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Securities Lending Is Being Squeezed Craig Karmin, WSJ 10-01 Public pension funds and other big investors have long squeezed out a few extra bucks by lending stock held in their portfolios -- for a fee -- to short sellers. Now those funds are starting to feel a squeeze of their own. The collapse of Lehman Brothers Holdings and Washington Mutual have set off new troubles in the securities-lending business, and the recent freeze in short-term debt markets has only compounded the problem. That has left a number of big investors -- from the California State Teachers' Retirement System to giant mutual funds -- with at least temporary losses. They could become permanent if conditions don't improve. The business of securities lending can seem yet another obscure corner of Wall Street. But it is big business for funds with huge portfolios of stocks. The profits earned from securities lending are one reason why index fund companies like Vanguard can charge clients such small fees. They can also boost overall pension-fund returns. Under a typical agreement, a pension fund lends out securities and receives cash as collateral, plus another 2%. That cash is then handed over to a broker, who invests the money so that the pension fund can get an additional return on that collateral of as much as 1% per transaction. The pressure on securities-lending programs comes at a time when pension funds and mutual funds around the world are voluntarily restricting their lending of shares of financial companies to hedge funds, which use borrowed shares for short selling. In a short sale, a trader borrows a security and hopes it will fall in price before the trader has to buy it back and return it. The California Public Employees' Retirement System, for instance, earned $118 million in net income for a $38 billion securities-lending program for the year ended in June. Over the past eight years, the program had cumulative net earnings of nearly $1.2 billion. This practice has worked reliably for years. But the decline in Lehman and Washington Mutual has set off an unsettling chain of events: first causing the value of their own securities to plummet, then contributing to a freeze in the credit markets that hurt most short-term debt securities. After that happened, investors were forced to make up the difference when they returned the collateral to the borrower of the securities. "Our earnings in this program will be affected," said Christopher Ailman, chief investment officer for the California State Teachers' Retirement System, the nation's second-largest pension fund that lends securities valued around $29 billion. Mr. Ailman said the fund "will not get face value" for collateral invested in medium-term notes issued by Lehman Brothers and Washington Mutual. The amount of losses is unclear because the pension fund expects to hold the paper for a long time and wait for a price rebound. They aren't alone. Northern Trust Corp. on Monday said it is taking a pretax charge of $150 million in the third quarter to pay back investors who lost money on collateral from securities lending that was invested by the Chicago-based investment firm. Bank of New York Mellon Corp. took similar action last week, saying it will "provide support" to clients impacted by the Lehman bankruptcy filing, including those in a fund used for "reinvestment of cash collateral within the company's securities lending business." ASBC Reports $0.30 vs. $0.56 in Q3-07 Businesswire 10-16 Associated Banc-Corp reported Q3-07 net income of $37.8 million [$0.30/share] compared to $71.7 million [$0.56/share] for Q3-07. Quarterly earnings were impacted by other-than-temporary valuation losses of $13.6 million [$0.07/share after tax] related predominantly to preferred stock holdings of Freddie Mac and Fannie Mae. ROA was 0.68% while ROE was 6.38%. Book value per share was $18.52. The tangible capital ratio was 6.50%. Net Interest Income was $166.517 million compared to $163.073 million in Q3-07 while the Provision for loan losses was $55.011 million compared to $8.733 million in Q3-07 resulting in Net interest income after provision for loan losses of $111.506 million compared to $154.340 million in Q3-07. The net interest margin was 3.48%. ASBC anticipates that the Q4 NIM will benefit from the current environment. Total earning assets of $19.884 billion earned $278.275 million at an average yield of 5.58% [compared to 7.05% in Q3-07. Total interest-bearing liabilities of $17.107 billion cost $104.859 million at an average yield of 2.44% [compared to 4.02% in Q3-07]. [The difference being $173 million and not the $166 million reported for NII - and I do not know why.] Core fee-based revenues were $71 million, up $6 million over Q3-07, led predominantly by increased service charges on deposit accounts [$33.609 million compared to $26.609 million in Q3-07]. Total noninterest income fell to $75.323 million from $84.920 million with the fall being due to the OTI loss of $13.6 million on Freddie/Fannie securities. Provision for loan losses was $55 million and net charge offs were $38 million [0.94% of average loans], compared to $8.733 million and $14.666 million [0.38%] for Q3-07. Nonperforming loans were $304.670 million while OREO was $46.473 million resulting in nonperforming assets of $351.143 million. Nonperforming assets / total loans plus OREO was 2.15% compared to 1.13% in Q3-07. Nonperforming assets / total assets was 1.56% compared to 0.82% in Q3-07. [note - acrruing loans 90 days past due were included in NPAs] BBT Reports $0.65 vs. $0.80 in Q3-07 PRNewswire 10-16 BB&T reported Q3-08 net income of $358 million [$.65/share] compared with $444 million [$.80/share] earned during Q3-07. Operating earnings totaled $355 million [$.64/share] excluding $35 million in net after-tax securities gains, $26 million in after-tax charges for other-than-temporary impairment and $6 million in after-tax charges for nonrecurring professional fees and merger-related and restructuring charges. Operating earnings for Q3-07 totaled $448 million [$.81/share] excluding $4 million in net after-tax merger-related and restructuring charges. ROA was 1.04% and ROE was 10.86%. Book value per share was $23.42. BB&T's tangible capital ratio was 5.8%, up from 5.7% at June 30, and the Tier 1 leverage ratio was 7.6%, up from 7.2% last quarter. BB&T's Tier 1 risk-based capital was 9.4% and total risk-based capital ratio was 14.4%, up from 8.9% and 14.0% at June 30. Net interest income after provision for credit losses was $2.256 billion compared to $2.625 billion in Q3-07. The Net interest income was up to $3.173 billion compared to $2.889 billion while the provision for credit losses was $917 million compared to $264 million in Q3-07. Net interest margin improved to 3.66%. Total earning assets had an average yield of 6.00% compared to 7.13% in Q3-07. Total interest-bearing liabilities had a yield of 2.66% compared to 4.23% in Q3-07. Noninterest income was $2.294 billion compared to $2.056 billion. Total nonaccrual loans and leases were $1.196 billion while OREO was $442 million resulting in NPAs of $1.638 billion. NPAs as a percentage of total assets increased to 1.20% at Sept. 30, compared to .95% at June 30. NPAs as a percentage of Loans, Leases and OREO was 1.69%. The 30-89 past due loans [$1.579 billion] were 1.63% of loans. Annualized net charge-offs were 1.00% of average loans and leases, up from .72% in Q2-08. Excluding losses incurred by BB&T's specialized lending subsidiaries, annualized net charge-offs for the current quarter were .82% of average loans and leases compared to .53% in Q2-08. From the Conference Call: Problem areas for loans were Atlanta, Metro DC and Florida but doing well in N Carolina and S Carolina and Virginia outside of DC. We are a no LTV lender. Even alt-a portfolio had 67% loan to value. 77% of loans were first mortgages with again 67% LTVs. Home equity - lots of losses per default since folks do not have equity in their homes, so the whole loan gets charged off. CD portolio re-priced at lower yields, helping NIM. Spreads on loans widened. Funding mix shifted to lower cost alternatives. BBT projects NIM to fall slightly in Q4-08 due to increased borrowing costs and deposit costs due to competition. BBT has a long term goal to diversify assets to be less dependant on real estate and more weighted on CNI loans. BBT will focus on revenue growth to get better margins, to sell more products, and to generate more relationships. Pricing pressure due to disintermediation due to non-bank competition. But weaker competitors are being weeded out and BBT projects less competition and thus less pricing pressure. Branch satisfaction [from outside firm Merit] is up on surveys. Greenich survey put BBT in the top 14 in the nation. What is the appropriate level of captial. Is TARP [Troubled Asset Relief Program] captial to deploy or only to strenghten balance sheet? BBT: BBT we fell we have adequte Teir 1. Did raise on Sept 10th. 5.8% tangilbe capital. Having too much capital would not be a problem in this market place. TARP would be an inexpensive way to raise capital for acquisitions - we have sufficient capital for lending. And the Fed wants us to take the money. Color on Incremental loans and reserves for residential loans. BBT: We have reduced that portfolio. We are still making loans with which we have long term relationships. Winston-Salem is struggling - but most of our market did not have home appreciation. Our footprint it is not like Florida. We are not doing new development. Most of builders with which we deal are well capitalized. Deposit growth was strong - but it does not show in your balances. Why? BBT: There was a big surge in deposits at end of June from an investment bank - and some of that ran off. Are your reserves based on a recession scenerio? Yes. We are chasing a moving target. Will TARP funds be available to you - are only to weak instituions? BBT: Even our regulators do not know that yet. The first traunch of funds went to banks like Citi and Morgan Stanley - banks that were more troubled, larger, more connected and more instituional in nature. Outlook? BBT: We assume we are in a reccession, and a pretty long reccession - but not a depression. Color of Defaults. BBT: Default rate in auto finance has not gone up much. But if we reposses an SUV, we take a big mark down [sometimes as much as $20k]. Our home equity portfolio is of good quality is not having a big default problem - but we have big losses per default. With home mortgages - it is the opposite - more problems but low losses per house. On dividend - BBT: we have a large retail base the is focused and dependant on the dividend. We expect to be able to pay the dividend unless the economy gets significantly worse. Is there a benfit to BBT of Well taking over Wachovia? BBT: We are taking up some business. It was an avalanche for a few weeks. But Wells is a good competitor. CHCO Reports - $0.16 vs. $0.76 in Q3-07 PRNewswire 10-27 Charleston, W.Va.'s City Holding Company reported Q3-08 net income [loss] of $2.557 million [- $0.16/share] compared with income of $12.714 million [$0.76/share] in Q3-07. Due to Freddie and Fannie, CHCO recorded a $21.1 million ($12.7 million after tax or $0.78/share) impairment loss. "According to the American Banker's Association, approximately 27% of all community banks in the United States owned preferred stock in FNMA and FHLMC. Moody's and S&P rated them both as 'investment grade'." Additionally, City took a charge of $5.4 million with respect to other investments in pooled trust preferred securities and recorded a provision for loan losses of $2.35 million reflecting several commercial loan customers whose credit worthiness has deteriorated in Q3-08. ROA was (0.41)% while the ROE was (4.04)%. Book Value per share was $17.61. Leverage Ratio was 9.97%, the Tier I Capital ratio was 13.11%, and the Total Risk-Based Capital ratio was 14.13%. Tangible capital ratio was 9.4%. FTE net interest income was $26.5 million compared with $24.5 million Q3-07. This increase is primarily attributable to interest expense on interest bearing liabilities decreasing more quickly than interest income from loans and investments. The net interest margin was 4.78% compared to 4.32% in Q3-07. Total interest-earning assets of $2.205 billion earned $36.722 million at an average yield of 6.62% [compared with 7.03% in Q3-07]. Total interest-bearing liabilities of $1.828 billion cost $10.238 million at an average yield of 2.23% [3.26% in Q3-07]. Total Non-Interest Income was - $12.758 million compared with $13.814 million in Q3-07. Exclusive of investment losses, non-interest income was $14.7 million. Total non-performing loans of $13.990 million [$14.614 million in Q2] plus OREO of $3.749 million [$6.485 million in Q2] resulted in NPAs of $17.739 million [1.00% of total loans and OREO compared with 1.20% at June 30, 2008]. This decrease was due to the sale of an upscale residence in Southern West Virginia that had previously been reported as OREO. With total assets of $2.503 billion, NPAs were 0.72% of assets. Net charge-offs were $1.430 million [1.06% of outstanding loans]. CMA Reports $0.18 vs. $1.17 in Q3-07 PRNewswire 10-17 Comerica reported Q3-08 income from continuing operations of $27 million [$0.18/share] compared to $180 million [$1.17/share] for Q3-07. Q3-08 included a $174 million provision for credit losses, compared to $177 million for the second quarter 2008 and $45 million for the third quarter 2007. During Q3-08, Comerica recognized a pre-tax charge of $96 million ($61 million after-tax, or $0.40/share), recorded in "litigation and operational losses," related to an offer to repurchase (at par) auction-rate securities from customers. Q3-08 net income reflected a $27 million pre-tax gain ($17 million after-tax, or $0.11/share) from the sale of shares in Visa and net after-tax charges of $7 million ($0.04/share) which included settlements with the IRS on disallowed foreign tax credits related to a series of loans to foreign borrowers and both the net interest income impact and tax-related interest on certain structured leasing transactions, as well as other adjustments to tax reserves. ROE was 2.12% while ROA was 0.18%. Book value per share was $33.89. Tier 1 capital ratio was 7.35%. Tier 1 common capital ratio was 6.69%. Total risk-based capital ratio was 11.22%. Net interest income was $466 million compared to $503 million in Q3-07 and the net interest margin was 3.11%. The net interest income declined $30 million and NIM declined 19 bps due to tax-related non-cash lease income charges. Noninterest income was $240 million. Net credit-related charge-offs were $116 million [90 bps as a percent of average total loans]. Nonperforming assets of $881 million [nonperforming loans of $863 million plus OREO of $18 million] were 1.71% of loans plus OREO. With total assets of $65.2 billion, NPAs werea calculated 1.35% of assets. Analyst Updates after the earnings release: Friedman, Billings, Ramsey analyst David Rochester reiterated a "Market Perform" rating on CMA and $27 target price on the shares. Rochester said he is concerned by the uncertainty surrounding potential losses in the bank's commercial and industrial loan portfolio. "We expect economic conditions in the U.S. to deteriorate into a moderate/deep recession over the next six months, which would likely drive an acceleration in commercial credit deterioration at Comerica, while exacerbating credit issues in the residential construction portfolio," Rochester wrote. Keefe, Bruyette & Woods analyst Brian Klock, who has a "Market Perform" rating on the shares, also expects commercial and industrial asset quality to weaken further, making 2009 a challenging year for the bank. Barclays Capital analyst Jason Goldberg, meanwhile, reiterated an "Underweight" rating on the shares, but noted that the bank's core third-quarter results exceeded his expectations. "While Comerica appears to have its arms around its residential real estate development book, it stated it is seeing softness in small business and middle market asset quality," Goldberg wrote. "Given this is a much bigger portfolio, this is an area to watch." Citi Investment Research analyst Keith Horowitz reiterated a "Buy" rating on the shares. While he also expects an increase in commercial and industrial loan losses over the next six to 12 months, Horowitz believes the bank will benefit from some of the government's recent initiatives aimed at strengthening banks. Specifically, he expects Comerica to sell at least $650 million in preferred stock to the Treasury Department in the fourth quarter, which will boost its capital levels, he said. CRBC Reports -$0.07 vs. +$0.42 in Q3-07 PRNewswire 10-16 Citizens Republic Bancorp reported for Q3-08 a net loss of $7.2 million $(0.07) compared with net income of $31.8 million [$0.42/share] for Q3-07. ROA was (0.22)% and ROE was (1.84)%. Book value was $12.20. Tier I ratio was 10.85%. Tier 1 leverage ratio was 8.76%. Net interest income was $87.3 million compared $94.9 million Q3-07. The decrease was due to the lower net interest margin, partially offset by a $149.6 million increase in average earning assets. The increase in average earning assets was the result of an increase in commercial loan balances, partially offset by decreases in investment, residential mortgage, and consumer loan portfolio balances. Net interest margin was 3.09% compared with 3.39% for Q3-07. The decrease was primarily the result of deposit price competition, narrower commercial loan pricing spreads and the movement of loans to nonperforming status, partially offset by a shift in asset mix from investment securities to higher-yielding commercial loans. The shift in funding mix included funds migrating within the deposit portfolio from lower cost savings and transaction accounts to higher cost savings and time deposits. Noninterest income was $28.0 million, a decrease of $2.6 million from Q3-07. The decrease was primarily due to a net loss on loans held for sale ($1.3 million) and lower brokerage and investment fees ($0.8 million). The net loss on loans held for sale was primarily the result of updated lower appraisal values on underlying collateral. The decline in brokerage and investment fees was primarily the result of the lower demand for investment products. Total Nonperforming Portfolio Loans of $231.3 million [2.47% of loans] plus Nonperforming Held for Sale of $86.6 million plus OREO of $46.5 million resulted in Total Nonperforming Assets of $364.4 million [3.87% of total loans plus OREO]. With total assets of $13.116 billion, NPAs were 2.77% of assets. The Loan Portfolio that was 30 to 89 days Past Due were $215.0 million [2.29% of loans]. Total Net Charge-offs were $22.4 million [0.94% of average loans]. FITB Reports - $0.14 vs. $0.61 in Q3-07 PRNewswire 10-21 Fifth Third Bancorp reported for Q3-08 a a net loss of $56 million [- $0.14/share] compared with net income of $325 million [$0.61/share] in Q3-07. The loss includes $51 million pre-tax [$0.06/share after-tax] charge due to the impairment of preferred stock in Fannie Mae and Freddie Mac; a non-cash charge of $45 million pre-tax [$0.05/share after-tax] related to Visa's settlement with Discover; and an estimated non-cash charge of $27 million pre-tax [$0.04/share after-tax] to lower the current cash surrender value of one of our Bank-Owned Life Insurance policies. ROA was (.28%) and ROE was (3.0)%. Book value was not given. Tier I capital was 8.53%. FTE Net interest income was $1.068 billion compared to $760 million in Q3-07. Provision for loan and lease losses grew to $941 million from $139 million in Q3-07. Reported net interest margin was 4.24% due to the impact of purchase accounting adjustments of $215 million for loan discount accretion of the Q2-08 acquisition of First Charter. Excluding the impact of these items, net interest margin was 3.39% and declined 5 bps from Q2-08. Yield on interest-earning assets was 6.16% [vs. 6.73% in Q3-07]. Yield on interest-bearing liabilities was 2.25% [vs. 4.04%]. Total noninterest income was $717 million compared to $681 million in Q3-07. Total net loan losses charged off was $463 million or 217 bps of average loans. Total nonaccrual loans and leases of $2.606 billion [compared to $569 million in Q3-07] plus Repossessed personal property of $24 million [$19 million] plus OREO of $198 million [$118 million] resulted in Total nonperforming assets of $2.828 billion [$706 million]. NPAs as a percent of total loans, leases and OREO was 3.30% [0.92%]. With total assets of $116 billion, NPAs were 2.44% of assets. Nonaccrual loans include debt restructuring balances of $168 million. In the CC, FITB commented that the composition of FITB's NPAs differintiates it due to [1] FITB had acquisition NPAs from Crown and First Charter; [2] FITB has $427 million of NPAs due to loan modification activity; and [3] FITB has been stock piling of NPAs due to lack of asset sales in last 4-5 quarters. FMBI Reports $0.50 vs. $0.55 in Q3-07 Marketwire 10-22 First Midwest Bancorp reported Q3-08 Net income of $24.191 million [$0.50/share] compared with $27.237 million [$0.55/share} in Q3-07. ROA was 1.16%. ROE was 13.09%. Book value per share was $14.81. Tier 1 Risk Based Capital was 9.42%. Total Risk Based Capital was 12.04%. Tier 1 Leverage was 7.59%. Net interest income was $62.758 million [compared with $60.697 million in Q3-07]. The Provision for loan losses was $13.029 million [$0.470 million in Q3-07]. Net interest income after provision for loan losses was $49.729 million [$60.227 million in Q3-07]. FTE net interest margin was 3.63%. Fee-based revenues improved to $24.8 million, up 3% on a linked quarter basis, due to higher service charge revenue. Trust revenue was $3.8 million, down from $3.9 million in Q2-08. Despite a deteriorating equity environment, trust sales remained solid in a difficult financial market, boding well for stronger performance as markets recover. Net charge-offs totaled $9.3 million. of which $6 million were residental properties. Nonperforming loans at September 30, 2008 were $55.6 million [1.06% of total loans] plus OREO of $23.697 million resulted in Total nonperforming assets of $79.272 million or 1.51% of loans & OREO. With total assets of $8.246 billion, NPAs were 0.958%. From the Conference Call: Trust Preferred portfolio did not appear aggresively marked down? FMBI: In Q3-08 we took a $15 million mark down related to Trust Preferred CDOs. That takes the valuation on our books to 84% of par. Regulators [FBSB] said that dealer quotes are not fair values for CDOs. We looked at credit histories and default probabilities to determine valuations. Color on real estate? FMBI: Housing will not improve until there is job creation in Chicago - and that is not just around the corner. FMBI is both seeing and projecting problems in retail [problems for strip shopping centers]. Other commercial sectors are fairly robust. Office and retail vacencies are beginning to tick up. Analyst: But your commercial retail loans were up. FMBI: We did new loans on properties that were 100% leased. Color on the improvement in 30-89 day past due? FMBI: First, heavy administrative component - and that was fized. And there was a cultural factor - senior managment has taken ownership of the catagory. We want to get close to pere averages of 1% - we were at 3.5% and are now down to 2% - so we are on our way to our goal. Margin expansion - will it hold given rate cut? FMBI: No - we are feeling pressure. Did you have interest reversals hurting Q3 NIM. FMBI: We lost 2 to 3 bps due to interest reverals on the NPAs. Where is comp pressure coming from? FMBI: Time deposit rates are elevated in both large and small players. FMER Reports $0.37 vs. $0.38 in Q3-07 PRNewswire 10-28 Akron, Ohio's FirstMerit Corporation announced Q3-08 net income of $29.8 million [$0.37/share] compared with $30.3 million [$0.38/share] for Q3-07. ROE was 12.73% and ROA was 1.12%. Book value per share was $11.44. Tangible equity to assets ratio was 7.45%. Net interest income of $91.121 million [$85.154 million in Q3-07] minus Provision for loan losses of $15.531 million [$7.324 million] resulted in Net interest income after provision for loan losses of $75.590 million [$77.830 million]. Net interest margin was 3.78% compared with 3.61% for Q3-07. Total earning assets of $9.756 billion earned $138.688 million at an average yield of 5.66% [compared with 6.84% in Q3-07]. Total interest bearing liabilities of $7.919 billion cost $46.029 million at an average yield of 2.31% [3.90% in Q3-07]. Noninterest income net of securities transactions was $47.029 million compared with $49.124 million in Q3-07. Net charge-offs totaled $11.8 million [0.64% of average loans] compared with $7.9 million [0.45%} in Q3-07. Nonperforming assets totaled $43.491 million at September 30, 2008 [0.57% of period-end loans plus OREO]. With total assets of $10.684 billion, NPAs were 0.40% of assets. FULT Reports $0.17 vs. $0.19 in Q3-07 Marketswire 10-21 Lancaster, PA's Fulton Financial reported Q3-08 net income of $29.1 million [$0.17/share] compared to $33.566 million [$0.19/share] in Q3-07. ROA was 0.73%. ROE was 7.25%. Book value was $xx.xx. Net interest income was $134.018 million compared to $122.410 million in Q3-07. The provision for Loan Losses was $26.700 million compared with $4.606 million resulting in Net Interest Income after Provision of $107.318 million compared with $117.804 million in Q3-07. The Net interest margin was 3.74%. Total Interest-earning Assets of $14.613 billion earned $217.826 million at an average yield of 5.91%. Total Interest-bearing Liabilities of $12.488 billion cost $79.791 million at an average yield of 2.54%. Total Other Income was $30.615 million compared with $36.743 million in Q3-07. Service charges on deposit accounts rose to $16.177 million from $11.293 million while Investment securities (losses) gains were ($9.501) million compared to ($0.134) million. Total loans charged off were $12.698 million [0.38% of average loans] compared with $2.805 million [0.08%] in Q3-07. Non-performing assets were $186.4 million [1.15% of total assets] compared to $107.0 million [0.69%] at September 30, 2007. HBAN Reports $0.28 vs. $0.38 in Q3-07 PRNewswire 10-16 Huntington Bancshares reported Q3-08 net income of $115.2 million [$0.28/share] compared with $138.2 million [$0.38/share] in Q3-07. ROA was 0.84%. ROE was 7.20%. Book value per share at end of period was $15.88. Tier 1 was 8.86% and Total risk-based capital ratio was 12.09%. Net interest income was $388.636 million [$409.663 million in Q3-07] while the Provision for credit losses was $125.392 million [$42.007 million] resulting in Net interest income after provision for credit losses of $263.244 million [$367.626 million]. The net interest margin was 3.29%. Total earning assets had an average yield of 5.76% [7 .25% in Q3-07] while Total interest bearing liabilities had an average yield of 2.78% [4 .24% in Q3-07]. Total non-interest income was $226.5 million compared with $204.7 million in Q3-07. Total net charge-offs were $83.8 million [0.82% of average total loans and leases] compared with $47.1 million [0.47%] in Q3-07. Commercial net charge-offs were $40.6 million [0.69%] while Consumer net charge-offs were $43.1 million [0.98%]. Automobile loan and lease net charge-offs were $13.3 million [1.15%]; Home equity $15.8 million [0.85%]; and Residential mortgage $6.7 million [0.56%]. Non-accrual loans were $585.9 million and represented 1.42% of total loans and leases. Non-accrual loans plus Restructured loans of $364.939 million plus OREO of $73.478 million plus Impaired loans held for sale of $13.503 million plus other NPAs of $2.397 million resulted in Non-performing assets of $1,040.3 million [2.52% of total loans and leases]. With total assets of $54.671 billion, NPAs were 1.90% of assets. HBAN was atypical in giving stats which produced more color on the NPAs. Beginning of period NPAs were $993.115 million with New NPAs of $175.345 million. Subtract the NPAs returning to accruing status ($9.104 million) and Loan and lease losses ($52.792 million), Payments to NPA accounts ($46.759 million) and Sales of NPAs ($19.547 million) resulting in end of period NPAs of $1,040.258 million. MBFI Reports $0.38 vs. $0.48 in Q3-07 Business Wire 10-31 Chicago's MB Financial reported Q3-08 net income from continuing operations of $13.2 million [$0.38/share] compared to $17.3 million [$0.48/share] for Q3-07. During Q3-08 income was positively impacted by a $1.5 million adjustment [$0.04/share] related to a reduction of state tax contingency reserves. ROA was 0.63%. ROE was 5.91%. Book value was $25.51. Tier 1 capital (to risk-weighted assets) ratio was 9.64%. Tier 1 capital (to average assets) was 8.00%. Net interest income was $56.606 million compared with $54.083 million in Q3-07. Provision for loan losses was $18.400 million compared with $4.500 million in Q3-07. Net interest income after provision for loan losses was $38.206 million compared with $49.583 million in Q3-07. The Net interest margin was 3.04%. Total interest earning assets of $7.411 billion earned $105.657 million at an average yield of 5.67%. Total core [deposit] funding of $4.426 billion cost $27.528 million at an average yield of 2.47% while Total interest bearing liabilities of $6.491 billion cost $46.455 million at an average yield of $2.85%. Total other [non-interest] income was $26.425 million compared with $23.259 million in Q3-07. Total non-performing loans of $117.206 million plus OREO of $3.821 million plus Repossessed vehicles of $0.108 million resulted in Total non-performing assets of $121.135 million - which were 1.92% of total loans and 1.45% of total aseets. Net charge-offs were $12.081 million, which were 0.80% of average loans. MI Reports $0.32 vs. $0.65 in Q3-07 press release 10-15 Marshall & Ilsley Corporation reported Q3-08 net income of $83.1 million [$0.32/share] as compared to $173.7 million [$0.65/share] in Q3-07. ROA was 0.52% while ROE was 5.07%. Book Value was $25.12/share. FTE net interest income was $447.5 million compared with $410.2 million in Q3-07. The net interest margin was 3.06%, down 8 bps on a linked quarter basis, and 1 basis point from Q3-07. FTE Interest Income to Avg. Interest Earning Assets was 5.51 % while the Interest Expense toAvg. Interest Bearing Liabilities was 2.86 %. Total Non-Interest Revenues were $183.8 million compared with $183.3 million in Q3-07. Net Charge-Offs were $152.3 million [1.21% of average loans and leases0 compared to $26.0 million [0.23%] in Q3-07. Non-performing loans and leases [$1.362 billion] were 2.70% of total loans and leases at September 30, 2008, compared to [$453.6 million] 1.01% at September 30, 2007. Nonaccrual Loans & Leases of $1.362 billion plus Other Real Estate Owned of $267 million resulted in Total Nonperforming Assets of $1.629 billion. With total assets of $63.501 billion, NPAs were 2.56% of assets. MTB Reports $0.82 vs. $1.83 in Q3-07 PRNewswire 10-21 Buffalo's M&T Bank reported Q3-08 of $91.185 million [$0.82/share] compared with $199.187 million in Q3-07. An impairment of holdings of Fannie and Freddie reduced net income by $97 million [$0.88/share]. ROA was 0.56% and ROE was 5.66%. Book value [at Yahoo] was $58.40. FTE net interest income totaled $493 million compared with $473 million in Q3-07 due to growth in average loans and leases, which rose 11% since Q3-07. The FTE net interest margin was 3.39% compared to 3.65% in Q3-07. The yield on average earning assets [of $57.971 billion] was 5.54% and the Cost of interest-bearing liabilities [of $49.888 billion] was 2.50%, resulting in a Net interest spread of 3.04%. Add to that the contribution of interest-free funds of 0.35% and that results in a NIM of 3.39%.Noninterest income was $114 million compared with $253 million in Q3-07, falling due to Fannie/Freddiw impairment charges. Net charge-offs of loans totaled $94 million [0.77% of average loans] compared with $22 million [0.20%] in Q3-07. There were $33 million charge-offs related to loans to builders and developers of residential real estate compared with none in Q3-07. Indirect automobile loan net charge-offs were $13 million compared with $7 million in Q3-07. Nonperforming loans rose to $710 million [1.46% of total loans] compared with $371 million [0.83%] in Q3-07. Loans past due 90 days or more and accruing interest were $96 million compared with $140 million a year earlier. Included in these past due but accruing amounts were loans guaranteed by government-related entities of $90 million. Assets taken in foreclosure of defaulted loans were $76 million. With total assets of $65.247 billion, NPAs were 1.20% of assets. NAL Reports $0.11 vs. $0.07 in Q3-07 Businesswire 10-28 New Haven, Conn. NewAlliance Bancshares reported Q3-08 net income of $10.9 million [$0.11/share] compared with $7.421 million [$0.07/share] in Q3-07. ROA was 0.53% while the ROE was 3.13%. Book value per share increased to $13.08. Tier 1 leverage ratio was 11.03%. Total risk-based capital ratio was 19.87%. Net interest income was $48.059 million compared with $43.692 million in Q3-07 while the Provision for loan losses increased to $4.200 million compared with $1.000 million resulting in Net interest income after provision for loan losses of $43.859 million compared with $42.692 million in Q3-07. The net interest margin was 2.63% compared with 2.49% in Q3-07. Total interest-earning assets of $7.323 billion earned $99.042 million at an average yield of 5.41%. Total interest-bearing liabilities of $6.283 billion cost $50.983 million at an average yield of 3.25%. Total non-interest income increased to $13.405 million from $10.457 million in Q3-07 primarily due to Net losses gain on securities decreasing to $0.215 million from $5.641 million in Q3-07. Net charge-offs were $2.823 million [0.23% of loans] compared with $0.423 million [0.04%] in Q3-07. Nonperforming loans of $34.996 million were 0.71% of total loans as compared to $26.181 million [0.53%] in the prior quarter and $19.435 million [0.42%] at the end of Q3-07. Nonperforming assets of $36.335 million were 0.44% of total assets as compared to $27.599 million [0.33%] at June 30, 2008 and $19.547 million [0.24%] at the end of Q3-07. NBTB Reports $0.46 vs. $0.46 in Q3-07 Marketwire 10-27 Norwich, NY NBT Bancorp reported Q3-08 net income of $15.083 million [$0.46/share] compared to $15.147 million [$0.46/share] in Q3-07. ROA was 1.13% and ROE was 14.58%. Book Value was $12.95. Tier 1 Leverage Ratio was 7.04%. Tier 1 Capital Ratio was 9.51%. Total Risk-Based Capital Ratio was 10.77%. Net interest income was $47.0 million compared with $41.2 million for Q3-07. FTE net interest margin was 3.94% compared with 3.56% for Q3-07. Although the yield on interest earning assets decreased 47 bps, the yield on interest bearing liabilities declined 98 bps. Noninterest income was $19.0 million compared with $16.5 million for Q3-07 due primarily to an increase in fees from service charges on deposit accounts and ATM and debit cards. Net charge-offs totaled $5.9 million [0.65% of loans and leases] compared with $7.0 million [0.82%] for Q3-07. Nonperforming loans were $24.7 million [0.69% of total loans and leases] compared with $30.6 million [0.88%] at December 31, 2007, and $30.7 million [0.90%] at September 30, 2007. The decrease was primarily the result of net charge-offs during the nine month period ending September 30, 2008 related to two large commercial loans, both of which had been previously identified and one of the two reserved for in 2007. Nonaccrual Loans of $23.031 million [$29.087 million in Q3-07] plus loans 90 Days Past Due and Still Accruing of $1.691 million [$1.620 million] plus OROE of $0.855 million [$0.917 million] resulted in Total Nonperforming Assets $25.577 million [$31.624 million]. Total Nonperforming Assets to Total Assets was 0.48% compared with 0.61% in Q3-07. NCC Reports - $5.86 vs. - $0.27 in Q3-07 /PRNewswire 10-21 Cleveland's National City reported for Q3-08 a net loss of $729 million [- $5.86/share], driven primarily by continued actions to build loan loss reserves, compared to a net loss of $1.8 billion [- $2.45/share] in Q2-08, and a net loss of $19 million [- $0.27/share] in Q3-07. With total equity of $17.182 billion, ROE was -16.9644%. With Total Assets of $145.035 billion, ROA was - 2.00%. Tier 1 Capital Ratio was 11%. Total risk-based capital was 14.86% and tangible equity to assets was 8.93%. FTE net interest income was $1024 billion compared with $1.102 billion in Q3-07. The Provision for loan losses was $1.184 billion compared with $368 million in Q3-07. The Net interest margin was 2.99%. Noninterest income was $386 million compared with $624 million in Q3-07. Net charge-offs in the Core Portfolio were $290 million and Net charge-offs for the Exit Portfolio were $554 million. Nonperforming assets were $3.5 billion. With total assets of $145.035 billion, NPAs were 2.41% of assets. NTRS Reports - $0.58 vs. + $0.93 in Q3-07 PRNewswire 10-22 Chicago's Northern Trust Corporation reported Q3-08 a net loss of $129.4 million [- $0.58/share] compared to income of $208.3 million [$0.93/share] reported in Q3-07. NTRS took [1] a pre-tax charge of $313.9 million ($197.5 million after tax, or $.89/share) in connection with an increase in support provided to cash investment funds under existing capital support agreements; [2] Pre-tax charges totaling $167.6 million ($105.4 million after tax, or $.47/share) in connection with actions taken to provide support for Northern Trust's securities lending clients; [3] An $80 million pre-tax charge ($50.3 million after tax, or $.23/share) related to the establishment of a program to purchase certain illiquid auction rate securities that were purchased by a limited number of Northern Trust clients; and other smaller charges. ROE was (10.14)%. ROA was (0.70)%. Book Value was $21.77. Tier 1 ratio was 9.2%. Total (Tier 1 + Tier 2) Risk-based Capital Ratio was 11.5%. The Leverage ratio was 6.6%. FTE Net interest income totaled $265.7 million, up 15% from $232.0 million reported in Q3-07. The net interest margin equaled 1.62%, down from 1.71% in Q3-07. Total Noninterest Income was $672.8 million compared with $660.5 million in Q3-07. Trust, Investment and Other Servicing Fees fell to $474.9 million from $508.8 million in Q3-07 while Foreign Exchange Trading Income rose to $141.8 million from $91.9 million. Net charge-offs totaled $.6 million [0.01% of average loans]. Nonperforming loans totaled $58.8 million [.20% of total loans and leases] at September 30, 2008, compared with $30.1 million at June 30, 2008 and $23.4 million at September 30, 2007. The increase primarily reflects the addition of two loans to nonperforming status. Nonperforming loans were covered 3.3 times by the assigned reserve. OREO was $2.7 million, and when added to NPL resulted in Nonperforming Assets of $61.5 million. Nonperforming Assets / Loans & OREO was 0.21%. With total assets of $79.244 billion, NPAs were 0.08% of assets. ONB Reports $0.26 vs. $0.34 in Q3-07 Globe Newswire 10-27 Evansville, Indiana's Old National Bancorp reported Q3-08 earnings of $17.0 million [$0.26/share] compared with $22.6 million [$0.34/share] earned in Q3-07. The 2008 EPS guidance is $1.10 - $1.15/share. ROA was .90%. ROE was 10.50%. Book Value was $9.59. Total risk-based capital ratio was 14.28%. Tier 1 risk-based capital ratio was 11.36%. The leverage ratio was 8.29%. Total loans at September 30, 2008 were $4.693 billion while Total investments were $2.098 billion [or 27.7% of assets]. As of September 30, 2008, Old National’s security portfolio consisted of 1,047 securities, 363 of which were in an unrealized loss position. The investment portfolio had an average duration of 4.76 years. The FTE annualized average yields on investment securities were 5.38% for the three months ended September 30, 2008, compared to 5.18% for the three months ended September 30, 2007. FTE net interest income was $64.5 million compared with $59.5 million in Q3-07. The net interest margin on total average earning assets was 3.79% compared with 3.37% for Q3-07. The yield on average earning assets decreased 88 bps from 6.77% to 5.89% while the cost of interest-bearing liabilities decreased 139 bps from 3.84% to 2.45% in the quarterly year-over-year comparison. Non-interest income was $38.995 million compared with $37.571 million in Q3-07. The largest components of non-interest income were Service charges on deposit accounts of $11.835 million; Insurance premiums and commissions of $8.782 million; ATM fees of $4.508 million and Wealth management fees of $4.163 million. Net Loan charge-offs $5.5 million [0.46% of loans]. Total nonperforming loans were $68.446 million [1.46% of total loans] compared with $49.312 million [0.87%] in Q3-07. Total under-performing assets were $73.551 million [1.57% of loans + OREO] compared with $45.203 million [0.96%] in Q3-07. With total assets of $7.568 billion, NPAs [or UPAs] were 0.99% of assets. SNV Reports - $0.08 vs. $0.41 in Q3-07 Businesswire 10-23 Synovus reported for Q3-08 a loss 0f $26.9 million [- $0.08/share] compared to income of $83.6 million [$0.25/share] continuing operations and net income of $134.943 million [$0.41/share] for Q3-07. ROA was -0.31%. ROE was -3.18%. Book Value was $10.27. Tier 1 Capital Ratio was 8.83%, the Total Risk-Based Capital Ratio was 12.22%, and the Tangible Common Equity to Tangible Assets Ratio was 8.50%. Net interest income was $267.798 million [$290.839 million in Q3-07]. Provision for loan losses was $151.351 million [$58.770 million]. Net interest income after provision was $116.447 million [232.069 million]. Total Interest Earning Assets of $31.296 bilion had an average yield of 5.81%. Total Interest Bearing Liabilities of $26.910 billion had an average yield of 2.77%. The Net Interest Margin was 3.42% compared to 3.97% in Q3-07. Total non-interest income was $98.955 million compared with $106.194 million in Q3-07. Nonperforming Loans $769.950 million [224.055 million in Q3-07] plus Impaired Loans Held for Sale of $13.554 million [zero] plus OREO of $215.082 million [$181.1 million] resulted in total Nonperforming Assets of $998.586 million [$300.569 million]. The ratio of NPAs to loans, impaired loans held for sale, and OREO was 3.58% compared to 1.16% in Q3-07. The Atlanta market represents 56% of Synovus’ total nonperforming loans in the residential construction and development portfolios. With total assets of $34.350 billion NPAs were 2.87% of assets. The net charge-offs of $105,328 million were 1.53% of average loans compared to 0.51% in Q3-07. During Q3, Synovus recognized an $18 million loss on $70 million of NPAs after identifying these assets for loan sales or auctions. Two auctions were completed in the quarter with proceeds of $28 million. From the Conference Call: NPLs have had 22% mark downs on their valuations. If we have two lost quarters in a row [there could be losses in Q4-09], we suspect the reduced dividend would continue. We have had conversations with our regulators on TARP funds and feel our ability to qualify is extremely high. Vulture funds have approached us with bids of 20 cents on the dollar and we have rejected those. One fund looked into this kind of investment and decided they wanted to wait a year. SUSQ Reports $0.07 vs. $0.38 in Q3-07 Businesswire 10-22 Lititz, PA's Susquehanna Bancshares report Q3-08 net income of $6.4 million [$0.07/share] compared to $19.9 million [$0.38/share] for Q3-07. Q3-08 contained an Investment security impairment charge of $17.5 million ($11.4 million after-tax of $0.13/share). ROA was 0.19%. ROE was a calculated 1.41%. Book value was $19.69. Net interest income was $101.262 million compared with $66.074 million in Q3-07. The Provision for loan and lease losses was $17.704 million compared to $2.414 million. Net interest margin was 3.60% compared to 3.64% in Q3-07. Total interest-earning assets of $11.510 billion earned $178.096 million at an average yield of 6.16%. Total interest-bearing liabilities of $10.344 billion cost $73.801 million at an average yield of 2.84%. Noninterest income was $17.919 million compared with $30.290 million in Q3-07. While Service charges on deposit accounts grew to $11.968 million [from $7.378 million in Q3-07] and Asset management fees grew to $7.405 million [from $5.235 million], the Net realized loss on securities of $17.550 million [compared to no loss in Q3-07] killed what otherwise would have been growth in noninterest income. Net charge-offs were $8.162 million [0.35% of average loans] compared with $5.598 million [0.39%] in Q3-07. Nonaccrual loans & leases of $96.022 million [$26.556 million in Q3-07] plus Restructured loans of $2.592 million [$1.867 million] plus OREO of $10.671 million [$10.331 million] resulted in Total nonperforming assets of $109.285 million [$38.754 million]. NPAs to Loans & leases & OREO was 1.15% compared with 0.66%. With total assets of $13.636 billion, NPAs were 0.80% of assets. USB Reports $0.32 vs. $0.62 in Q3-07 Businesswire 10-21 U.S. Bancorp reported Q3-08 earnings of $576 million [$0.32/share] compared to $1.096 billion [$0.62/share] reported for Q3-07. Included in the results were securities valuation losses representing $411 million [$0.18/share] and an incremental provision for credit losses equal to $250 million [$0.10/share]. ROA was 0.94% and ROE was 10.8%. Book value was $11.50. Tier 1 capital ratio was 8.5%. Total risk-based capital ratio was 12.3%. Net interest income was $1.967 billion compared to $1.685 billion in Q3-07. The net interest margin increased to 3.65% compared with 3.44% in Q3-07. The improvement was 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 repricing dynamics. Also, given current market conditions, short-term funding rates were lower due to volatility and changing liquidity in the overnight fed funds markets. Earning assets had an average yield of 5.77% compared to 6.90% in Q3-07. Interest-bearing liabilities had an average yield of 2.45% compared to 4.01% in Q3-07. Noninterest income was $1.412 billion compared to $1.877 billion in Q3-07. Strong fee-based revenue growth in a majority of revenue categories was offset by impairment charges related to structured investment securities, perpetual preferred stock, including the stock of GSEs, and certain non-agency mortgage-backed securities, and retail lease residual losses increased from a year ago. Credit and debit card revenue, corporate payment products revenue, ATM processing services and merchant processing services were higher. Net charge-offs were $498 million and equal to 1.19% of average loans outstanding. Nonperforming assets ended the quarter at $1.492 billion [.88% of outstanding loans plus OREO] compared with $513 million [0.43%] in Q3-07. NPAs were the sum of nonperforming loans of $1.303 billion, OREO of $164 million and other NPAs of $25 million. With assets of $247.055 billion, NPAs were 0.604% of assets. VLY Reports $0.03 vs. $0.xx in Q3-07 PRNewswire 10-23 Valley National Bancorp reported Q3-08 net income of $3.6 million [$0.03/share]. Results were reduced by a $70.9 million securities loss on Fannie Mae and Freddie Mac perpetual preferred stock which reduced Q3-08 net income by $44.1 million [$0.33/share]. Core operating [excluding the above securities loss] net income was $47.7 million [$0.35/share]. ROA was 0.10%. ROE was 1.28%. Book value was $8.07 The risk-based capital was 10.12%. Tier I capital was 8.41%. The leverage capital ratio was 6.83%. FTE Net interest income was $116.6 million - an increase of $12.7 million from Q2-08 due to increased loan volumes caused by the Greater Community acquisition, organic loan growth, and an 11 bps decline in funding costs, partially offset by additional interest expense related to higher average interest-bearing liabilities. The FTE net interest margin was 3.64% compared to 3.48% in Q2-08 and 3.40% in Q3-07. The yield on average interest earning assets increased by six bps from Q2-08 mainly due to a 3 bps increase in yield on average total loans. The cost of average interest bearing liabilities decreased 11 bps from Q2-08 mainly due to a decrease in the cost of deposits. Non-interest income decreased $52.4 millio |