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Billions in Troubled Construction Loans at Regional Banks Corkery, Forsyth & Wei, WSJ 7-03 Wall Street is bracing for regional and small banks to fess up to large losses from their mounting volume of soured construction loans made primarily to home builders. According to the FDIC, $45.4 billion of the $631.8 billion in construction loans outstanding at the end of the first quarter were delinquent. Scores of banks were already suffering headaches by the end of the first quarter, according to a review by The Wall Street Journal of FDIC-filed reports by 6,919 banks that make construction loans. The smallest banks, those with total assets of less than $5 billion, faced the biggest problems. Nearly one in three of the banks analyzed - or 2,182 - had construction-loan portfolios that exceeded 100% of their total risk-based capital, a red flag to regulators, although it doesn't mean the bank is in danger of failing. Risk-based capital is a cushion that banks can dig into to cover losses. Even more alarming, 73 of those banks had construction-loan delinquency rates of more than 25%. Executives at all of the banks that responded to questions acknowledged the problems but expressed confidence they had the capital to weather the storm. Larger regional banks also face mounting construction-loan problems, but are in decent shape. Thirty-eight of them had more than 100% of their total risk-based capital in construction loans at the end of the first quarter, but only nine of those faced delinquency rates of more than 10%. Over the next few quarters, banks are expected to begin recording much larger losses. In 2007 and the first quarter of this year, U.S. banks wrote down just 0.7% of their residential construction and land assets as bad debt, according to Zelman & Associates, a research firm. Over the next five years that figure could rise to 10% and 26%, which would amount to about $65 billion to $165 billion, Zelman projects. ASBC Reports $0.37 vs. $0.59 in Q2-07 Business Wire 7-14 Associated Banc-Corp reported Q2-08 net income of $47.4 million [$0.37/share] compared to $75.8 million [$0.59/share] for the Q2-07 and $66.5 million [$0.52/share] for Q1-08. The provision for loan losses in Q2-008 was $59 million ($0.30/share) compared to $23 million ($0.12/share) in Q1-08. Net charge offs were $37 million compared to $16 million for Q1-08. ROA was 1.25% while ROE was 11.34%. Book value per share rose to $18.46. Net interest income was $173 million, up from $165 million in Q1-08 and $157 million in Q2-07, and the FTE net interest margin for the same quarters was 3.65% [3.14% non-FTE net interest spread], 3.58% and 3.53%, respectively. The net interest margin benefited in second quarter 2008 largely from improved loan growth, lower funding costs, and higher average balances of noninterest-bearing demand deposits. Total earning assets were $19.276 billion earning $303.966 million at an average yield of 6.33%. Total interest-bearing liabilities were $16.611 billion costing $131.753 million at an average yield of 3.19%. Core fee-based revenues were $69 million, up $7 million over Q1-08, and up $5 million or 7% over Q2-07, led predominantly by increased service charges on deposit accounts for both comparable periods. Net mortgage banking income of $5 million was down nearly $2 million from Q1-08. Nonaccrual loans were $277.100 million while Loans 90 or more days past due and still accruing were $11.762 million resulting in total nonperforming loans of $288.862 million. When added to OREO of $46.579 million, this resulted in Total nonperforming assets of $335.441 million. Nonperforming assets / total loans plus OREO was 2.07% compared to 1.31% in Q2-07. Nonperforming assets / total assets was 1.50% compared to 0.95% in Q2-07. Net charge offs were $36.998 million compared to $5.186 in Q2-07. Net charge offs / average loans (annualized) was 0.92% compared to 0.14% in Q2-07. BBT Reports $0.78 vs. $0.83 in Q2-07 PRNewswire 7-17 BB&T reported Q2-08 net income of $428 million [$0.78/share] compared with $458 million [$0.83/share] earned during Q2-07. Q2 contained a $30 million after-tax gain from the sale of Visa stock, a $22 million after-tax gain from an extinguishment of debt and $1 million in net after-tax merger-related and restructuring charges - and includes a $330 million provision for credit losses. ROA was 1.27% compared to 1.47% in Q2-07 and ROE was 13.27% compared to 15.18% in Q2-07. Book value per share was $ 23.40. Tier 1 leverage ratio was 7.2%. BB&T's Tier 1 risk-based capital ratio was 8.9% and total risk-based capital ratios was 14.1%. FTE net interest income totaled $1.068 billion compared to $0.966 billion in Q2-07. The net interest margin was 3.65%, up 11 bps from 3.54% for Q1-08. The increase marks the third consecutive quarter that BB&T's margin has improved. Management currently anticipates some continued expansion of the net interest margin for the remainder of the year. Total earning assets had an average yield of 6.09% compared to 6.56% in Q1-08 and 7.14% in Q2-07. Total interest-bearing liabilities had an average cost of 2.77% compared to 3.42% in Q1-08 and 4.15% in Q2-07. Noninterest income was $780 million compared to $729 million in Q2-07. These increases include higher revenues generated by BB&T's insurance operations [up 3.5% to a record $237 million], service charges on deposit accounts [$172 million, an increase of 13.9%] and other nondeposit fees and commissions as well as a solid performance from BB&T's mortgage banking operations [$57 million, an increase of $26 million or 83.9%]. Residential mortgage originations are up due to lack of competition [example: Countrywide] Nonperforming assets were $1.381 billion [0.95% of total assets] compared to $0.989 billion [.73%] at March 31 and $0.423 billion [.33%] at June 30, 2007. Total loans 90 days or more past due and still accruing were $282 million [0.29% of of total loans and leases]. With total loans and leases of $95.715 billion and OREO of $285 million, NPAs were 1.44% of loans & OREO. Annualized net charge-offs of $170 million were .72% of average loans and leases for Q2-08, up from $125 million [.54%] in Q1-08 and $78 million [.35%] in Q2-07. Excluding losses incurred by BB&T's specialized lending subsidiaries, annualized net charge-offs for the current quarter were .53% of average loans and leases compared to .32% in Q1-08 and .20% in Q2-07. From the Conference Call: BBT had $17.672 billion in residential loans - with most in North Carolina and Virgina, but with the problem loans centered in Florida [small exposure - big problem] Atlanta and D.C. [larger exposure]. BBT stress tested our capital ratios projecting much higher charge-offs and loan loss reserves before they increased the dividend. We did a projection of loan losses going to 1% in 08 reserves going to 2% - and for 2009 the losses going to 1.5% and loan loss reserves to 3%. Under those extremely pessimistic scenerios, we still met regulatory capital guide lines without need to raise capital. [implied - if they needed capital, then they would not have raised the dividend.] BBT is are not looking to do any regional bank M&As. BBT could be adding more insurance agencies. BBT does not project raising capital in this environment. Morgan Stanley - You quoted some high LTVs on both first and second lien residential loans. Are you using values at the time the loan was made? BBT: Yes for first loans, but some of those are three are four yuears old and would not need to be adjusted down - but HELOCs are updated yearly. NIMs going up due to CD roll overs - what if the fed was raising rates? BBT: We have $270 billion CDs with average maturity of 7 months. If fed increases early - it would have a positive impact to NIM. On OREO - we have traditionally made small recoveries - but we are making small losses on most of what we are selling - but the portfolio is moving. On HELOCs - we look at credit scores yearly. 40% to 50% of HELOCs are behind BBT first loans. Deutche Bank: Your worst case loan losses is 1.5% while the industry is using a loan loss of 2%. Why is BBT's lower? for us to get to 2%, the economy would have to get much worse than the worst projections. We do in market loans that are conservatively underwritten. We historically have not come close to 2%. Are you surprised that auto loans are holding up? BBT: When we repo a SUV, we are taking a bigger hit. On our high risk portfolio . . . people have to have cars to get to work. Unemployment would need to go up for losses to rise, and that has not happened. But higher risk folks are buying smaller cars because that is what they can afford - and those autos are holding up in value. What will you do different next time the economy goes sour? BBT: We did not do much sub-prime. We did not do pick a pay. We did not have CLOs and SIVs. We want to stick with what we know and what makes sense. Citi: construction portfolio in many banks have high losses in 3 to 4% range. Why are you low? BBT: Client selection - we loan to those who have been in business a long time. We do 'in market' loans. We are a higher collateral lender. Our team has gone through the 90s. Citi: Were your LTVs lower than peres? BBT: Yes, lower than a lot of our competitors. Citi: What about the 30-89 day past due trends? BBT: We had an increase in the 30 day past dues. The 30 days are trending up at the same pace that the 90 days are increasing. CHCO Reports $0.83 vs. $0.76 in Q2-07 PRNewswire 7-17 Charleston's City Holding Company reported net income of $13.379 million [$0.83/share] compared with $12.322 million [$0.76/share] in Q2-07. ROA was 2.14%. [With Stockholders' equity at $307.960 million, I calculated the annulaized ROE to be 17.38%. CHCO only reports a 'return on tangible equity' of 21.0%] Book Value was $18.72. Leverage Ratio was 10.75%, the Tier I Capital ratio was 14.19%, and the Total Risk-Based Capital ratio was 15.16%. FTE net interest income was $25.7 million compared with $24.6 million in Q2-07. This increase is primarily attributable to interest expense on deposits and other interest bearing liabilities decreasing more quickly than interest income from loans and investments as a result of rate declines in the Federal Funds rate during 2008. Additionally, CHCO's interest rate floors with a total notional value of $500 million have diminished the impact of falling rates on the Company's interest income from variable rate loans. Net interest margin was 4.65% as compared to 4.32% in Q2-07. Total interest-earning assets were $2.283 billion earning $39.761 million at an average yield of 6.98%. Total interest-bearing liabilities were $1.880 billion costing $15.196 million at an average yield of 3.24%. Exclusive of investment gains, non-interest income increased $0.6 million to $14.195 million as compared to $13.6 million in Q2-07. Service charges were $11.269 million while insurance commissions were $1.168 million. Non-performing loans of $14.614 million plus OREO of $6.458 million sums to Non-performing assets of $21.099 million [1.20% of total loans and OREO] compared to $20.692 million [1.21%] at March 31, 2008 and $12.306 million [0.71%] at June 30, 2007. With Total Assets of $2.494 billion, NPAs were 0.84% of assets. Net charge-offs were $1.458 million or 0.34% of average loans outstanding compared to Q2-07's $1.067 million or 0.25%. CMA Reports $0.37 vs. $1.25 in Q2-07 PRNewswire 7-17 Comerica reported Q2-08 income from continuing operations of $56 million [$0.37/share] compared to $196 million [$1.25/share] for Q2-07. Q2-08 results included [1] a $177 million provision for credit losses, compared to $34 million for Q2-07 and a pre-tax charges of $50 million ($32 million after-tax, or $0.21/share) related to tax deductions on structured lease transactions. ROA was 0.33% while ROE was 4.25%. Book value was $33.78/share. Tier 1 common capital ratio was 6.72%. Tier 1 risk-based capital ratio was 7.36%. Total risk-based capital ratio was 11.11%. Leverage ratio was 8.55% FTE Net interest income was $442 million compared to $509 million in Q2-07. The Net interest margin was 2.91% [structured lease transactions subtracted 19 bps] compared to 3.76% in Q2-07. Noninterest income was $242 million compared to $225 million for Q2-07. Q2-08 included a $14 million gain on sale of MasterCard shares. Nonperforming assets were $747 million [1.44% of Total loans & OREO] compared to $259 million [0.53%] in Q2-07. With total assets of $64.945 billion, NPAs were 1.15% of assets. Net loan charge-offs were $112 million [0.86% of average total loans] compared to $30 million [0.24%] in Q2-07. CRBC Reports - $2.53 vs. $0.13 in Q2-07 PRNewswire 7-17 Flint, Michigan's Citizens Republic Bancorp reported a Q2-08 net loss of $201.6 million [-$2.53/share] compared to $9.6 million [+$.13/share] for Q2-07. Citizens recorded a non-cash goodwill impairment charge of $178.1 million, a non-cash credit writedown of $42.4 million. Gross charge-offs were $35.1 million as a result of transferring $86.2 million of nonperforming commercial real estate and $42.3 million of nonperforming residential mortgage loans to held for sale status at an aggregate estimated fair market value of $93.4 million. CRBC recorded a loss of $2.3 million as a result of a fair-value adjustment on $29.8 million of commercial real estate loans previously held for sale; and a loss on of $5.0 million as a result of a fair-value adjustment on $34.2 million of commercial and residential repossessed assets. The provision for loan losses was $74.5 million compared with $30.6 million for Q1-08. Net charge-offs totaled $69.3 million compared with $17.4 million for Q1-08. ROA was -6.10% compared with 0.29% in Q2-07. ROE was -52.47% compared with 2.49% for Q2-07. Citizens issued $79.6 million of common stock and $120.4 million of contingent convertible perpetual non-cumulative preferred stock in June - and after this capital raise Tier 1 capital ratio (estimate) of 10.75%. Book value was $16.12 compared with $20.82 at the end of Q1-08. It appears CRBD did not pay a dividend in Q2-08. Net interest income was $87.6 million, essentially unchanged from Q1-08 and a decrease of 9.5% from Q2-07. Net interest margin was 3.11% compared with 3.12% for Q1-08 and 3.44% for Q2-07. The decrease in net interest margin from the first quarter of 2008 was primarily the result of a shift in funding mix from lower cost savings and transaction accounts to higher cost savings and time deposits and commercial loan spread compression. Noninterest income was $27.1 million, a decrease of 12.5% from Q1-08 and a decrease of 13.5% from Q2-07. Q2-08 includes a $2.3 million loss as a result of the aforementioned fair-value adjustment on commercial real estate loans held for sale. Total delinquencies at June 30, 2008 were essentially unchanged from March 31, 2008 at $190.2 million as decreases in the commercial and industrial and direct consumer portfolios were essentially offset by increases in the other portfolios. The decline in commercial and industrial was primarily the result of loans migrating to nonperforming status. Accruing watchlist loans at June 30, 2008 increased $57.1 million or 6.1% over March 31, 2008. The increase was primarily the result of greater scrutiny of commercial real estate construction and income producing loans as well as several asset-based lending loans. Nonperforming assets totaled $285.9 million at June 30, 2008, a decrease of 12.5% from March 31, 2008 and an increase of $139.5 million over June 30, 2007. The decrease was primarily the result of the aforementioned $42.4 million net credit writedown, which was comprised of: 1) a $128.5 million decrease in nonperforming loans ($86.2 million in commercial real estate and $42.3 million in residential mortgage); 2) a $5.0 million decrease in other repossessed assets acquired; and 3) a net increase of $91.1 million in nonperforming held for sale loans. Total Nonperforming Loans of $139.2 plus NPLs Held for Sale of $92.6 million plus OREO of $54.1 million sums to NPAs of $285.9 million. Net portfolio loans of $9.267 billion plus Loans held for sale of $111.542 million plus OREO of $54.1 million sums to 9432.642 million - and NPAs to loans & OREO was 3.03%. Total assets were $13.170 billion and NPAs were 2.17% of assets. Net charge-offs totaled $69.3 million [2.93% of average portfolio loans] compared with $17.4 million [0.74%] in Q1-08 and $20.0 million [0.87%] in Q2-07. The increases were primarily the result of the aforementioned $35.1 million fair-value adjustment ($16.8 million on commercial real estate and $18.3 million on residential mortgage) and higher commercial real estate charge-offs. From the Conference Call: Some 20% of mortgage loans have FICO scores under 620 - with 692 being the average FICO score - which is low but typical of Michigan. Home equity loans have an average FICO of 724. When asked about commercial real estate weakness, CRBC noted that there is lease slipage in strip malls. Some of the nail, hair and tanning salons are not renewing their leases. CNI loans new on the watch list were [1] an auto dealer; and [2] wholesale building supply. One auto parts supplier sliped from the watch list to non-performing. Loans held for sale have been marked down in the 40% to 60% range. When a bank puts loan auctions together [the quick and easy way to get rid of loans] - the person who buys it then seperates it for sale. We are trying to cut out the middleman and sell these individually and gets a profit. Many of the loans, the lenders have an incentive to work out the loan with the bank - sometimes getting a discount on the loan. what are the write-downs on residential held for sale? Over the last 15 months - the average discount was 30%. We still see deteriorazaion - so we took a 45% markdown on those in Q2-08. LTVs on those loans was less than 80%. In Michigan, home prices are down 15.4% from the peak - and they are expected to continue to fall. Certain of our markets, especially with the higher end stuff. When people know banks are trying to sell a property, they expect steeper discounts. You have had CNI loan growth - what are the drivers? CRBC: We have a lot of good people who are expanding relationships with clients. And we have done that without compromising underwriting standards. Profitability standards on those loans are rising. And the spreads are rising. We would trade growth for credit quality. We are still making real estate loans - put those are only done on income producing properties with a large equity component. FITB Reports - $0.37 vs. $0.69 in Q2-07 PRNewswire 7-22 Fifth Third Bancorp reported a Q2-08 net loss of $202 million [- $0.37/share] compared with earnings of $376 million [$0.69/share] for Q2-07. Q2-08 results included charges related to leveraged leases totaling $0.42/share. ROA was - 0.73% while ROE was - 8.40%. Tier 1 capital ratio was 8.51%. Tier I leverage ratio was 9.08%. Total risk-based capital was 12.15%. FTE Net interest income was $744 million and compared with Q2-07, was flat. Net interest margin declined 33 bps to 3.04% due to the impact of the charge related to our leveraged lease litigation. Excluding the impact of the leveraged lease litigation charges, net interest income increased by $129 million [17%] from Q2-07, and NIM expanded 20 bps. Noninterest income of $722 million increased $53 million [8%] from a year ago. Electronic payment processing revenue of $235 million increased 15%. Service charges on deposits of $159 million increased 12%. Corporate banking revenue of $111 million increased 26%. Nonperforming assets at quarter end were $2.2 billion [2.56% of total loans and leases and OREO], up from 1.96% last quarter and 0.70% in Q2-07. Total net losses charged off was $344 million [1.66% of average loans and leases] compared with $102 million [0.55%] in Q2-07. FMBI Reports - $0.56 vs. $0.xx in Q2-07 PRNewswire 7-16 First Midwest Bancorp reported Q2-08 earnings of [$0.56/share] versus [$0.xx/share] for Q2-07. ROA was 1.33% while ROE was 14.57%. Book value per share was $14.90 compared to $15.20 at the end of Q1-08 and $14.97 at the end of Q2-07. Total capital to risk-weighted assets was 12.03% compared to 11.78% in Q1-08 and 12.49% in Q2-07. Tier 1 capital to risk-weighted assets was 9.42% compared to 9.19% in Q1-08 and 9.87% in Q2-07. Tier 1 leverage to average assets was 7.56% compared to 7.51% in Q1-08 and 7.75% in Q2-07. Net interest income after provision for loan losses was $54.546 million compared to $59.203 million in Q2-07. The Net interest margin was 3.58% compared to 3.61% in Q2-07. Total noninterest income was $22.423 million compared to $30.623 million in Q2-07, with the decrease mostly due to Security losses of $4.618 million in Q2-08 compared to gains of $0.961 million in Q2-07. Total net loans charged-off were $4.456 million and the Quarter-to-date net loan charge-offs to average loans (annualized) was 0.35%. Total nonperforming loans were $25.495 million and and OREO [Other real estate owned] was $7.042 million resulting in $32.537 million in NPAs. Total 90 days past due loans were $37.510 million resulting in NPAs + 90s of $70.0 million at June 30, 2008 and stand at 1.35% of loans at quarter end. Total assets were $8,311,025 and NPAs to assets was 0.30%. Total loans were $5,182,355 and Nonperforming loans to loans was 0.49%. Exposures are primarily in projects that are well known to management because of their nearly 100% concentration in our Chicagoland markets. Loan to value guidelines for unimproved and developed land are 65% and 75% respectively which provide an initial cushion to future reappraisal of property values. Fortunately, FMBI is only minimally exposed to the direct consumer part of this negative credit cycle because of its modest concentrations and conservative underwriting. Aggregate loan to value ratio in the Company's home equity portfolio ($460.6 million) is approximately 60%. At the same time, the Company's single-family mortgage portfolio ($213.3 million) is leveraged at approximately 50%. FMER Reports $0.36 vs. $0.37 in Q2-07 PRNewswire 7-22 Akron Ohio's FirstMerit Corporation announced Q2-08 net income of $29.2 million [$0.36/share] compared with $29.9 million [$0.37/share] for Q2-07. ROA was 1.11% while ROE was 12.31%. Book value was $11.43/share. FTE Net interest income was $89.0 million compared with $85.6 million in Q2-07. Net interest margin was 3.69% compared with 3.62% for Q2-07. Reduced funding costs compared with Q2-07 due to an increased composition of lower cost core deposits along with lower liability pricing from a falling interest rate environment supported margin expansion over both periods. Total earning assets of $9.704 billion earned $137.196 million at an average yield of 5.69%. Total interest bearing liabilities of $7.844 billion cost $48.240 million at an average yield of 2.47%. Noninterest income net of securities transactions was $48.7 million compared with $48.930 million in Q2-07. Service charges on deposits were $16.028 million; Credit card fees were $12.146 million; Trust department income was $5.824 million. Nonperforming assets totaled $41.6 million [0.57% of loans & OREO], compared with $35.3 million [0.50%] at March 31, 2008. With total assets of $10.564 billion, NPAs were 0.39% of assets. Net charge-offs totaled $10.7 million [0.60% of average loans] compared with $11.3 million [0.65%] in Q1-08 and $7.6 million [0.43%] in Q2-07. FULT Reports $0.15 vs. $0.23 in Q2-07 Market Wire 7-22 Lancaster's Fulton Financial Corporation reported Q2-08 earnings of $25.7 million [$0.15/share] compared to [$0.23/share] in Q2-07. FULT [1] recorded a $24.7 million pre-tax charge for other-than-temporary impairment of bank stocks; [2] recognized a $13.9 million pre-tax gain on the sale of its approximately $87 million credit card portfolio; and [3] recorded a $13.2 million reserve related to auction rate certificates held in certain customer accounts of FULT's trust company subsidiary. These three items decreased net income by approximately $15.6 million $0.09/share] and excluding these items, diluted net income per share for Q2-08 would have been 24 cents. ROA was 0.65% while ROE was 6.33%. Book value was $9.15. Tier 1 Leverage ratio was 7.4%. Tier 1 risk-based capital ratio was 9.3%. Total risk-based capital ratio was 11.9%. Net interest income was $131.890 million compared to $120.908 million in Q2-07 while the Provision for loan losses was $16.706 million compared to $2.700 million in Q2-07. Net Interest Income after Provision was $115.184 million copared to $118.208 million in Q2-07. Net interest margin was 3.75% compared to 3.70% in Q2-07. Total Interest-earning Assets of $14.559 billion earned $219.313 million at an average yield of 6.05%. Total Interest-bearing Liabilities of $12.463 billion cost $83.502 million at an average yield of 2.69%. Total Other [Non-interest] Income was $32.150 million compared to $37.005 million in Q2-07. Q2-08 contained an atypical $21.647 million loss of Investment securities and an atypical $13.910 million Gain on sale of FULT's credit card portfolio. Service charges on deposit accounts was $15.319 million and Investment management and trust services were $8.389 million. Non-accrual loans of $108.699 million plus Accruing loans 90+ days overdue of $35.656 million plus OREO of $20.156 million sum to Non-performing assets of $164.5 million [1.02% of total assets and 1.42% of total loans and OREO] at June 30, 2008, compared to $74.1 million [0.49% and 0.69%] at June 30, 2007 and $144.7 million [0.90% and 1.27%] at March 31, 2008. Net loans charged off were $9.552 million [0.33% of average total loans annualized] compared to $3.707 million [0.14%] in Q2-07. HBAN Reports $0.25 vs. $0.34 in Q2-07 PRNewswire 7-17 Columbus, Ohio's Huntington Bancshares reported Q2-8 net income of $101.4 million [$0.25/share] compared to $80.5 million [$0.34/share] in Q2-07. HBAN's Q2-08 was negatively impacted [1] $14.6 million pre-tax ($0.03/share) of merger / restructuring costs [with SKYF]; a $6.8 million pre-tax ($0.01/share) charge on net market-related losses [mainly a loss on NPLs held for sale]; and a $3.4 million ($0.01 per common share) benefit to provision for income taxes. ROA was 0.73% while ROE was 6.4%. Book value was $15.87/share. Tier 1 capital ratio was 9.03%. Total risk-based capital ratio was 12.31%. FTE net interest income increased $138.0 million, or 54%, from the year-ago quarter. This reflected the favorable impact of a $16.6 billion, or 52%, increase in average earning assets, with $14.6 billion representing an increase in average loans and leases, and a 3 basis point increase in the net interest margin to 3.29%. The increase in average earning assets, including loans and leases, was primarily Sky Financial merger-related. Total earning assets had an average yield of 5.85% while Total interest bearing liabilities had an average yield of 2.85%. Total non-interest income was $236.430 million. Total nonaccrual loans and leases of $535.042 million plus Restructured loans of $368.379 million plus OREO of $72.378 million plus Impaired loans held for sale of $14.759 million plus Other NPAs of $2.,557 million sums to Total NPAs were 993.115 million. Non-performing assets were $993.1 million compared with $261.2 million at the end of Q2-07 and $1.678 billion at the end of Q1-08. With Total loans and leases at $41.025 billion and OREO at $72.378 million, NPAs were 2.41% of loans and OREO. With Total assets of $55.338 billion, NPAs were 1.79% of assets. Total net charge-offs were $65.2 million [an annualized 0.64% of average total loans and leases] compared to $34.5 million [0.52%] in Q2-07. Commercial net charge-offs were $27.5 million [0.47%] while consumer net charge-offs were $37.8 million [0.85%]. Problem catagories: Auto loan and lease were $11.5 million [1.01%]; Home equity net were $14.0 million [0.76%]; Residential mortgage were $4.3 million [0.33%]. MBFI Reports $0.63 vs. $0.68 in Q2-07 Business Wire 7-25 MB Financial reported Q2-08 net income from continuing operations of $22.0 million [$.63/share] compared to $19.6 million [$0.53/share] for Q2-07. Income was positively impacted by a $7.3 million [$0.21/share] adjustment related to the removal of valuation allowances on certain state tax net operating loss carryforwards and an adjustment of state tax contingency reserves. ROA was 1.08%. ROE was 10.11%. Book value was $25.20. Total capital to risk–weighted assets was 11.60%. Tier 1 capital to risk-weighted assets was 9.59%. Tier 1 capital to average assets was 8.08%. Net interest income was $56.073 million compared with $52.354 million in Q2-07. The Q2-08 provision was $12.200 million compared with $3 million in Q2-07, resulting in Net interest income after provision for loan losses of $43.873 million compared with $49.354 million in Q2-07. The increase in net interest income was primarily due to a $305.3 million increase in average interest earning assets and a 3 bps increase in the FTE net interest margin. The Net interest margin was 3.11% compared with 3.20% in Q2-07. Total non-interest income was $25.567 million compared with $30.720 million in Q2-07 - with the decline due to a drop in net gains on the sale of other assets from $9.059 million in Q2-07 to $0.050 million in Q2-08. Non-accrual loans of $91.972 million plus Loans 90 days past due and accruing of $1.327 million plus OREO of $1.499 million plus Repossessed autos of $0.81 million summed to $95.179 million in NPAs. Total non-performing loans were 1.56% of total loans. Total non-performing assets were 1.13% of total assets. With Net loans of $5,918.438 million and OREO of $1.499 million, the NPA ratio of loans + OREO was 1.61%. Net charge-offs were $8.420 million and Net loan charge-offs were 0.57% of average loans. MI Reports - $1.52 vs. $0.68 in Q2-07 PRNewswire 7-16 Marshall & Ilsley reported a Q2-08 net loss of $393.8 million [$1.52/share] as compared to income from continuing operations of $178.9 million [$0.68/share] in Q2-07. During the quarter a provision for loan and lease losses of $886 million was taken, representing $485 million in excess of charge-offs of $401 million. ROA and ROE being negative was not given - but assets were $64.260 billion so my calculated ROA was -0.613% and with shareholders equity of $6.966 billion, my calculated ROE was -5.656%. Book Value was $26.86 compared to $17.51 at the end of Q2-07. FTE net interest income rose to $454.6 million compared to $406.8 million in Q2-07. The net interest margin was 3.14%, up 5 basis points on a linked quarter basis, and down 1 basis point from Q2-07. Total Non-Interest Revenues were $187.0 million compared to $186.5 million in Q2-07. Wealth Management total revenue was $74.8 million while service charges on deposits were $37.9 million. Net charge-offs for the period were $400.7 million [3.23% of total average loans and leases] compared to $23.6 million [0.22%] in Q2-07. Non-performing loans and leases were $1.041 billion [2.07% of total loans and leases] at June 30, 2008, compared to $384.0 million [0.89%] at June 30, 2007. At June 30, 2008 and 2007, the allowance for loan and lease losses was 2.05% and 1.00%, respectively, of total loans and leases. The ratio of Loan and Lease Loss Reserve to Non-Performing Loans & Leases was 99% compared to 112% at the end of Q2-07. OREO was $207.1 milliion compared to $24.4 million in Q2-07. Total Nonperforming Assets were $1.248 billion compared to $408.4 million in Q2-07. Total Assets were $64.260 billion. MTB Reports $1.44 vs. $1.95 in Q2-07 PRNewswire 7-14 M&T Bank Corporation reported Q2-08 net income of $160 million [$1.44/share] compared with $214 million [$1.95/share] in Q2-07. ROA was .98% compared to 1.49% in Q2-07 while ROE was 9.96% compared with 13.92% in Q2-07. FTE net interest income totaled $492 million, up 5% from $467 million in Q2-07. Growth in average loans and leases, which rose 14% to $49.5 billion from $43.6 billion in Q2-07, was the most significant contributor to the improvement. The FTE net interest margin declined to 3.39% from 3.67% in Q2-07 due to the impact of Q4-07 acquisition transactions and the issuances of subordinated notes in Q4-07 and Enhanced Trust Preferred Securities in Q1-08 quarter. Q1-08's net interest margin was 3.38%. Total Loans and Leases $50.233 billion [and average earnings assets were $58.199 billion] with the Yield on average earning assets was 5.66% compared to 6.95% in Q2-07 while the Cost of interest-bearing liabilities was 2.64% compared to 3.87% in Q2-07. Noninterest income totaled $271 million compared with $283 million in Q2-07. Higher service charges on deposit accounts, increases in revenues for providing mortgage banking and trust services, and higher credit-related fees were more than offset by a $21 million decline in M&T's pro-rata portion of the operating results of Bayview Lending Group [a privately-held commercial mortgage lender]. Loans classified as nonperforming increased to $587 million, or 1.20% of total loans at June 30, 2008 from $296 million or .68% a year earlier, $447 million or .93% at December 31, 2007 and $495 million or 1.00% at March 31, 2008. Significant factors contributing to the jump were a $139 million rise in residential real estate loans and a $124 million increase in loans to builders and developers of residential real estate. The higher level of nonperforming residential real estate loans reflects a December 2007 change in accounting procedure whereby residential real estate loans previously classified as nonaccrual when payments were 180 days past due now stop accruing interest when principal or interest is delinquent 90 days. The impact of the acceleration of the classification resulted in an increase in the nonperformings of $65 million and $84 million, respectively. Loans past due 90 days or more and accruing interest were $94 million compared with $135 million at June 30, 2007. Included in these past due but accruing amounts were loans guaranteed by government-related entities of $89 million and $70 million at June 30, 2008 and 2007, respectively. Assets taken in foreclosure of defaulted loans were $53 million at June 30, 2008, compared with $18 million at June 30, 2007. The rise in such assets from a year earlier resulted from higher residential real estate loan defaults. NBTB Reports $0.30 vs. $0.30 in Q2-07 Market Wire 7-28 Norwich, New York's NBT Bancorp reported Q2-08 net income of $14.7 million [$.45/share] compared to $12.1 million [$0.36/share] in Q2-07. The increase was primarily the result of an increase in net interest income, an increase in noninterest income, and a decrease in the provision for loan and lease losses, partially offset by an increase in noninterest expense. ROA was 1.12% and ROE was 14.49%. Book Value was $12.56/share. Tier 1 Leverage Ratio was 7.23%. Tier 1 Capital Ratio was 9.67%. Total Risk-Based Capital Ratio was 10.92%. Net interest income was up 11.2% to $46.0 million compared with $41.4 million for Q2-07. The FTE net interest margin increased from 3.63% for Q2-07 to 3.94% for Q2-08. Total Earning Assets of $4.827 billion earned $72.854 million at an average yield of ?.??. Total Interest Bearing Liabilities of $4.067 billion cost $26.849 million at an average yield of ?.??. [I wrote Investor Relations for this data - and they were reasonably quick to respond that they data will be in the 10-Q which will not be relased until mid August.] Noninterest income was $16.4 million, up $2.4 million or 17.3% from $14.0 million for Q2-07. The increase was due primarily to increased service charges on deposit accounts and ATM and debit cards, which collectively increased $2.2 million. Nonperforming loans at June 30, 2008 were $22.8 million [0.63% of total loans and leases] compared with $30.4 million [0.87%] at March 31, 2008 and $34.4 million [1.00%] at June 30, 2007. The decrease was primarily the result of $7.8 million in net charge-offs during Q2 related primarily to one large commercial loan. Nonaccrual Loans of $22.039 million plus Loans 90 Days Past Due and Still Accruing of $0.717 million plus OREO of $1.140 million sums to Total Nonperforming Assets of $23.896 million [or 0.45% of Total Assets]. With period ending Loans and leases of $3,602.895 million and OREO of $1.140 million, NPAs were 0.66% of loans and OREO. Net charge-offs totaled $7.8 million [0.88% of average loans and leases], up from $4.2 million [0.48%] for the three months ending March 31, 2008, and up from $3.3 million [0.38%] for the three months ended June 30, 2007. NCC Reports - $2.45 vs. $0.60 in Q2-07 PRNewswire 7-24 Cleveland's National City Corp reported a Q2-08 net loss of $1.765 billion [- $2.45/share] compared to net income of $347 million [$0.60/share] in Q2-07. The loss was mainly driven by actions to increase loss reserves on liquidating mortgage loan portfolios and a non-cash goodwill impairment charge of $1.1 billion related to previous acquisitions. With Total Assets of $153.852 billion, ROA was - 1.15%. With Total Equity of $17.981 billion, ROE was - 9.82%. Book value was $15.07/share. The Tier 1 risk-based capital ratio was approximately 11.08%. Total risk-based capital was approximately 14.90%. Tier 1 leverage ratio was 10.33%. FTE net interest income was $1.021 billion compared to $1.096 billion in Q2-07. Provision for loan losses was $1.592 billion compared to $145 million in Q2-07, resulting in Net interest (expense) income after provision of ($571 million) compared to $1.947 billion in Q2-07. Net interest margin was 2.97%, 3.18% in Q1-08, and 3.59% in Q2-07. The lower margin reflects higher levels of nonperforming loans, as well as lower interest rates, which moved loan yields more than funding costs. Noninterest income was $431 million compared to $764 million in Q2-07. Loans 90 days past due were $1.2 billion at June 30, 2008, down 12% from March 31, 2008 due primarily to lower levels of past due nonprime mortgage loans, as this portfolio continues to runoff. Nonperforming assets were approximately $3.1 billion at June 30, 2008, up 14% from the preceding quarter, with the growth primarily in mortgage- and broker-sourced home equity loans, as well as commercial construction loans to residential real estate developers. Nonperforming loans in the Core portfolio were $1.577 billion plus NPLs in the Liquidating portfolios of $1.021 billion plus OREO of $528 million sums to total non-perfroming assets of $3.126 billion. With Total portfolio loans of $114.065 billion plus Loans held-for-sale of $3.075 billion plus OREO of $0.528 billion summing to $117.668 billion, NPAs to loans plus OREO ratio was 2.66%. With total assets of $153.852 billion, NPAs to assets ratio was 2.03%. Net charge-offs were $740 million, $538 million in Q1-08, and $98 million in Q2-07, with the increase mainly in the liquidating portfolios. NTRS Reports $0.96 vs. $0.92 in Q2-07 PRNewswire 7-16 Chicago's Northern Trust reported Q2-08 net income $215.6 million [$0.96/share] compared with $206.9 million [$0.92/share] in Q2-07. Q2-08 results include accounting charges of $87.3 million [$.39/share] associated with lease transactions. NTRS had 24% revenue growth driven by trust, investment and other servicing fees; foreign exchange trading income; and net interest income. ROA was 1.22% while ROE was 17.75%. Book Value was $22.46/share. Tier 1 ratio was 9.8%. The Leverage ratio was 6.9%. FTE Net interest income totaled $248.8 million, up 19% from $209.0 million in Q2-07. Q2-08 includes the $29.4 million reduction from the leasing related adjustment. Absent this adjustment, net interest income would have increased 33% from the prior year quarter, reflecting higher levels of average earning assets. The net interest margin equaled 1.59%, unchanged from Q2-07, but absent the leasing related adjustment would have been 1.78%, reflecting a widening of the spread between interest rates on short term investments and on overnight funding sources, including the impact of Federal Reserve Bank rate reductions. Total Noninterest Income was $845.3 million compared to $673.4 million in Q2-07. Trust, investment and other servicing fees from Corporate & Institutional Services increased 32% from Q2-07 to $409.2 million. Foreign exchange trading income reached $126.6 million, up 56% or $45.6 million from Q2-07. Revenues from security commissions and trading income equaled $20.4 million, up 36% from Q2-07, driven by increased revenue from brokerage, interest rate protection products, and transition management services. Other operating income equaled $34.8 million, an increase of 23% compared with $28.3 million in Q2-07. Nonperforming Loans were $30.1 million plus OREO of $ 4.3 million sums to Total Nonperforming Assets of $34.4 million or 0.12% of Loans & OREO. With total assets of $71.276 million. NPAs were 0.048% of assets. Net Charge-offs of $4.7 million were 0.07% of Average Loans. ONB Reports $0.30 vs. $0.30 in Q2-07 Business Wire 7-28 Evansville's Old National Bancorp announced Q2-08 net income of $19.5 million [$.30/share] compared to x million [$.30/share] in Q2-07. ROA was 1.03% while ROE was 11.58%. Book Value was $9.80/share. Tier 1 ratio was 11.2%. Leverage Ratio (to Average Assets) was 8.2%. FTE net interest income was $65.9 million compared to $64.2 million in Q1-08 and $58.6 million in Q2-07. Net interest margin was 3.85% compared to 3.68% for Q1-08 and 3.20% for Q2-07. Total Earning Assets had an average yield of 5.97% while Total Interest-bearing Liabilities had an average yield of 2.46%. Total fees, service charges and other revenue were $41.8 million compared to $43.0 million for Q1-08 and $39.0 million in Q2-07. Service Charges on Deposit Accounts were $11.3 million; Insurance Premiums and Commissions were $9.3million; and Wealth Management Fees were $4.9 million. Net Charge-offs [$15.9 million] to Average Loans ratio was 1.35%. Non-Performing Loans to Ending Loans ratio was 1.43%. Total Non-performing Loans of $68.1 million plus OREO of $3.3 million plus loans 90+ days past due and still accruing of $1.3 million sum to 'under-perfroming assets' were $72.9 million. With Total Assets of $7.602 billion, NPAs to assets ratio was 0.96%. With Total Loans of $4.894 billion and OREO of $3.3 million, NPAs to loans + OREO ratio was 1.49%. NAL Reports $0.12 vs. - $0.04 in Q2-07 Business Wire 7-29 New Haven, Connecticut's NewAlliance Bancshares Q2-08 announced net income of $11.8 million [$0.12/share] compared to ($3.9) million [- $.04/share] for Q2-07. Q2-07 included a $22.6 million write-down related to the restructuring of the investment securities portfolio. Exclusive of the restructuring of the securities portfolio and merger related charges, net income in the prior year period was $11.1 million [$.11/share]. ROA was 0.48% while the ROE was 3.33%. The Book value was $13.03/share. Tier 1 leverage capital ratio was 11.16%. Net interest income before provision for loan losses was $48.248 million compared to $42.609 million in Q2-07. Provision for loan losses was $3.700 million compared to $0.600 million in Q2-07, resulting in Net interest income after provision for loan losses of $44.548 million compared to $42.009 million in Q2-07. The Net interest margin was 2.67% compared to 2.56% in Q1-08 and 2.44% in Q2-07. Total interest-earning assets were $7.234 billion earning $99.180 million at an average yield of 5.48%. Total interest-bearing liabilities were $6.205 billion costing $50.932 million at an average yield of 3.28%. Total non-interest income was $14.519 million compared to a loss of $7.766 million in Q2-07 (due to the $22.6 million write-down). The margin increased due primarily to an increase in the average balances on interest-earning assets and an emphasis on reducing the average rate paid on interest-bearing deposits. NAL began aggressively reducing deposit costs in Q1-08 and was able to realize the full impact of this strategy in Q2. NAL experienced a 51 basis point decline on the average rate paid on interest-bearing deposits from Q1-08 mainly due to time deposits which decreased 68 bps from the prior quarter. Total nonperforming assets were $27.599 million [0.53% of total loans and 0.33% of total assets]. Total net charge-offs were $1.316 million [0.11% of average loans]. SNV Reports $0.04 vs. $0.32 in Q2-07 Business Wire 7-24 Synovus reported Q2-08 net income of $12.1 million [$0.04/share] compared to $105.8 million [$0.32/share] for Q2-07. Q2-08 results include the impact of a non-cash goodwill impairment charge of $27 million [$0.08/share]. ROA was 0.14% while ROE was 1.40%. Book value per share was $10.38. Tier 1 Capital Ratio was 8.91%. Total Risk-Based Capital Ratio was 12.28%. Leverage Ratio was 8.69%. Net interest income $273.4 million compared to $288.5 million in Q2-07. The net interest margin was 3.57%, compared to 3.71% last quarter and 4.00% in Q2-07. Of the 14 bps decrease in the margin from the previous quarter, 3 bps were related to increased credit costs. Total Interest Earning Assets were $30.979 billion and had an average yield of 5.96%. Total Interest Bearing Liabilities were $26.504 billion and had an average yield of 2.80%. Non-interest income was $107.7 million. After excluding a $9.9 million net after-tax gain on the sale of MasterCard stock, non-interest income was down 5% compared to Q2-07 with increases in brokerage and investment banking revenue of 17.9%, bankcard fees of 22.7%, and fiduciary and asset management fees – which include trust, financial planning, and asset management fees of 1.9%, while mortgage banking income and service charges on deposit accounts were down 26.1% and 7.1%, respectively. With Non-performing Loans of $626.571 million, Impaired Loans Held for Sale of $6.365 million; and OREO of $197.328 million, Non-performing Assets were $830.264 million. NPAs to "loans, impaired loans held for sale, and OREO" was 3.00%, compared to 2.49% last quarter and 0.87% in Q2-07. With Total assets of $34.227 billion, NPAs were 2.42% of assets. Non-performing loans were $627 million, an increase of $111 million from Q1-08. The rate of increase in nonperforming loans slowed in Q2 (22%) as compared to Q1 (51%). Of the $111 million increase in non-performing loans, 46% were in the Atlanta area. The Atlanta market represents 58% of Synovus’ total non-performing loans in the residential construction and development portfolios. Net charge-offs were $70.652 million and the charge-off ratio [to average loans] was 1.04% compared to 0.95% last quarter and 0.25% in Q2-07. Total loans past due and still accruing as a percentage of loans outstanding improved from 1.39% last quarter to 1.33% in Q2. Past due loans over 90 days and still accruing as a percentage of loans outstanding improved from 0.16% last quarter to 0.14% in Q2. SUSQ Reports $0.34 vs. $0.19* in Q2-07 Business Wire 7-24 Susquehanna Bancshares announced Q2-08 net income of $29.2 million [$0.34/share] compared to $9.8 million [$0.19/share] for Q2-07. [ * Q2-07 earnings included a pre-tax charge of $11.8 million related to a restructuring of its bank investment portfolio.] ROA was 0.89% and ROE was 6.81%. Book Value per share was $19.95. Net interest income was $99.058 million compared with $63.437 million in Q2-07 while the Provision for loan and lease losses were $13.765 million compared with $1.933 million resulting in Net interest income after provision of $85.293 million compared with $61.504 million in Q2-07. Net interest margin was 3.66% compared to 3.67% for Q2-07. Total interest-earning assets were $11.202 billion earning $174.956 million at an average yield of 6.28%. Total interest-bearing liabilities were $10.012 billion costing $72.917 million at an average yield of 2.93%. Total noninterest income was $44.685 million compared with $19.151 million in Q2-07. Service charges on deposit accounts were $11.767 million [up from $7.181 million in Q2-07] and Asset management fees were $6.911 million [up from $4.792 million]. Nonaccrual loans & leases of $78.424 million plus Restructured loans of $2.582 million plus OREO of $10.510 million sums to Total nonperforming assets of $91.516 million compared to $36.893 million in Q2-07. NPAs to Loans & leases & OREO was 0.99%. With Total assets of $13.505 billion, NPAs were 0.67% of assets. Net charge-offs of $10.727 million was 0.48% of average loans and leases were compared to $1.851 million [0.14%] for Q2-07. USB Reports $0.53 vs. $0.65 in Q2-07 Business Wire 7-15 U.S. Bancorp reported Q2-08 net income of $950 million [$0.53/share] compared with $1,156 million [$0.65/share] for Q2-07. Significant items included in Q2-08 results were net securities losses [impairment charges] of $63 million and an incremental provision for credit losses, which exceeded net-charge-offs by $200 million, which combines reduced EPS by approximately $0.11. ROA was 1.53% compared with 2.09% for Q2-07. ROE was 17.9% compared with 23.0% for Q2-07. Book value per share was $11.67 compared with $11.55 at the end of Q1-08 and $11.19 at the end of Q2-07. The Tier 1 capital ratio was 8.5%, equall to that of Q2-07. Total risk-based capital ratio was 12.5% comapred with 13.0% in Q2-07. The leverage ratio was 7.9% compared with 7.9% in Q2-07. Common equity to assets was 8.2% compared with 8.7% in Q2-07. Tangible common equity to assets was 5.2% compared with 5.2% in Q2-07. FTE net interest income was $1,908 million compared with $1,650 million in Q2-07. The increase was due to strong growth in average earning assets as well as an improving net interest margin. The net interest margin increased to 3.61% compared with 3.44% in Q2-07 due to growth in higher spread assets, the benefit of USB's current asset/liability position in a declining interest rate environment and related asset/liability re-pricing dynamics. Also, short-term funding rates were lower due to market volatility and changing liquidity in the overnight fed fund markets given current market conditions. Noninterest income was $1,892 million, $7 million (.4%) higher than Q2-07. Strong fee-based revenue growth was muted by impairment charges on certain structured investments and higher retail lease residual losses from a year ago. Credit and debit card revenue, corporate payment products revenue, ATM processing services and merchant processing services were higher than Q2-07 by $36 million (15.7%), $15 million (9.4%), $11 million (13.4%) and $23 million (8.0%), respectively. The strong growth in credit and debit card revenue was primarily driven by an increase in customer accounts and higher customer transaction volumes over a year ago. Net charge-offs of $396 million for the quarter were 0.98% of average loans outstanding, while total nonperforming assets at the end of the quarter totaled $1,135 million [0.68% of total loans plus ORE] compared with $565 million [0.39%] in Q2-07. Nonperforming assets to loans plus ORE was 0.68% compared to 0.39% in Q2-07. In addition to providing for the $396 million of net charge-offs, USB recorded an incremental provision for credit losses of $200 million, bringing the allowance to period end loans coverage ratio to 1.60 percent at June 30, 2008. USB expects nonperforming assets to continue to increase due to general economic conditions and continuing stress in the residential mortgage portfolio and residential construction industry. Accruing loans 90 days or more past due increased to $687 million at June 30, 2008, compared with $676 million at March 31, 2008, and $376 million at June 30, 2007. From the Conference Call: USB is benefiting from the uncertainty and volatility of the current market - we benefit from a flight to quality. We have the balance sheet that allows us to lend. Average deposits was up a strong 13.5% after subtracting the benefit of acquiring Mellon branches. There were 4.84% charge-offs on credit card loans. There is some seasonality in this and should moderate in Q3 - and should continue to be below industry average. Residential loan charge-offs were around 1.01%. Auto loans and leases were $9.5 billion and this is a high quality portfolio and charge-off ratios was 0.72% in Q2 compared to 0.79% in Q1. Auto leases were $5.4 billion with 58 bps in charge offs vs 49 bps in Q1-08. Lease residial values on car loans are falling - and the severity of losses on auto loans have grown. This is charge to non-interest income. Given current market for used cars, losses will be higher, but manageable. USB expects Q3 total charge-offs to be higher - above 1% in Q3. NPAs were $1.135 billion. The increase was driven by residential real estate - but there was stress everywhere. NPAs forecasted to rise in Q3. Todd Hagerman with Credit Suisse - given your outlook [challenging and stressful] - how are you thinking about expansion? USB: The core company is doing better than ever. Our initiatives [power bank, wealth management, corp trust and payments] are coming through. We are working on moving the bank forward. You will see the improvement once loan losses stop to rise. We believe the stimulus was not shown at the banks - but at the gas pumps. It did have an impact. Will it impact customer's ability to pay going forward? Matt O'Connor with UBS - more color on auto loans? USB: $5.5 billion in leasing - all prime portfolio - 58 bps loss rate. 25 million in loss per quarter. We expect an uptick in the second half of the year - with higher losses on SUV. Higher loss per incident - with 41% of the auto loan book in SUV's - just like in the auto market in general. We do have insurance on these loans, but with a high deductable. NIM improved due to USB being liability sensitive. We benefited due to flight to quality. We are able to loan at attractive spreads. We are NOT growing loans by reaching down in the specturm. Nancy Bush with NAB Research - asked for color on the credit quality decelleration. USB: Back in May, we were in 90s in the charge-offs. It is getting worse. NPAs and net charge-offs will rise, but at a lower pace. Do not model a 1.5 charge offs - that is too high. But it will be higher than our current 1.0. On NPAs - NPAs did not hurt NIMs by a significant amount. On M&A opportunities, it looks like a number of banks will sell non-core business. What is your appetite for C business? USB: It is a buyers market, so we are interested. But we do not want to be in a position where we need to raise capital. What fee business would you be most interested in acquiring? [1] The Payment business - like corporate business due to high barrier to entry. [2] Prime credit cards. [3] Small branch banks - that do not have a lot of residential real estate or a high portfolio in high cost CDs. We are not shopping. We made $950 million this quarter and we have retained earnings. But we are not 'searching' and adding risk to our portfolio. We will not buy other people's problems. JP Morgan - On commerical leases - the loss is growing. USB: Largest exposure is for copiers for small business. Of $6.4 billion - about half is for small business. xx with xxx - looking at the industry numbers for sub 30 day delinquencies for residential loans, they are increasing. The quality of the 06-07 originations are droping faster the 05-04s. Are you seeing that? USB: No. We are not seeing that. Mortgage portfolio is primer or near prime. USB projected another fall in residential values of 5% for the rest of the year in their markets. when asked if USB would use the RPX to hedge loan losses, USB said they view the cost of that hedge as too high. On residential loans - customers remember who stuck with them. We are not walking away from anyone. We are slow to foreclose and quick to restructure. The vast majority continue to pay. RBC: Commercial real estate loans still growing - why? USB: Retail malls and multi-family space is still being done - and something we have done for years. The residential book is declining. On the dividend - you want to protrct it - will it increase this year? USB: That is a board decision, but that is our intent. No one will protect it more than us Is there an upper limit in the pay-out ratio? USB hedged an answer. What are the problem markets? USB: Michigan and Ohio is stressed. California, Neveada Arizonia. Not much exposure in Florida. On residential mortgage re-negoitations - we focused on customers who are current and do it before a variable rate mortgage would change. VLY Reports $0.53 vs. $0.65 in Q2-07 Business Wire 7-15 Valley National Bancorp announced Q2-08 net income of $41.5 million [$0.33/share adjusted for a 5% stock dividend issued on 5-23-08] compared to $39.7 million [$0.31/share] for Q2-07. ROA was 1.28% compared with 1.46% in Q2-07. ROE was 17.20% compared with 19.25% in Q2-07. Book value was $7.55 compared with $7.35 at the end of Q2-07. Net Interest Income was $102.578 million compared to $95.781 million in Q2-07. The increase was primarily due to a 40 bps decline in the cost of interest-bearing liabilities. Net interest income after provision for credit losses was $96.778 million compared to $93.393 million in Q2-07. FTE Net interest margin increased 13 bps from Q1-08 to 3.48% as the reduced cost of funds and strong loan volume during the quarter more than offset a 20 bps decline in the yield on interest earning assets. Total interest earning assets were $11,940,528 generating income of $177,235 at an average rate of 5.94%. Total interest bearing liabilities $10,024,260 costing $73,321 at an average rate of 2.93%.. Total non-interest income was $17.954 million compared to $22.403 million in Q2-07 partially due to a loss on securities transactions of $0.958 million compared to a gain of $0.44 million in Q2-07. With a loan portfolio totaling over $9.0 billion, net loan charge-offs were $4.9 million compared to $3.9 million for Q1-08, and $3.1 million for Q2-07. Total non-performing assets, consisting of non-accrual loans, OREO and other repossessed assets, totaled $36.1 million [0.40% of loans] at June 30, 2008 compared to $33.3 million [0.38%] at March 31, 2008. At June 30, 2008, VLY's $538 million home equity portfolio consisting of over 14,200 loans had only 11 loans past due 30 days or more. These loans totaled $727 thousand or 0.14% of the portfolio. At the same time, VLY's residential mortgage portfolio totaling $2.2 billion and approximately 9,100 total loans had 49 loans past due 30 days or more. These loans totaled $7.6 million or 0.34% of the portfolio. VLY's delinquency levels remained relatively low with total loans past due in excess of 30 days declining to 0.82% of our total loan portfolio of $9.0 billion at June 30, 2008 as compared to 0.93% of total loans at March 31, 2008 and 1.00% of total loans at December 31, 2007. Loans past due 90 days or more and still accruing increased $3.4 million to $11.2 million, or 0.12% of total loans at June 30, 2008 compared to $7.8 million [0.09%] at March 31, 2008 due to a $3.4 million increase in matured performing loans in the normal process of renewal. Loans past due 90 days or more and still accruing include matured performing loans in the normal process of renewal which totaled approximately $5.6 million and $2.2 million at June 30, 2008 and March 31, 2008, respectively. Total loans past due in excess of 30 days declined to 0.82% of total loans at June 30, 2008 compared with 0.93% of total loans at March 31, 2008 and include matured performing loans in the normal process of renewal totaling approximately $10.7 million and $10.6 million at June 30, 2008 and March 31, 2008, respectively. From the Conference Call: Auto loans performed in line with declining expectations - with 90 day past due's equal to 1.15% of total loans. These loans had an average FICO of 736. Some 94% of loans originated where VLY has opperated for years. Charge-offs are elevated - but relative to over-all size. Historically VLY recovers one third of the charge offs on auto loans. Many of competitors auto loans problems stem from purchased loans, out of market and low on credit quality. There are rumors that people are going to stop paying on their loans on SUVs - we do not see that. They may drive less - but people bought those SUVs for a reason [example - car pooling soccer moms]. The impact of gas and the change of desirability of SUV/cars does have some effect - when we do repossess we are seeing higher losses on SUVs. The break down of new car vs. used car loans is about half and half [both in the portfolio and in originations] - and the defaults on new vs. used is about equal. When asked if the loss when repo-ed was higher for new cars - VLY said No. Some 80% of VLY's $3 billion in CDs re-prices in a 12 month period. The fall in short term interest rates in Q2-08 had negative impact on NII and NIM until the CDs reset. OREO was up to $4.4 million due to the addition of one property of $3.5 million of which VLY expects a very small loss - if any. The over-all economy has not been down with the customers that we are dealing with. VLY is big in the jewlry business and that is not hurting - the bigest problem for them is with getting product. On construction - they are holding off building. There is a decrease is competition for loans. We have had borrowers who have apartments in NCY where the loan LTV is 30% - and they are being encouraged to move their business elsewhere - and that is easy to pick up. The home equity loans are holding up - but they are being watched. SNL ranked VLY as hvaing zero home equity losses - so we are not increasing reserves. Those who are increasing reserves did some 125% LTV lending. We closely monitor the checks going out on the HELOCs. If we see that HELOCs are being used to pay customer credit card monthly bills - we call the customer and sometimes we cut those lines of credit off. Losses are running around 50 bps. On residential loan originations, the LTVs have been in the range of 64% to 72% with FICO score averages of 750. WL Reports - $0.29 vs. $0.70 in Q2-07 Business Wire 7-18 Wilmington Trust Corporation reported a Q2-08 loss of $19.5 million [$0.29/share] compared to a gain of $48.9 million [$0.70/share] in Q2-07. There was a non-cash impairment expense of $66.9 million in WL's investment in Roxbury Capital Management that reduced net income by $43.5 million [$0.64 per share]. WL's investment in Freddie Mac and Fannie Mae was recorded as a securities loss of $12.6 million which reduced net income by $8.0 million [$0.12/share]. On an operating basis (excluding the two charges), net income for Q2-08 was $32.0 million [$0.47/share]. ROE was -7.01% and ROA was -0.66%. Book value at period end was $15.85. Total risk-based capital ratio was 11.14%. Tier 1 risk-based capital ratio was 6.74%. Tier 1 leverage capital ratio was 6.45%. Net interest income was $85.2 million compared to $92.8 million in Q2-07. The net interest margin was 3.17%, 20 bps lower than Q1 and 56 bps lower than Q2-07. Since most of WL's floating rate loans reprice within 30 days of a rate change, downward loan pricing adjustments began in Q4-07 and continued into 2008. Funding costs typically take 90 to 120 days to reprice. Consequently, most of the corresponding decreases in funding costs did not begin until Q1-08, and continued to lag loan repricing for most of Q2-08. Total earning assets had an average yield of 5.56% while Total interest-bearing liabilies had an average yield of 2.71%. Noninterest income was $93.2 million compared to $96.9 million in Q2-07. Total Wealth Advisory Services contributed $57.8 million plus Total Corporate Client Services $31.7 million combined for Advisory fees after amortization of affiliate intangibles of $91.9 million. Service charges on deposit accounts was $7.5 million and Other noninterest of income $6.3 million. But Securities losses subtracted $12.5 million. Total nonperforming assets increased to $88.5 million from $77.7 million at March 31, 2008. NPAs included OREO of $16.7 million. Non-performing assets to loans ratio was 0.95%. Three credits – a commercial construction loan, a loan to a retailer, and a loan to a textile manufacturer – accounted for the majority of this $10.8 million increase. The net charge-off [$11.8 million] ratio to average loans was 13 bps, an increase of 8 bps from Q1-08. Loans past due 90 days or more increased from $14.6 million at March 31, 2008, to $21.8 million. Three loans -- a commercial loan to a chemical manufacturer, a commercial construction loan to a tubing manufacturer, and a commercial mortgage loan to a retailer -- accounted for most of this increase. Ratings & Dividend Changes - July On 7-02 Susquehanna [SUSQ] jumped but closed unchanged after a Keefe, Bruyette & Woods analyst upgraded the bank, which has branches throughout the Mid-Atlanic region, saying he doesn't expect the bank to have to raise capital. Keefe, Bruyette & Woods analyst Robert Hughes boosted his rating to "Market Perform" from "Underperform" with a $13 price target -- slightly below Tuesday's $13.49 closing price. "Susquehanna's concentration of (construction and development) loans is still somewhat concerning, but according to our stressed credit scenario, we view Susquehanna as unlikely to have to raise equity capital," he said in a note to clients. He said the stock's current price (down about 27 percent year to date) better balances potential upside with risk, although Hughes does expect to see further credit weakening and continued volatility in the marketplace. On 7-03 FirstMerit [FMER] was downgraded to hold. FirstMerit operates in northern and central Ohio and western Pennsylvania. FMER's net income increased by 0.1% when compared to the same quarter one year prior, edging up from $31.42 million to $31.44 million. Compared to other companies in the industry and the overall market, FirstMerit's return on equity exceeds that of both the industry average and the S&P 500. FirstMerit, with its decline in revenue, underperformed when compared the industry average of 22%. Since the same quarter one year prior, revenue dropped by 3.6%. FirstMerit had been rated a buy since April 2008. On 7-14 ASBC declared a dividend of $0.32/share payable Aug. 15 to shareholders of record Aug. 7. On 7-17 WL declared a dividend of $.345 payable Aug. 15 to shareholders of record as of Aug. 1. On 7-17 NTRS declared a dividend of $.28 payable on Oct. 1 to shareholders of record as of Sept. 10. On 7-22 CMA declared a dividend of $0.66/share payable October 1, 2008, to shareholders of record September 15, 2008. On 7-24 ONB declared a dividend of $0.23/share payable September 16, 2008, to shareholders of record September 2, 2008. On 7-29 NAL declared a dividend of $.07/share to be paid on August 19, 2008 to shareholders of record on August 8, 2008. Home Page Factoids Previous Update |