit card loans that have both companies as co-issuers. It is unlikely that Wachovia will want to have Bank of America run its credit card group, analysts say. And building a credit card unit from scratch would take time and money and would probably never achieve any real scale, analysts add. MBNA would have been a terrific fit for Wachovia. But after spending about two weeks in negotiations, talks ended because the bank did not think the deal worked financially. With MBNA off the table, Capital One, the nation's sixth-largest issuer of credit cards with $53 billion in outstanding loans, is a strong contender. But the cardholder base of Capital One is of lesser quality than MBNA's. Another option could be Discover Financial, the nation's seventh-largest issuer of credit cards. Discover's parent company, Morgan Stanley, has said it is evaluating whether to spin off Discover in a tax-free deal. But Morgan Stanley would face a huge tax bill if it sold its stake in Discover within two years of spinning it off. Wachovia's options certainly are not limited to credit cards. The bank could also look to buy a regional bank that extends its reach into some of the fastest-growing areas of the country, analysts say. "Ken has said he'd like to see Wachovia have a bigger presence in the Texas and New York metropolitan markets," noted Ed Najarian, a bank analyst with Merrill Lynch. Wachovia was shown Houston's Amegy Bancorp, which was acquired last week by Zions Bancorp for $1.7 billion, but quickly decided against pursuing it. Another potential Southwest target could be Compass Bancshares. Yet another name that has been mentioned is North Fork Bank, which has branches across New York and New Jersey. The obstacle to a deal there is that North Fork is so efficiently operated that it will be tough to squeeze out excess expenses, said Jacqueline Reeves, an analyst with Ryan Beck & Company. Still, the other end of the deal spectrum involves speculation of a merger of equals between Wachovia and Wells Fargo. Such a merger would create a retail banking behemoth with a nationwide network of branches, rivaled only by Bank of America. To be sure, Wachovia does not necessarily need to do a deal. It could bide its time, waiting for the market to shift in its favor. The risk in waiting, though, is that it could miss out on some of the most attractive properties, as was the case with MBNA. Worse yet, Wachovia could face fierce bidding competition from the likes of J. P. Morgan Chase and Citigroup if they rebound and return to the hunt themselves. Bank of America Posts 12% Increase in Profit PRNewswire 7-18 BAC reported that Q2 net income rose to $4.30 billion from $3.85 billion a year earlier. Earnings per share increased 14% to $1.06 per share (diluted) from $0.93. Return on average common shareholders' equity in Q2 was 17.54%. Q2 earnings included merger and restructuring charges of $121 million pre-tax, which reduced earnings per share by 2 cents. Total revenue at Bank of America rose 7.4% to $14.02 billion from $13.05 billion a year earlier. Analysts had forecast an average $14.00 billion in revenue. For the first six months of 2005, Bank of America earned $8.99 billion, or $2.20 per share (diluted), compared to $6.53 billion, or $1.85 per share, a year earlier. Improved results were driven by a 7% increase in revenue and 3% decrease in noninterest expense. The revenue increase was primarily due to strong noninterest income growth, led by the growth in card income and service charges. Also contributing were gains from whole loan sales and equity investment gains. Noninterest expense fell due to savings created by the merger with FleetBoston. Revenue on a fully taxable-equivalent basis grew to $14.21 billion from $13.22 billion the same quarter last year. Net interest income on a fully taxable-equivalent basis was $7.84 billion, up 1% from $7.75 billion a year earlier. The increase was due to growth in consumer and business loans, a larger asset-liability management portfolio and higher domestic deposit levels. These increases were partially offset by the impact of further flattening of the yield curve, a lower trading-related contribution and lower levels of large corporate and foreign loans. Noninterest income rose 16% to $6.37 billion from $5.47 billion a year earlier. These results were driven by gains from whole loan sales, card income, service charges and equity investment gains. These improvements were offset by weaker trading profits and investment banking income as well as lower mortgage banking income. During the quarter, the company realized $325 million in securities gains, down significantly from $795 million in Q2-04. The efficiency ratio improved to 49.42% (48.56% excluding merger and restructuring charges). For 2005 year-to-date, the company has achieved operating leverage of 13.5%. During the quarter, Bank of America paid a cash dividend of $0.45 per share. The Board of Directors has increased the quarterly dividend to $0.50 per share, effective with the payment in the third quarter. The company issued 22 million shares, primarily related to employee stock options and ownership plans, and repurchased 40 million shares. Average common shares issued and outstanding were 4.01 billion in the second quarter, compared to 4.03 billion in Q1-05 and 4.06 billion in Q2-04. Citigroup Earnings Up Press Release 7-18 Citigroup today reported net income for Q2-05 of $5.07 billion, or $0.97 per share, an increase from $1.14 billion or $0.22 per share in Q2-04. Income from continuing operations was $4.73 billion, or $0.91 per share, up from $916 million, or $0.17 per share. Excluding the second quarter 2004 after-tax charge of $4.95 billion for a WorldCom class action settlement and increased litigation reserves and an after-tax gain of $756 million on the sale of a stake in Samba Financial Group, revenues increased 2%, and net income and earnings per share from continuing operations declined 7% and 6%, respectively. Return on common equity was 18.4%, while return on risk capital was 36%. Rising short-term interest rates and a flattening yield curve resulted in spread compression across several businesses. New bankruptcy legislation caused a short-term spike in bankruptcy filings, adding approximately $175 million to our credit costs in North America cards. Revenues declined 3%. Excluding the impact of a $1.17 billion pre-tax gain on the sale of a stake in Samba recorded in the prior year period, revenues increased 2%. Revenue growth reflects 10% growth in international consumer businesses, driven by strong growth in Asia and Latin America. In North America retail banking, revenue increased 6% including a 16% increase in Mexico revenue. Transaction services revenues increased 21% to record levels. Revenues declined 5% from Q1-05. Expenses declined 40%. Excluding the impact of a $7.92 billion charge for the WorldCom settlement and increased litigation reserves recorded in the prior-year period, expenses increased 7%. Approximately 3 points of the increase was due to increased investment spending and 3 points was due to acquisitions and the impact of foreign exchange. Expenses declined 4% from the first quarter 2005. Share repurchases during Q2 were 42 million shares for a total cost of $2.0 billion. Wells Fargo Reports Record Quarterly EPS and Net Income Business Wire 7-19 Wells Fargo reported record diluted EPS of $1.12 for Q2-05, up 12% from $1.00 in Q2-04. Net income was a record $1.91 billion, up 11% from $1.71 billion in Q2-04. WFC's return on equity was 19.8%. Net interest income increased 7% both from Q2-04 and on a linked-quarter basis (annualized). The year-over-year increase in net interest income reflected 6% earning asset growth and a 6 basis point increase in the net interest margin to 4.89% in Q2-05 from 4.83% a year ago. The net interest margin increased 2 basis points on a linked-quarter basis, despite a flatter yield curve. Noninterest income increased $129 million, or 4%, from Q2-04. Excluding mortgage banking, noninterest income increased 14% from Q2-04. The growth in noninterest income reflected double-digit increases in trust and investment fees, card fees, loan fees and gains from equity investments, offset by a $256 million decrease in mortgage banking noninterest income. During the quarter, the Company recognized a net gain of $201 million from equity investments. At quarter end, the private equity portfolio had a cost basis of $1.5 billion and the $630 million public equity portfolio had unrealized gains of $261 million, up from $162 million at March 31, 2005. The debt securities portfolio had unrealized gains of $943 million at quarter-end. Total nonperforming assets (NPAs) were $1.39 billion (.46% of total loans) at June 30, 2005, compared with $1.41 billion (.48%) at March 31, 2005, and $1.62 billion (.60%) at June 30, 2004. Wachovia Earns Record $1.04 Per Share in 2nd Quarter 2005, Up 9% Business Wire 7-19 Wachovia reported record net income of $1.65 billion, or a record $1.04 per share, in Q2-05 compared with $1.25 billion, or 95 cents per share, in Q2-04. Excluding after-tax net merger-related expenses of 3 cents per share in Q2 of both years, Q2-05 earnings were $1.70 billion, or a record $1.07 per share, compared with $1.30 billion, or 98 cents per share, in the Q2-04. Its efficiency ratio, or ratio of costs to revenues, fell from 63.46% a year ago to 59.29% in Q2. Wachovia reported 34% growth in business loans and a 32% jump in consumer loans, while mortgages jumped 50%. Wachovia's net-interest margin dropped to 3.23% from 3.37% in Q2-04. Wachovia said it expects the margin to stay steady for the rest of the year, in part because of improving rate conditions. The bank's net-interest income grew 17% from a year earlier but dropped 2% from Q1 to $3.41 billion. Noninterest income, which reflects service charges and other fees and profits from trading, grew 14% from a year earlier but was also down 1% from Q1. U.S. Bancorp's Profit Rose to 60 cents/share from 54 Business Wire 7-19 U.S. Bancorp reported net income of $1,121 million [$.60 per diluted share] for Q2-05, compared with $1,037 million [$.54 per diluted share] for Q2-04. Return on average assets and return on average equity were 2.23% and 22.7%, respectively, for Q2-05, compared with returns of 2.19% and 21.9%, respectively, for Q2-04. Q2 net interest income on a taxable-equivalent basis was $1,761 million, compared with $1,779 million recorded in Q2-04. Average earning assets for the period increased over Q2-04 by $9.7 billion (5.8%), primarily driven by a $3.3 billion (8.2%) increase in retail loans, a $3.2 billion (8.1 %) increase in total commercial loans and a $3.1 billion (22.4%) increase in residential mortgages. The growth in earning assets was more than offset by a lower net interest margin. The net interest margin in Q2-05 was 3.99%, compared with 4.28% in Q2-04. The decline in the net interest margin reflected the current lending environment, asset/liability management decisions and the impact of changes in the yield curve from a year ago. Q2 noninterest income was $1,541 million, an increase of $299 million (24.1%) from Q2-04, and $159 million (11.5%) higher than Q1-05. The increase in noninterest income was driven by favorable variances in securities gains (losses) and in the majority of fee income categories. Credit and debit card revenue [up 11.3%] and corporate payment products revenue [up 16.5%] were both higher. The growth in credit and debit card revenue was driven by higher transaction volumes and rate changes. The corporate payment products revenue growth reflected growth in sales, card usage, rate changes and the recent acquisition of a small fleet card business. ATM processing services revenue was higher by $12 million (26.7%) in Q2-05 than the Q2-04, primarily due to the expansion of the ATM business in May of 2005. Merchant processing services revenue was higher in Q2-05 than Q2-04 by $33 million (20.0%), reflecting an increase in sales volume, new business, higher equipment fees and the expansion of business in Europe. Deposit service charges were higher year-over-year by $32 million (15.8%) due to account growth and transaction-related fees. Other income was higher by $28 million (26.2%), primarily due to higher income from equity investments relative to the same quarter of 2004. SunTrust Net Income Falls to $1.28/share from $1.36/share in Q2-04 PRNewswire 7-19 SunTrust Banks today reported net income for Q2-05 of $465.7 million, up from $386.6 million in Q2-04. Net income per diluted share was $1.28, down from the $1.36 per diluted share earned in Q2-04. Operating income per diluted share was $1.37, up 1% from Q2-04. Operating income does not include $33.6 million of after-tax merger charges incurred in Q2-05 associated with SunTrust's acquisition of National Commerce Financial), which closed 10-01-04. The efficiency ratio for Q2-05 was 61.30%, a 28 basis point decrease from Q2-04. The operating efficiency ratio, which excludes merger expenses, was 58.46%, a 312 basis point decrease from the operating efficiency ratio in Q2-04. Return on average total assets less net unrealized securities gains was 1.18 % for the six months ending in Q2-05 vs. 1.23% for the six month period ending in Q2-04. Return on average total shareholders' equity 14.68% for the six month period ending Q2-05 vs. 15.25% for the six month period ending Q2-04. Fully taxable net interest income was $1,142.4 million in Q2-05, up from $885.1 million in Q2-04. On an estimated historical combined basis, fully taxable net interest income was up 6% from Q2-04. The primary factors driving the net interest income growth have been strong loan growth [Up 13% from Q2-04] and improvement in net interest margin. The net interest margin improved from 3.13% for Q2-04 to 3.16% for Q2-05, but was down nine basis points from the Q1-05. Total noninterest income was $770.9 million for Q2-05, up from $622.7 million for Q2-04. On an estimated historical combined basis, total noninterest income for Q2 was up 3% from Q2-04. Comparing Q2 to Q1-05, total noninterest income excluding securities gains and losses and the net gain on sale of RCM factoring assets that occurred in Q1 increased 17% on a sequential annualized basis. The Company's reported efficiency ratio was 61.30% for Q2-05 compared to 60.22% for Q1-05. The operating efficiency ratio, which excludes the impact of merger expenses, was 58.46%. This compares favorably to the first quarter operating efficiency ratio of 58.85% and the adjusted operating efficiency ratio, which excludes the impact of the net gain on sale of RCM factoring assets in addition to merger expenses, of 59.48%. Net charge-offs in Q2-05 were 0.13% of average loans, down from 0.14% of average loans in Q1-05 and 0.19% of average loans in Q2-04. Net charge-offs were $35.4 million in Q2-05 compared to $36.8 million in Q1-05. Nonperforming assets were $380.3 million at 6-30-05 or 0.35% of loans, other real estate owned and other repossessed assets, as compared to $392.3 million or 0.37% of loans, other real estate owned and other repossessed assets at 3-31-05. KeyCorp Net Income Rises to 70 cents/share from 58 cents/share in Q2-04 Business Wire 7-19 KeyCorp announced Q2 net income of $291 million, or $0.70 per diluted common share, compared with $239 million, or $0.58 per share, for Q2-04. For Q1-05, net income was $264 million, or $0.64 per diluted common share. Return on average equity reached 16.15% for Q2-05, compared with 13.97% for the same period last year and 15.09% for Q1-05. Taxable-equivalent net interest income was $723 million for Q2-05, compared with $714 million for the previous quarter and $651 million for the same period one year ago. This growth was attributable to a higher net interest margin, which improved to 3.71% from 3.66% for the previous quarter and 3.56% for Q2-04. During Q2-05, the net interest margin benefited from a principal investing distribution of $15 million received in the form of dividends and interest. This distribution added approximately 8 basis points to the net interest margin for the current quarter. Key's average earning assets for Q2-05 declined slightly from the prior quarter, due largely to the sale of the nonprime segment of the indirect automobile loan portfolio completed in April and the sale of the prime segment in March. Compared with the same period last year, average earning assets increased by 7%, due primarily to strong commercial loan growth. Key's noninterest income was $486 million for Q2-05, compared with $500 million for Q1-05. The decrease reflected a $15 million decline in income from investment banking and capital markets activities, due to a reduction in net gains from principal investing activities, and lower revenue from dealer trading and derivatives. Net loan charge-offs for the quarter totaled $48 million, or 0.29% of average loans, compared with $54 million, or 0.32%, for the previous quarter and $104 million, or 0.67%, for the same period last year. During the second quarter of 2005, Key's nonperforming loans decreased by $12 million to $293 million and represented 0.43% of period-end loans at 6-30-05, compared with 0.45% at 3-31-05, and 0.72% at 6-30-04. PNC Profit fell 7% Hurt by Takeover of Riggs National Business Wire 7-19 The PNC Financial Services Group reported Q2-05 earnings of $282 million, or $0.98 per diluted share. Earnings a year ago were $304 million, or $1.07 per diluted share, and earnings for Q1-05 were $354 million, or $1.24 per diluted share. Earnings for the Q2-05 included integration costs and dilution from operations of $18 million after tax, or $.08 per diluted share, related to the acquisition of Riggs National Corporation. For the first six months of 2005, the company earned $636 million, or $2.22 per diluted share, compared with $632 million, or $2.22 per diluted share, for the first six months of 2004. Return on average common equity was 14.34% for Q2 compared with 17.41% a year ago and 19.17% in Q1-05. Taxable-equivalent net interest income increased 12% compared with a year ago and 6% compared with last quarter as a result of increased earning assets and higher yields on assets. * Average total loans increased $7.1 billion, or 18%, compared with Q2-04, driven by targeted sales efforts to capitalize on increased market demand. Four percent of the growth was attributable to the Riggs acquisition. * Average total deposits increased $7.6 billion, or 16%, compared with a year ago, driven by higher certificates of deposit, money market and demand deposit balances, and higher Eurodollar borrowings. The Riggs acquisition accounted for 4% of the growth. Compared with a year ago, average interest-bearing deposits increased 17%, while average demand and other noninterest-bearing deposits increased 11%. Noninterest income increased 2% compared with a year ago driven by a 33% increase in asset management fees and higher fund servicing revenue. These factors were mostly offset by net securities losses compared with gains in Q2-04, lower gains on institutional loans held for sale, lower trading revenue and lower equity management gains. NFB Net Income Rises to 51 cents/share from 45 cents/share in Q2-04 Business Wire 7-20 North Fork Bancorporation reported advances in earnings and earnings per share, loan and deposit growth, improvements in asset quality, record originations from its mortgage banking company and a repositioned balance sheet. Highlights in the current period include: [1] 122% increase in earnings for the second quarter compared to 2004, with a 13% increase in diluted earnings per share. [2] Returns on average tangible equity and tangible assets of 34.5% and 1.96%, excluding the MSR expense. [3] 27% annualized growth in commercial demand deposits. [4] 30% annualized growth in commercial loans. [5] 10% annualized growth in total deposits. [6] 20% decline in non-performing assets. Net income for Q2-05 was $242 million or $.51 diluted earnings per share compared to $109 million or diluted earnings per share of $.45 for Q2-04, a 122% increase in earnings and a 13% increase in diluted earnings per share. Diluted earnings per share for Q2-05, excluding the effects of the MSR expense discussed below, was $.56. NFB's returns on average tangible equity and assets in the current quarter excluding the effect of the MSR expense were 34.51% and 1.96%, respectively. Return on average tangible assets is computed by dividing net income, plus amortization of identifiable intangible assets, net of taxes by average total assets less average goodwill and average identifiable intangible assets. Return on average tangible equity is computed by dividing net income, plus amortization of identifiable intangible assets, net of taxes by average total stockholders' equity less average goodwill and average identifiable intangible assets. For the quarter ended June 30, 2005, net interest income and net interest margin were $462.1 million and 3.59%, respectively, compared to $234.1 million and 4.26% in 2004. On a linked quarter basis, net interest income declined modestly as the net interest margin declined by 20 basis points. The margin decline was caused primarily by the rising cost of funds, a flattening yield curve and aggressive consumer deposit pricing. The net interest margin is expected to stabilize for the remainder of the year. Total interest income was $709.444 million and Total Non-Interest Income was $169.131 million for Q2-05. On a linked quarter basis, non-performing assets declined by approximately $34 million or 20%. The entire reduction was in the non-performing loans category. Net charge-offs in the quarter were a modest 20 basis points. The overall allowance for loan losses to non-performing loans improved to 270%. The allowance for loan losses of $218 million, when allocated between residential mortgages and all other commercial loans, was .36% and 1.22%, respectively. Bank of New York Net Income Rises to 52 cents/share from 48 cents/share in Q2-04 Business Wire 7-20 The Bank of New York reported Q2-05 net income of $398 million and diluted earnings per share of 52 cents, compared with net income of $371 million and diluted earnings per share of 48 cents in Q2-04, and net income of $379 million and diluted earnings per share of 49 cents in Q1-05. Year-to-date net income was $777 million, or $1.00 of diluted earnings per share, compared to $735 million, or 94 cents of diluted earnings per share in 2004. JPMorgan Chase Net Income Rises to 28 cents/share Business Wire 7-20 JPMorgan Chase & reported Q2-05 net income of $1.0 billion, or $0.28 per share, compared to a net loss of $0.5 billion, or $0.27 per share, for Q2-04. Current period results include a $1.9 billion (pre-tax) litigation reserve charge, or $0.33 per share, and $279 million (pre-tax) of merger charges, or $0.05 per share, reflecting the merger with Bank One Corporation completed on July 1, 2004. Excluding these charges, operating earnings would have been $2.3 billion, or $0.66 per share. Prior-year reported results included a $3.7 billion (pre-tax) litigation reserve charge, or $1.09 per share, and $90 million (pre-tax) of merger charges, or $0.03 per share, but do not include Bank One's results. Excluding these charges, operating earnings would have been $1.8 billion, or $0.85 per share. Refer to the "Merger and other financial information" section of this press release for additional information concerning the merger. Return on equity was 12% for the quarter and 19% for the first half of 2005. Regions Net Income Rises to 53 cents/share from 51 cents/share in Q1-05 Business Wire 7-15 Regions Q2-05 net income was $248.4 million, or $0.53 per diluted share, including after-tax merger-related costs of $29.6 million ($0.06 per diluted share). This compares to first quarter's $0.51 per diluted share, including $0.06 of merger-related costs. Thus, excluding merger charges, per share earnings rose 3.5% linked quarter to $0.59 from $0.57. Return on average tangible equity for the first half of 2005 was 18.33% vs, 20.02% for the first half of 2004. Return on average stockholders' equity was 9.21% for the first half of 2005 vs, 15.04% for the first half of 2004. Return on average total assets was 1.17% for the first half of 2005 vs. 1.35% for the first half of 2004. Regions' July 1, 2004, merger with Union Planters was accounted for as a purchase; therefore, Q2-04 financial data are only for legacy Regions and do not include the former Union Planters. Legacy Regions reported Q2-04 net income available to common shareholders of $159.3 million, or $0.58 per diluted share, including an after-tax $2.7 million ($0.01 per share) charge related to a new accounting pronouncement and an after-tax $5.8 million ($0.02 per share) charge related primarily to merger expenses. The Q2-05 efficiency ratio (excluding certain items) was 61.5%, down from 62.6% in Q1-05. Q2-05 net income was $248.4 million, or $0.53 per diluted share, including after-tax merger-related costs of $29.6 million ($0.06 per diluted share). This compares to Q1's $0.51 per diluted share, including $0.06 of merger-related costs. Thus, excluding merger charges, per share earnings rose 3.5% linked quarter to $0.59 from $0.57. Regions continued to maintain strong credit quality in the second quarter. Non-performing assets declined to $455.8 million (0.78% of loans and other real estate) as of 6-30-05, compared to $487.1 million as of 3-31-05. Q2 net loan charge-offs increased to $34.1 million, or an annualized 0.23% of average loans, from Q1's unusually low $24.7 million. During the second quarter, Regions used excess capital to repurchase 4 million shares of its common stock at an average price of $33.54 per share. First half buyback total to 8.5 million shares. A similar level of buybacks is anticipated for the second half of 2005. July Ratings Changes On 7-21 Advest Downgraded NFB from Buy to Neutral. On 7-20 RBC Capital Mkts Upgraded BK from Underperform to Sector Perform. On 7-18 Keefe Bruyette Downgraded RF from Outperform to Mkt Perform. On 6-28 Advest initiated BAC at Buy. On 6-02 CIBC Wrld Mkts initiated coverage of BBT at Sector Underperform, initiated coverage of NCC and PNC at sector perform, and initiated coverage of STI at sector perform. On 6-22 Advest initiated coverage of NFB at Buy, initiated coverage on USB at Buy, initiated coverage of WB at buy, and initiated coverage of WFC at buy. From newratings.com on 6-28: Analysts at Morgan Stanley maintain their "overweight" rating on Citigroup, while the EPS estimate for 06 was reduced from $4.53 to $4.52. Monthly Mid-Cap Bank Sector Summary Mid-cap banks rose 4.13% to a year-to-date gain of 0.13% from June's loss of 3.78% and yields ended at 3.32% [vs June's 3.46% - a fall of 14 basis points]. The ten year treasury ended the month at 4.28% [vs 3.91% on 6-30 - a rise of 37 basis points]. Mid-cap banks rose to a year-to-date loss of 3.78% from May's loss of 5.98% and yields ended at 3.46% [vs May's 3.56% - a rise of 10 basis points]. The ten year treasury ended the month at 3.92% [vs 4.00% on 5-31 - a fall of 8 basis points]. Hudson United Purchased by TD Banknorth Bizjournals.com 7-14 TD Banknorth will strengthen its position in eastern New York with the purchase of Hudson United Bancorp. Portland, Maine-based TD Banknorth (BNK) will pay $1.9 billion in cash and stock for Hudson United, which is based in Mahwah, N.J., and has 204 offices in New Jersey, New York, Connecticut and Pennsylvania. TD Banknorth is parent to Glens Falls. N.Y.-based TD Banknorth New York, as well as to banks in Maine, New Hampshire, Massachusetts, Vermont and Connecticut. The transaction will give TD Banknorth 590 branches and more than $26 billion in deposits across eight Northeastern states. The purchase is expected to dilute TD Banknorth's earnings by about a penny a share in 2006, but should add 6 cents a share to 2007 earnings. Under terms of the agreement, Hudson United shareholders may receive payment in cash, TD Banknorth stock, or a combination of stock and cash. In all cases, the deal will be worth $21.07 plus 0.7247 times the average closing price of TD Banknorth's stock during a 10-day period prior to the closing date. Based on the price of TD Banknorth on July 11, the deal is valued at $42.78 a share. Other Bank Targets Reuters 7-15 Philadelphia-based Sovereign Bancorp (SOV), the No. 3 U.S. savings and loan which has a current market capitalization of about $9 billion, is seen as a potential target for bigger banks and also a possible buyer of smaller players. A spokesman for Sovereign said the bank did not comment on speculation. A host of banks in the New York and New Jersey area, including North Fork Bancorp (NFB), Astoria Financial (AF), Independence Community Bank Corp. (ICBC) , Hudson City Bancorp (HCBK), Dime Community Bancshares (DCOM) and Sterling Bancorp (STL) may also be merger candidates, industry experts said. In Connecticut, People's Bank (PBCT) is viewed as a possible participant in any future consolidation. AmSouth Net Income Up 10.6% Q2 Business Wire 7-19 AmSouth reported earnings for Q2-05 of $.52 per diluted share, compared to $.47 per diluted share reported for Q2-04. Net income for Q2-05 was a record $184.6 million versus $167.0 million for the same period in 2004, an increase of 10.6%. This second quarter performance resulted in a return on average equity of 20.9%, a return on average assets of 1.47%, and an improved efficiency ratio of 51.4%. Net interest income was $378.6 million in Q2, a 4.8% increase compared with Q2-04. The net interest margin in the second quarter was 3.40%, which is a 4 basis point decline compared with Q2-04. The increase in net interest income in the Q2 was driven by solid loan growth supported by continued strength in deposits, particularly in the low-cost category. Commercial loans grew 12.8% compared with Q2-04, and low-cost deposits increased 15.1% during the same period. Noninterest revenue, which includes earnings from service charges, trust, investment management services, securities gains and other sources of fee income, was $223.2 million for the quarter. Interchange income increased 10.2%t compared with Q2-04, and commercial credit fee income rose 25.4% compared with the previous year. Net charge-offs were 0.21% of average net loans in Q2, declining 2 basis points compared with Q1-05. The ratio of loan loss reserves to total loans was 1.09% at 6-30-05. The loan loss provision essentially matched net charge-offs in the quarter. Nonperforming loan coverage increased to 519% during the quarter. Total nonperforming assets at 6-30-05, were $90.0 million, or 0.27% of loans net of unearned income, foreclosed properties and repossessions, compared to $112.7 million, or 0.34%, in the previous quarter. Associated Banc-Corp EPS Rises to 59 cents/share from 58 cents/share in Q2-04 Business Wire 7-21 Associated Banc-Corp earned $.60 per diluted share in Q2-05, compared to $.59 per diluted share for Q1-05, and $.58 per diluted share for Q2-04. For the six months ended June 30, 2005, diluted earnings per share were $1.19, up 7.2% from $1.11 per diluted share in the same period in 2004. For Q2-05, return on average assets (ROAA) was 1.52%, return on average equity (ROAE) was 15.41% and book value per share was $15.77, compared to 1.54%, 15.52%, and $15.61, respectively, for the first quarter of 2005. Comparatively, for Q2-04 ROAA was 1.67%, ROAE was 18.87%, and book value per share was $12.53. Associated's net interest income for Q2-05 was $166.7 million, compared to $165.9 million for Q1-05, and $131.9 million in the year-earlier quarter. For the first half of 2005, net interest income was $332.6 million, up from $261.0 million for the comparable year-to-date period of 2004. The increase is due predominantly to higher average balance sheet volumes. Net interest margin for Q2 was 3.63%, compared to 3.68% for Q1-05 and 3.80% for Q2-04. On a year-to-date basis, the net interest margin was 3.65%, versus 3.80% for the comparable period last year. The trend in the net interest margin is primarily from the impact of the continued flattening of the yield curve, and competitive pricing pressures. Noninterest income was $68.4 million for Q2-05, compared to $71.4 million for Q1-05, and $57.9 million for q2-04, with year-to-date noninterest income at $139.8 million or 34% higher than the six-month period in 2004. Changes in net mortgage banking income (gross mortgage banking income less MSR expense), particularly from movements in the value of the MSR asset, impact the comparison of noninterest income between the various periods. Excluding net mortgage banking income, noninterest income was $66.1 million for Q2-05, up 7% over $61.5 million for Q1-05, and up 42% over $46.5 million for Q2-04. Asset quality remained steady, with Q2 net charge-offs of $3.6 million, compared to net charge-offs of $2.2 million for Q1-05 and $5.6 million for Q2-04. For the first half of 2005, net charge-offs were $5.7 million (0.08% of average loans), versus $10.7 million (0.20 percent of average loans) for the first half of 2004. The provision for loan losses approximated the related net charge-off levels for each of the comparative quarterly and year-to-date periods. Nonperforming loans at 6-30-05 were $112.5 million, representing 0.80% of loans, compared to $102.9 million or 0.74% of loans at 3-31-05, and 0.81% of loans at 6-30-04. AmSouth holds Mergent's "Dividend Achiever" designation for its record of increasing dividends for 34 consecutive years, an honor accorded just 3 percent of U.S.-listed, dividend-paying publicly traded companies. BancorpSouth Net Income Falls to 33 cents/share from 40 cents/share in Q2-04 PRNewswire 7-21 BancorpSouth announced net income was $25.8 million, or $0.33 per diluted share, for Q2-05 compared with net income of $31.3 million, or $0.40 per diluted share, for Q2-04. As in previous quarters, BancorpSouth's second quarter 2005 financial results were significantly affected by impairment of the Company's mortgage servicing asset ("MSA"). For the quarter, a $3.9 million MSA impairment charge reduced earnings by $0.03 per diluted share after tax. For the second quarter of 2004, the reversal of previously recorded MSA impairment charges totaled $9.4 million, or $0.07 per diluted share after tax. Excluding the impact of MSA impairment, adjusted earnings for Q2-05 would have been $28.2 million, or $0.36 per diluted share, from adjusted earnings of $25.5 million, or $0.33 per diluted share, for Q2-04. Return on average assets was 0.96% for Q2-05 vs. 1.18% for Q2-04. Return on common equity was 11.19% for Q2-05 vs. 14.19% for Q2-04. Net interest margin was 3.66% for Q2-05 vs. 3.52% for Q2-04. Interest revenue for Q2-05 grew 10.0%, or $12.3 million, to $136.0 million from $123.7 million for Q2-04 and 3.0% from $132.1 million for Q1-05. Interest expense increased 20.8%, or $8.3 million, to $48.3 million. The average taxable equivalent yield on earning assets increased to 5.63% for Q2-05 from 5.15% for Q2-04 and 5.48% for Q1-05. The average rate paid on interest bearing liabilities was 2.34% for Q2-05, compared with 1.93% for Q2-04 and 2.17% for Q1-05. Net interest revenue increased 4.8% to $87.7 million for Q2-05 from $83.7 million for Q2-04 and 0.7% from $87.1 million for Q1-05. Net interest margin expanded to 3.66% for Q2-05 from 3.52% for Q2-04 and 3.64% for Q1-05. Noninterest revenue declined $8.4 million, or 16.3%, for Q2-05 compared with Q2-04, primarily due, as discussed above, to the negative $3.9 million impact from impairment of the MSA for the second quarter of 2005 compared with the positive $9.4 million impact from the recovery of a previously recorded impairment to the MSA for the second quarter of 2004. Excluding these items, noninterest revenue increased 11.5% for Q2-05 from Q2-04. Non-performing loans and leases fell 36.1% to $23.7 million, or 0.34% of loans and leases, at 6-30-05, from $37.1 million, or 0.58% of loans and leases, at 6-30-04, while decreasing 25.8% from $32.0 million, or 0.46% of loans and leases, at 3-31-05. The allowance for credit losses was 1.29 percent of loans and leases at 6-30-05, 1.41% of loans and leases at 6-30-04 and 1.34% of loans and leases at 3-31-05. Citizens Banking Net Income Rises to 47 cents/share from 43 cents/share in Q2-04 PRNewswire 7-21 Citizens Banking Corporation announced net income of $20.6 million for Q2-05. This represents an increase of $0.5 million or 2.4% over Q1-05 net income of $20.1 million and an increase of $1.8 million or 9.8% over Q2-04 net income of $18.7 million. Diluted net income per share was $0.47, compared with $0.46 for Q1-05 and $0.43 for the same quarter of last year. Annualized returns on average assets and average equity during Q2-05 were 1.06% and 12.62%, respectively, compared with 1.05% and 12.54% for Q1-05 and 0.97% and 12.00% for Q2-04. Net interest margin was 3.92% for Q2-05 compared with 3.96% for Q1-05 and 3.98% for Q2-04. The decrease in net interest margin compared with Q1-05 resulted from mix shifts within the deposit portfolio from lower cost savings and transaction products to time deposits and continued pressure on loan spreads. Net interest income was $68.8 million in Q2-05 compared with $68.2 million in Q1-05 and $69.2 million in Q2-04. The increase in net interest income compared with Q1-05 was driven by growth in average earning assets and there being more days in the quarter, partially offset by a lower net interest margin. Noninterest income for Q2-05 was $23.1 million, an increase of $0.7 million or 3.1% from Q1-05 and an increase of $0.3 million or 1.5% over Q2-04. Compared to the prior quarter, increases in deposit service charges, trust fees, and brokerage and investment fees were partially offset by decreases in mortgage and other loan income and other income. Nonperforming assets totaled $49.0 million at 6-30-05, an increase of $5.3 million or 12.1% compared with 3-31-05 and a decrease of $9.2 million or 15.8% compared with 6-30-04. Nonperforming assets at 6-30-05 represented 0.89% of total loans plus other repossessed assets acquired compared with 0.80% at 3-31-05 and 1.10% at 6-30-04. Net charge-offs decreased to $2.4 million or 0.17% of average portfolio loans in Q2-05 compared with $4.2 million or 0.32% of average portfolio loans in Q1-05 and $4.4 million or 0.34% of average portfolio loans in Q2-04. Compass EPS Up 12% in Q2 Business Wire 7-18 Compass Bancshares reported record earnings of $201.2 million for the first six months of 2005, a 13% increase over the $178 million earned during the first six months of 2004. For the same time period, earnings per share increased 12% to $1.59 from $1.42 in the prior year. Return on average assets and return on average shareholders' equity for the first six months of 2005 were 1.41% and 19.22%, respectively. Earnings for Q2-05 increased 12% to $102.5 million compared to $91.7 million earned during Q2-04. Earnings per share for Q2-05 increased 11% to $0.81 from $0.73 in the prior year. Return on average assets and return on average shareholders' equity for Q2-05 were 1.41% and 19.23%, respectively. Compass' record financial performance was fueled by an 8% increase in revenue. Net interest income increased 6% from year ago levels driven by focused growth in earning assets and continued low-cost deposit generation. Each of our major fee-based businesses generated solid results as noninterest income increased 11% from prior year levels and now represents almost 41% of total revenue. Our ability to continue to grow top-line revenue, coupled with well contained expense growth of five percent, also resulted in enhanced operating leverage as our efficiency ratio improved to 54.63%. In addition, focused growth in earning assets, particularly high-quality loans, continued with total loans increasing 13% over prior year levels. CBSS was able to fund loan demand primarily through internal deposit generation. Average deposits increased 11%, led by a 15% increase in noninterest bearing deposits. Noninterest bearing deposits now represent more than 32% of Compass' total deposits. Net interest margin increased to 3.60% from 3.58% a year ago. Net interest margins remain under pressure given the flattening of the yield curve and expectations that interest rates will continue to rise. CBSS' NPA [non-performing asset] ratio declined to 0.34% and its NCO [net charge-offs to average loans and leases] ratio decreased to 0.40% from 0.51% in prior year. Comerica EPS Rises to $1.28/share from $1.10/share in Q2-04 PRNewswire 7-20 Comerica Incorporated reported Q2-05 earnings of $217 million, or $1.28 per diluted share, compared to $199 million, or $1.16 per diluted share, for the first quarter 2005 and $192 million, or $1.10 per diluted share, for Q2-04. Return on average common shareholders' equity was 16.99% in Q2-05, 15.73% in Q1-05, and 15.35% in Q2-04. Return on average assets was 1.68% in Q2-05, 1.57% in Q1-05, and 1.49% in Q2-04. Net interest income was $483 million for Q2-05, compared to $460 million for Q1-05 and $448 million for Q2-04. The $23 million increase in net interest income from the first quarter 2005 resulted from an increase in average earning assets, the spread improvement provided by non-interest bearing deposits in a rising interest rate environment, and the impact of one more day in the second quarter 2005. Average earning assets of $47.4 billion for the second quarter 2005 increased $767 million from the first quarter 2005, primarily as a result of a $1.1 billion, or three percent, increase in average loans to $43.2 billion for the second quarter 2005. Average deposits of $40.0 billion for the second quarter 2005 increased $218 million, less than one percent, from the first quarter 2005. Average short-term borrowings increased $741 million in Q2-05, when compared to the prior quarter. The net interest margin increased nine basis points from the first quarter 2005 to 4.09% in Q2-05, due primarily to a greater contribution from noninterest-bearing deposits in a higher rate environment. Noninterest income was $219 million for the second quarter 2005, compared to $210 million for the first quarter 2005 and $228 million for the second quarter 2004. Included in other noninterest income in the second quarter 2005 were write-downs (net of income distributions) recognized on unconsolidated venture capital and private equity investments of $5 million, compared to income distributions (net of write-downs) of $1 million in the first quarter 2005. Also included in other noninterest income in the second quarter 2005 were risk management hedge ineffectiveness gains of $5 million, compared to $5 million of losses in the first quarter 2005. Net loans charged off as a percentage of average total loans was 0.27% in Q2-05, 0.36% in Q1-05, and 0.55% in Q2-04. Nonperforming assets as a percentage of total loans, other real estate and nonaccrual debt securities was 0.57% in Q2-05, 0.75% in Q1-05, and 1.07% in Q2-04. Total assets and common shareholders' equity were $54.7 billion and $5.1 billion, respectively, at June 30, 2005, compared to $53.5 billion and $5.0 billion, respectively, at 3-31-05. There were approximately 167 million shares outstanding at 6-30-05, compared to approximately 169 million shares outstanding at 3-31-05. In Q2-05, approximately 2.0 million shares were repurchased in the open market for $114 million. Colonial BancGroup EPS Rises to 38 cents/share from 33 cents/share in Q2-04 Business Wire 7-20 Colonial BancGroup announced record earnings for Q1-05 of $0.38 per diluted share, a 15% increase over the $0.33 recorded for Q2-04. Net income for Q2 was $57.5 million, a 33% increase over the $43.3 million earned in Q2-04. Colonial's net interest income [$344.065 million] for the quarter increased 24% over Q2-04 and 26% annualized over Q1-05. The strong increase in net interest income was attributed to solid loan growth, outstanding low cost deposit growth and an expanded interest margin. The net interest margin increased to 3.78%, an 18 basis point increase over Q2-04 and a 6 basis point increase over Q1-05, representing the seventh consecutive quarter of net interest margin expansion. Noninterest income, excluding securities gains and losses and gain on sale of branches, [$79.394 million] increased $8 million over Q1-05. The increase was primarily from mortgage warehouse lending fees of $3.1 million, service charges on deposit accounts of $1 million, mortgage banking revenues of $900,000 and nonrecurring gains on the sale of properties held for sale and certain other assets of $2.3 million. Excluding securities gains and losses, gain on sale of branches and these nonrecurring gains, noninterest income increased 15.8% over the first quarter of 2005. Total non-performing assets ratio fro Q2-05 was 0.20% compared to 0.38% for Q2-04. Net charge-offs ratio for Q2-05 was 0.15% compared to 0.23% for Q2-04. F.N.B. Net Income Falls to $0.31/share from $0.32/share in Q2-04 PRNewswire 7-21 F.N.B. Corporation reported Q2-05 net income of $17.5 million, or $.31 per diluted share. These results compare to $14.9 million, or $.28 per diluted share, for Q1-05 and $15.1 million, or $.32 per diluted share, for Q2-04. The Corporation's return on equity for Q2-05 was 15.4%, its return on tangible equity was 30.2% and its return on assets was 1.25%. Fully tax equivalent net interest income for Q2-05 was up 4.4% on a sequential quarter basis and 15.9% over Q2-04. Average loans were up 5.8% on a linked quarter basis. In spite of rising market rates, the yield on earning assets was flat compared to the previous quarter due to competitive pricing pressures. Partially offsetting the increase in interest income was a 10 basis-point increase in the cost of funds, again due to competitive pricing pressures. The net interest margin for Q2 was 3.87%, a decrease of 9 basis points from Q1-05, as a result of the higher cost of funds and the impact of purchase accounting on NSD assets and liabilities. Non-interest income for Q2-05 was $18.3 million compared to $18.4 million last quarter and $17.4 million in Q2-04. Service charges on loans and deposits were up $906 thousand, or 10%, on a linked quarter basis reflecting the addition of NSD as well as cyclical trends. Insurance commissions were down $642 thousand from the previous quarter due to the reduction in contingent fees, which are primarily earned in the first quarter of each year. Retail security sales were lower in Q2-05 versus the first quarter, which resulted in a decline of $309 thousand in commissions and fees. Annualized net charge-offs for Q2-05 were 54 basis points of average loans, compared to 43 basis points for Q1-05 and 46 basis points for Q2-04. Net charge-offs increased in the second quarter due to the charge-off of a $1.5 million loan that was previously fully reserved. Non-performing loans to total loans were 81 basis points for Q2-05, down from 87 basis points in Q2-04 and 88 basis points on a sequential quarter basis. Shareholders' equity at 6-30-05 was $460 million. FNB's leverage capital ratio was 6.8% and its tangible capital ratio was 4.5% at the end of the quarter. FNB continues to maintain "well capitalized" ratios for federal bank regulatory purposes. First Horizon Net Income Down 13% in Q2 AP & Press Release 7-18 First Horizon National reported that Q2 profit fell 13% due to a sluggish capital markets environment. Net income declined to $102.7 million, or 80 cents per share, from $118.4 million, or 92 cents per share. On average, analysts surveyed by Thomson Financial expected earnings of 87 cents per share. Return on average shareholders' equity and return on average assets were 19.6% and 1.14%, respectively, for Q2-05 compared to 25.5% and 1.75% for Q2-04. For the six months ended June 30, 2005, return on average shareholders' equity and return on average assets were 20.7% and 1.21%, respectively, compared to 25.5% and 1.83% for the same period in 2004. Net interest income increased 26% to $211.4 million in Q2-05 from $167.3 million in Q2-04. The increase in 2005's net interest income is primarily attributable to 20% total loan growth with commercial loans growing 31% to $8.5 billion from $6.5 billion and retail loans growing 11% to $9.3 billion from $8.3 billion.Total deposits increased 12% or $1.1 billion over Q2-04. Retail/Commercial Banking's net interest margin for Q2-05 was held stable compared to Q2-04 by minimizing loan rate spread compression caused by competitive pricing while successfully increasing spreads on deposits in conjunction with fed rate increases. Noninterest income remained relatively flat at $123.1 million in Q2-05 compared to $121.4 million in Q2-04. Q2-05 noninterest income included $8.4 million net revenue from sales and securitizations of real estate residential loans. FHN's net charge-off ratio was 23 basis points in Q2-05 compared to 30 basis points in Q2-04 as net charge-offs decreased to $10.3 million from $11.0 million. The nonperforming assets ratio was 36 basis points in Q2-05 compared to 51 basis points last year with nonperforming assets of $77.5 million on June 30, 2005, compared to $90.0 million on June 30, 2004. FirstMerit Net Income Rises to 43 cents/share from 36 cents/share in Q2-04 PRNewswire 7-20 FirstMerit announced Q2-05 net income of $36.1 million, or $0.43 per diluted share, up from $31.0 million, or $0.36 per diluted share, for Q2-04. Annualized returns on average common equity and average assets for the quarter were 15.07% and 1.40%, respectively, compared with 12.71% and 1.19% for Q2-04. Total revenue, defined as net interest income on a fully-tax equivalent basis plus non-interest income net of securities transactions, was $138.6 million for Q2-05, compared with $132.1 million in the prior-year quarter. Fully-tax equivalent net interest income increased 0.74% year-over- year, to $88.4 million. The impact of an 8 basis point increase in the net interest margin to 3.74% offset a 1.75% decline in average earning assets to $9.5 billion. While the investment portfolio declined as a result of the Company's strategy of de-leveraging the balance sheet to manage its interest rate risk position, the yield on the investment portfolio has improved since Q2-04. Average loans increased 0.92%, to $6.6 billion, with growth tempered by the sale of problem commercial assets in June of 2004. While the disposal of criticized assets restrained the Company's growth somewhat over the past twelve months, the overall risk profile of the balance sheet was strengthened. Non-interest income for Q2-05 totaled $50.1 million, compared with $45.7 million for Q2-04. Excluding securities gains (losses), non-interest income was $50.1 million in Q2-05 and $44.3 million in Q2-04. The overall increase in non interest income reflects increased deposit and bankcard fees resulting from the Company's strategies to generate higher fee income from these business lines and the favorable settlement of certain contractual obligations. As of June 30, 2005, nonperforming assets were $54.0 million, or 0.82% of period-end loans plus other real estate, compared with $46.7 million, or 0.71%, as of 3-31-05, and $48.8 million or 0.75%, as of 6-30-04. Net charge-offs for Q2-05 were $10.3 million, compared with $14.2 million for Q2-04, a decline of $3.9 million, or 27.53%. Compared with the previous quarter, net charge-offs decreased $1.5 million, or 12.86%. Annualized net charge-offs to average loans in Q2-05 improved to 0.62%, compared with 0.74% for the prior quarter and 0.87% for Q2-04. Fulton Financial Net Income Up 9.8% in Q2 Market Wire 7-19 Fulton Financial earned $41.6 million in Q2-05, a 9.8% increase over $37.9 million for Q2-04. Diluted net income per share increased to 27 cents, an 8.0% increase over the 25 cents reported for Q2-04. Annualized return on average assets was 1.46% for the quarter. Annualized return on average equity was 13.95% and annualized return on tangible equity was 20.64%. Net interest income for the quarter increased $11.2 million, or 12.6%, to $99.9 million, compared to Q2-04. Fulton Financial's net interest margin was 3.92% for Q2-05, compared to 3.95% for Q1-05 and 3.73% for Q2-04. Other income, including investment securities gains, increased $1.7 million, or 4.5%, to $38.3 million in Q2-05. Non-performing assets were 0.27 percent of total assets at 6-30-05 and 0.31% of total assets at 6-30-04, reflecting an improvement in overall asset quality. Annualized net charge-offs for the quarter ended 6-30-05 were 0.02% of average total loans, compared to 0.03% for the same period of 2004. Hudson United Net Income Rises to 78 cents/share from 70 cents/share in Q2-04 PRNewswire 7-20 Hudson United Bancorp reported net income of $34.7 million, or $0.78 per diluted share, for Q2-05 compared to the $0.70 per diluted share reported for Q2-04. The Company's return on average equity was 26.19% and return on average assets was 1.57% for Q2-05. The net interest margin was 3.80% and noninterest income as a percent of net revenue was 31.47% for Q2-05. The Company's return on average equity was 26.58% and return on average assets was 1.51% for Q2-04. The net interest margin was 4.08%. The Company's diluted EPS for the first six months of 2005 was $1.44 per diluted share. For the first six months of 2004 the Company reported diluted EPS of $1.40 per share. Net interest income for the first half of 2005 was $153.9 million and the net interest margin was 3.81%. Net interest income for the first half of 2004 was $156.0 million and the net interest margin was 4.18%. Net interest income decreased by $2.0 million in the first half of 2005 compared to the first half of 2004. The decrease in net interest income in the first half of 2005 compared to the first half of 2004 was due primarily to higher interest expense on deposits and borrowings. This was offset in part by yields on new loans being originated in a higher interest rate environment. Interest income on securities increased in the first half of 2005 compared to the comparable period in 2004 due to an increase in the average volume being partially offset by a decline in average yield. Noninterest income was $35.2 million in Q2-05 and $39.1 million in Q2-04. Noninterest income for Q2-05 decreased by $3.9 million, compared to Q2-04. Credit card fee income increased by $3.0 million. The decrease in noninterest income in Q2-05 compared to 2004 was due mainly to decreases in income from Landfill Investments and a decrease in loan fees. Nonperforming loans and leases totaled $14.6 million at 6-30-05. This was an increase of $2.3 million compared to $12.3 million of 12-31-04 and 6-30-04. Nonperforming loans and leases were 0.29% of total loans and leases at 6-30-05, compared to 0.25% at 12-31-04 and 0.26% at 6-30-04. Nonperforming assets were $30.0 million at 6-30-05, up from $27.9 million at 12-31-04 and up from $14.4 million at 6-30-04. Nonperforming assets as a percent of loans, leases and foreclosed property were 0.59% at 6-30-05, 0.58% at 12-31-04 and 0.30% at 6-30-04. Huntington EPS Rises to 45 cents/share from 41 cents/share in Q1, but 47 in Q2-04 Business Wire 7-20 Huntington Bancshares reported Q2-05 earnings of $106.4 million, or $0.45 per common share. This compared with $110.1 million, or $0.47 per common share, in Q2-04 and $96.5 million, or $0.41 per common share, in Q1-05. A number of key fee income categories rebounded from Q1, and expenses and credit costs remained well controlled. Average consumer core deposits increased, but commercial core deposits declined. HBAN issued upside guidance for 05, and sees EPS of $1.78-1.81 vs. $1.76 consensus. Fully taxable equivalent net interest income increased $19.4 million, or 9%, from the year-ago quarter, reflecting the favorable impact of a $1.7 billion, or 6%, increase in average earning assets, and a 7 basis point, or an effective 2%, increase in the net interest margin. The fully taxable equivalent net interest margin increased to 3.36% from 3.29% in the year-ago quarter. The increase in the net interest margin from the year-ago quarter reflected a shift from lower-yielding investments to higher-yielding loans as a result of decreasing the level of excess liquidity, redirecting part of the proceeds of securities sales to fund loan growth, and higher yields on mezzanine-related loans. In addition, both the proportion and the contribution of net free funds on the balance sheet increased. Compared with the 2005 first quarter, fully taxable equivalent net interest income increased $6.8 million, or 3%, reflecting a 5 basis point, or an effective 2%, increase in the net interest margin to 3.36% from 3.31% in the 2005 first quarter, and a slight increase in average earning assets. Non-interest income decreased $62.0 million, or 28%, from the year-ago quarter with $40.6 million of the decline reflecting the run-off of the operating lease portfolio. Of the remaining $21.3 million decline from the year-ago quarter, the primary drivers were: [1] $25.7 million decline in mortgage banking income, [2] $4.6 million decline in gains on sale of automobile loans, [3] $2.1 million, or 5%, decline in service charges on deposit accounts with declines in commercial and consumer service charges contributing equally to the decrease, [4] $1.2 million decline in bank owned life insurance income. This was partially offset by: [5] $8.9 million decline in securities losses and [6] a $2.4 million, or 14%, increase in trust services. Compared with the 2005 first quarter, non-interest income decreased $11.9 million, or 7%, with $8.6 million of the decline reflecting the run-off of the operating lease portfolio. Total net charge-offs for Q2-05 were $16.3 million, or an annualized 0.27% of average total loans and leases. This was up from $12.5 million, or 0.23%, in the year-ago quarter. Non-performing assets increased, in part reflecting weakness in the domestic automobile supplier sector. Sky Financial Net Income 45 cents/share in Q2-05 vs. 43 cents/share in Q2-04 PRNewswire 7-19 Sky Financial reported Q2 net income of $48.5 million, or $.45 per diluted share, compared to $40.2 million, or $.43 per diluted share for Q2-04. Annualized return on assets and return on equity for Q2 were 1.29% and 13.52%, respectively, compared with 1.33% and 15.25%, respectively, for the same period in 2004. Net interest income for the second quarter was $128.0 million, up 24.7% from $102.7 million in Q2-04. The net interest margin for Q2 was 3.73%, up 4 basis points from both last quarter and Q2-04. Non-interest revenues were $51.5 million for the second quarter, up 3.8% from $49.6 million in Q2-04. Excluding mortgage banking and net securities transactions, non-interest revenues were up 11.7% including the benefit from acquisitions, with strong increases in several fee businesses compared to Q2-04. Trust services income was up 31.6%, and service charges on deposits were up 26.3%, while brokerage and insurance commissions were up 5.0%. Compared to the prior year quarter, mortgage banking revenues were down 13.9% mainly due to higher impairment charges. Commenting on 2005, Kevin Thompson, CFO, stated, "With our solid results and profitability back on track this past quarter, we are maintaining our projections of 2005 diluted earnings per share on a core operating basis, excluding merger-related expenses, of $1.69 to $1.72, and on a net income, or GAAP basis, of $1.68 to $1.71 per diluted share." Synovus EPS up 19.9% to $0.41/share Press Release 7-21 Synovus’ Q2 earnings grew 22.2% over Q2-04 to $128.5 million, which represented earnings per share growth of 19.9% to $.41 per share, Synovus’ Chief Executive Officer and President Richard E. Anthony announced today. TSYS’ results were driven by strong growth in its fundamental core business, improved operating leverage and the acquisition of Vital. Return on assets for the quarter was 1.98% and return on equity was 18.70% for Q2-05, compared to 1.86% and 17.60%, respectively, in the same period last year. Shareholders’ equity at June 30, 2005, was $2.79 billion, which represented a very strong 10.46% of quarter-end assets. Total assets ended the quarter at $26.7 billion, an increase of 13.4% from the same period last year. Net interest income grew 12.3% over last year as total loans grew 13.3%. The net interest margin expanded to 4.15% in Q2 from 4.11% last quarter. Net interest margin expansion was primarily due to increased yields on the variable rate portion of the loan portfolio, which remains at approximately 65% of total loans. Net income for the Synovus Financial Services segment increased 15.0% over Q2-04. Financial Services’ non-interest income was up 1.6% as compared to last year with increases in mortgage banking revenue of 28.7%, credit card fees of 25.1%, brokerage and investment banking revenue of 12.2%, and fiduciary and asset management fees – which include trust, financial planning and asset management fees – of 6.1%. Service charges on deposit accounts were up 3.9% compared to last quarter and down 9.9% compared to the second quarter last year. Financial Services’ non-interest expense was flat compared to the first quarter of 2005. The efficiency ratio was 49.5% for Q1 compared to 52.2% for Q1. Asset quality remained stable for the first six months of the year. Although the net charge-off ratio was 0.37% compared to 0.23% last quarter and 0.22% for the second quarter of last year, the net charge-off ratio is 0.30% for the first six months of the year. The ratio of nonperforming assets to loans and other real estate was 0.51%, down from 0.52% in both last quarter and the second quarter in 2004. The allowance for loan losses was 1.36% of loans, which provides coverage of 349% of nonperforming loans and the provision for loan losses covered net charge-offs by 1.20x for the quarter. TCF EPS Rises to 53 cents/share from 47 cents/share in Q2-04 Business Wire 7-20 TCF Financial reported record diluted earnings per share of 53 cents for Q2-05, compared with 47 cents for Q2-04. Net income for Q2-05 was a record $70.6 million, compared with $65.2 million for Q2-04. For Q2-05, return on average assets was 2.22% and return on average common equity was a record 30.23%, compared with 2.20% and 27.68%, respectively, for Q2-04. TCF's net interest income in Q2-05 was $131.3 million, up $8.9 million, or 7%, from Q2-04 and up $2.2 million, or 2% from Q1-05. Net interest margin in Q2-05 was 4.53%, flat with Q2-04 and down from 4.56% in Q1-05. The increase in net interest income from Q2-04 was primarily driven by increases in average Power Assets and Power Liabilities, partially offset by relatively more expensive funding costs due to the mix in funding sources supporting the net growth in assets and the effect of a flattening yield curve. Total non-interest income in Q2-05 was $117.7 million, down $5.6 million, or 5%, from Q2-04 primarily due to declines in fees and service charges, mortgage banking, and leasing and equipment finance revenues, partially offset by higher card revenues and gains on sales of securities. Net loan and lease charge-offs were $1.9 million, or .08% (annualized) of average loans and leases, in the Q2-05, down from $2.1 million, or .10% (annualized), for Q2-04. Total non-performing assets were $59 million at June 30, 2005, up from $56.6 million at June 30, 2004, while the percentage of total non-performing assets to total assets remained the same at .47%. Wilmington EPS up 9% to $0.59/share Business Wire 7-22 Wilmington Trust Corporation reported that net income for Q2-05 was $40.4 million. This was 11% higher than net income for the year-ago second quarter, and slightly higher than for Q1-05. Earnings per share for Q2-05, on a diluted basis, were $0.59. This was 9% more than for the year-ago second quarter and equal to the Q1-05 amount. On an annualized basis, Q2-05 results generated a return on average assets of 1.68% and a return on average stockholders' equity (ROE) of 17.44%. The corresponding returns for the second quarter of 2004 were 1.63% and 17.82%, respectively. ROE declined year-over-year because growth in stockholders' equity exceeded growth in net income, due largely to expenditures the company made during the second half of 2004 to expand and acquire the minority interest in Balentine & Company. Net interest income was $80.1 million for Q2-05. Noninterest income was $42.4 million for Q2-05. The net interest margin for Q2-05 was 3.66%. This was 14 basis points higher than for the year-ago second quarter; 2 basis points more than for the 2005 first quarter; and the highest net interest margin since the first quarter of 2003. The margin improved because the company's interest rate sensitivity position is slightly asset-sensitive, and the yield on earning assets continued to increase more quickly than the cost of funds. The net charge-off ratio continued to be low, mirroring the current trend throughout the financial services industry. For Q2-05, the ratio was 3 basis points. This was equal to the ratio for the year-ago second quarter, and 1 basis point lower than for Q1-05. June Ratings Changes On 7-21 Smith Barney Citigroup Downgraded CMA from Hold to Sell. On 6-02 CIBC Wrld Mkts initiated coverage of ASO at Sector Underperform. On 6-30 JP Morgan initiated FHN at Neutral. On 6-22 Advest initiated HU at Neutral. On 6-09 Keefe Bruyette downgraded SKYF from Market Perform to Underperform. On 6-23 Moors & Cabot initiated coverage of TCB at Buy. On 6-30 JP Morgan initiated TCB at Underweight. Home Page Factoids Previous Update |