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Click on individual bank names in the table below to access American Banker's coverage of each company's earnings report.
July 31 -
Comerica in Dallas reported flat quarterly earnings as cost cuts and improved credit quality offset a dip in lending revenue.
July 16 -
Planned price increases and hints that households are looking for higher yields for their savings suggest that the flood tide of deposits could finally be ebbing.
July 15 -
Richard Davis, whose U.S. Bancorp reported a quarterly revenue slowdown, says the threat of higher rates actually would stir complacent corporate borrowers to seek more credit. But when that would happen is anybody's guess.
April 16 -
Tighter margins. Anxious commercial customers. Fresh memories of bad risks taken. These are a few of the limitations acting on Fifth Third, BB&T, PNC and other regional banks as they try to improve on progress made last year.
January 17
A slowdown in deposit growth is a harbinger of an acceleration of loan growth at some point.
U.S. Bancorp (USB) reported its average deposits grew 7% in the second quarter, to $247.4 billion, from a year earlier. That percentage has steadily declined since hitting 11.1% at Sept. 30.
These are signs that businesses are spending more to expand their operations, said U.S. Bancorp CEO Richard Davis, echoing what other bank leaders have said in recent days. The hope, Davis says, is commercial customers will need to borrow more as they work down the cash stockpiles they amassed in recent years.
Customers appear to be investing "in some form of growth," Davis said on Wednesday during a conference call to discuss
Following the use of existing lines of credit, new lines and loans come, he says.
"We used to be in the mid- to high-30% utilization, so there is a significant amount of pent-up opportunity," Davis said.
Davis' comments were in response to a question about the deposit growth from Jack Micenko, an analyst at Susquehanna Financial Group. In an interview, Micenko says Federal Reserve data show the beginning signs of loan growth gaining on deposit growth. For instance, the Fed data from July 3 show loans at all banks are up 3.1% from a year earlier while deposits are up 6.1%, but loans grew 0.6% while deposits grew 0.3% from March 31 to June 30.
"We are wondering if we are at the beginning of that point where a slowdown in deposit growth precedes loan growth," Micenko said, adding that Davis' comments added qualitative credence to the data. "When you ask Richard Davis about [declining deposit growth leading to loan growth] and he affirms it, it is an encouraging sign for the industry overall."
Other banks also noted that customers were using their cash. Brian Moynihan, chief executive of Bank of America (BAC), said on Wednesday that customers are warming up to taking risks. Meanwhile, on Tuesday, Ralph W. Babb, chief executive of Comerica (CMA), said his company was seeing some businesses using cash to invest in their business, but said it was more of a glimmer of hope, rather than a trend.
Babb's reticence might be because of the time it will take for the loan growth to outpace deposit growth and trickle down to the bottom line. Given that the current recovery has been slower than past ones on many levels, customers are expected to be deliberate in shifting from deploying their capital to taking loans, analysts say.
"The banks should eventually begin to experience stronger loan growth, as this recovery strengthens, but it may take longer to materialize because the economy has taken a lot longer to gain momentum during this cycle," says Marty Mosby, an analyst at Guggenheim Securities.
Andrew Cecere, the chief financial officer of U.S. Bancorp, said in an interview that the company is already seeing loan growth accelerate. Loans increased 1% in the first quarter, 1.25% in the second quarter and are expected to be on the high side of expectations between 1% and 1.5% this quarter.
Cecere said there are positive signs that loan growth will continue to build, but he shared Davis' frustration with utilization rates.
"They are still very low they've been at 25% for six quarters and are not moving yet," Cecere said. "We've been growing commitments, [but] utilization is hard to determine. It depends on things like economic growth and employment."
Yet 1.5% loan growth is good for now, analysts say.
"Going from 1.25% to 1.5% is just rounding in a sense," Mosby says. "Going from 1% to 2.5% or 3% is what will make a meaningful impact. They are sitting there ready and poised to take advantage of the market, but are waiting on a catalyst in the economy."
U.S. Bancorp reported earnings of $1.48 billion for the quarter, up 4.9% from a year earlier and up 3.9% from the prior quarter.
Its shares fell 1.42%, to $36.74, on Wednesday. Analysts say the stock's reaction was likely driven by the fact that expenses rose faster than revenue. At $4.95 billion, revenue was 1.5% higher from the first quarter, while its expenses, at $2.56 billion, were up 3.5%.
Revenue growth was dampened by a larger-than-expected decline in mortgage banking revenues, and a slower-than-expected growth in its payments business, says Scott Siefers, an analyst at Sandler O'Neill.
Davis said he refuses to cut expenses and therefore its investments in things like new businesses or ventures -to generate positive operating leverage.
"I don't want to be dollar-for-dollar and be shortsighted," Davis said. "We have been working for five years to grow a substantial amount of momentum and become a revenue company, not an expense company, and I would hate to slow that down at this last stage."
Siefers said that was likely the smart move for the future of the company.
"In the long term, it is the right decision, but it was more noise and uncertainty than investors want out of them," Siefers says.
